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Baker Law Offices, Phoenix Real Estate and Business Lawyers

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Alex Baker: Real estate transactions, litigation, tax liens and estate planning ... Super Lawyers Rising Stars honoree

 

 

Real Estate Law | August 2011

Recovering Attorneys' Fees in Defending Title to Real Property

In order to obtain a judgment awarding the recovery of attorneys’ fees upon successfully defending a real property title claim in Arizona, strict adherence to statutory requirements is a must.

A property owner generally cannot control when they will face a lawsuit challenging the title to their real property. When that occurs, the owner not only faces the potential of losing their property; win or lose, they are also forced to incur what will usually amount to substantial attorneys’ fees and out-of-pocket expenses in defending the lawsuit.

Fortunately, A.R.S. § 12-1103(B) provides a mechanism by which the property owner can recover those costs upon successfully defending against the claim. Unfortunately, the requirements necessary to invoke the provisions of that statute are not as clear as would be desired, often resulting in property owners being left footing the bill for defending the title to property that was theirs in the first place.

Remedy

The Arizona legislature enacted A.R.S. § 12-1103(B) in recognition of the fact that costs can often be an impediment for one who wishes to bring an otherwise viable claim to quiet title to real property. The statute permits recovery of attorneys’ fees and out-of-pocket expenses to a party that successfully pursues a quiet title claim, as long as that party delivers a quit claim deed and $5.00 to the adverse party at least 20 days prior to filing the quiet title action. However, the statute does not specify (a) what occurs when the defendant to such an action is successful and (b) exactly what steps the defendant must take in order to be entitled to a similar judgment should that party ultimately prevail in the litigation.

Intuitively, a party defending a quiet title action should not have to comply with the requirements of A.R.S. § 12-1103(B) in order to recover its attorneys’ fees and costs incurred, considering that taking the steps set forth therein would clearly be futile (or else, of course, the quiet title action would not have been filed against that party in the first place).[1] Thus, it would seem, a successful defendant in a quiet title action should automatically be entitled to an award of attorneys’ fees and costs incurred. However, operating under this presumption is likely to hold grave financial consequences for a defendant, at least according to a yet-to-be-published opinion.

Strict Compliance

In Long v. Clark [2], the Arizona Court of Appeals was presented with a situation in which Clark successfully defended a quiet title action. While Clark did tender a quit claim deed and $5.00 to Long in connection with the lawsuit, Clark did not file a counterclaim for quiet title. Based on these facts, the Court of Appeals determined that an award of attorneys’ fees and costs incurred was not appropriate, due to the fact that Clark did not file a counterclaim for quiet title and, therefore, did not satisfy the “bringing the action to quiet title” language of A.R.S. § 12-1103(B). In other words, despite the fact that doing so would have been completely futile on Clark’s part, the Court of Appeals interpreted the statute to be equally applicable to defendants in a quiet title action, thereby requiring strict compliance therewith.

While perhaps contrary to common sense, the bottom line is this: A defendant in a quiet title action must know and strictly comply with the statutory requirements of A.R.S. § 12-1103(B) or else be prepared to absorb the full financial impact of defending such a lawsuit.

Alex Baker represents clients throughout the Phoenix area, including north Scottsdale, Cave Creek and Carefree.

[1] See Schmitt et al. v. Sapp et al., 71 Ariz. 48, 53, 223 P.2d 403, 406-07 (1959) (holding that “the law does not require one to do a vain or useless thing . . .”)

[2] 598 Ariz. Adv. Rep. 18 (App. Div. 1 2010)