Assessments & Foreclosure | A.R.S. § 33-1807 | 1 CA-CV 10-0142 & 10-0235
This landmark Arizona case demonstrates that HOA assessment liens cannot extinguish senior first mortgages or deeds of trust, regardless of when they are recorded. It also serves as a critical warning to HOA attorneys regarding their duty of candor to the court, particularly during ex parte hearings where all material facts must be disclosed.
Last updated June 29, 2026. Case: Cypress on Sunland, appellate No. 1 CA-CV 10-0142 and 1 CA-CV 10-0235; reversing reinstatement of default foreclosure judgment.
Scope note: This page covers the Arizona Court of Appeals’ decision regarding the absolute priority of first mortgages over homeowners association assessment liens and the standards for finding fraud on the court. This page is educational and is not legal advice.
The takeaway
Under A.R.S. § 33-1807(B)(2), a recorded first deed of trust has priority over a homeowners association’s assessment lien regardless of when the two instruments were recorded. Obtaining an ex parte default foreclosure judgment by concealing the existence of a senior first deed of trust and misrepresenting the priority of the HOA assessment lien constitutes a fraud upon the court, justifying setting aside the judgment under Rule 60(c).
Case Participants
Petitioner Side
- James V. Orlandini, II (Defendant)
Intervenor who purchased the property from the bank following the senior trustee's sale. - First American Title Insurance Company (Defendant)
Intervenor and title insurer that issued the lender's title policy on the senior first deed of trust. - HSBC Bank, USA (Defendant)
Assignee bank holding the senior first deed of trust on the property. - Scott A. Malm (Counsel)
Gust Rosenfeld, P.L.C.
Attorney representing Intervenors/Appellants James V. Orlandini, II and First American Title Insurance Company. - Ari Ramras (Counsel)
Ramras Law Offices, P.C.
Attorney representing Intervenors/Appellants James V. Orlandini, II and First American Title Insurance Company. - David N. Ramras (Counsel)
Ramras Law Offices, P.C.
Attorney representing Intervenors/Appellants James V. Orlandini, II and First American Title Insurance Company.
Respondent Side
- Cypress on Sunland Homeowners Association (Plaintiff)
Homeowners association that initiated the original lien foreclosure action. - Scott Jacoby (Plaintiff)
Subsequent buyer of the property who filed the quiet title action. - Derrick Spearman (Defendant)
Original homeowner who defaulted on homeowners association assessments. - American Lending Corporation (Defendant)
Original lender of Spearman's first and second deeds of trust. - Robert Draper (Other)
Purchaser of the property at the HOA sheriff's sale who later sold it to Scott Jacoby. - Charles E. Maxwell (Counsel)
Maxwell & Morgan, P.C.
Attorney representing Plaintiff/Appellee Cypress on Sunland Homeowners Association. - Brian W. Morgan (Counsel)
Maxwell & Morgan, P.C.
Attorney representing Plaintiff/Appellee Cypress on Sunland Homeowners Association. - Paul R. Neil (Counsel)
Maxwell & Morgan, P.C.
Attorney representing Plaintiff/Appellee Cypress on Sunland Homeowners Association. - Warren Nikolaus (Counsel)
Maxwell & Morgan, P.C.
Attorney with Maxwell & Morgan, P.C. who wrote the January 2, 2008 letter. - Mark E. Lines (Counsel)
Shaw & Lines, LLC
Attorney representing Plaintiff/Appellee Scott Jacoby. - Michael C. Lamb (Counsel)
Shaw & Lines, LLC
Attorney representing Plaintiff/Appellee Scott Jacoby.
Neutral Parties
- Alliance Bancorp (Other)
Intermediate assignee of the senior first deed of trust. - Sheldon H. Weisberg (Judge)
Arizona Court of Appeals, Division One
Appellate judge who authored the court's opinion. - Donn Kessler (Judge)
Arizona Court of Appeals, Division One
Presiding appellate judge on Department B. - Diane M. Johnsen (Judge)
Arizona Court of Appeals, Division One
Appellate judge on Department B. - Edward O. Burke (Judge)
Maricopa County Superior Court
Trial judge who vacated the default judgment and sheriff's sale for fraud on the court. - Kirby D. Kongable (Judge)
Maricopa County Superior Court
Superior Court Commissioner / Judge Pro Tempore who consolidated the actions and reinstated the default judgment. - M. Scott McCoy (Judge)
Maricopa County Superior Court
Superior Court Commissioner who signed the original ex parte default foreclosure judgment. - Philip G. Urry (Other)
Arizona Court of Appeals, Division One
Clerk of the Court of Appeals who issued several civil notices and records orders. - Ruth Willingham (Other)
Arizona Court of Appeals, Division One
Clerk / Acting Clerk of the Court of Appeals who issued notices, opinions, and mandates. - Rachelle M. Resnick (Other)
Arizona Supreme Court
Clerk of the Arizona Supreme Court who sent notifications regarding the denial of petition for review. - Michael K. Jeanes (Other)
Maricopa County Superior Court
Clerk of the Maricopa County Superior Court. - Patricia Sanderman (Other)
Maricopa County Superior Court
Supervisor of the Appeals Section of the Maricopa County Superior Court. - Marcus Reinkensmeyer (Other)
Maricopa County Superior Court
Court Administrator listed on various court notifications.
What happened
Derrick Spearman owned a home in Phoenix subject to the CC&Rs of the Cypress on Sunland Homeowners Association, which were recorded in 2003. In 2006, Spearman obtained two loans from American Lending Corporation secured by first and second deeds of trust. Spearman subsequently failed to pay his HOA assessments. In April 2007, the HOA, represented by Maxwell & Morgan, P.C., filed a foreclosure lawsuit against Spearman and American Lending Corporation. The complaint failed to disclose that one of the loans was a senior first deed of trust and falsely asserted that the HOA’s assessment lien had priority over all other interests.
American Lending Corporation did not answer the complaint, having already assigned the first deed of trust. At an ex parte default hearing in June 2007, the HOA’s attorney obtained a default judgment declaring the assessment lien a ‘valid first lien’ and purporting to foreclose all other interests. The property was sold at a sheriff’s sale to Robert Draper for $5,599 (compared to its $190,000 appraisal value), who later sold it to Scott Jacoby for $110,000. Meanwhile, the assignee bank foreclosed its senior first deed of trust and sold the property to James Orlandini for $80,550. When Jacoby filed a quiet title action against the bank, Orlandini intervened and sought to vacate the default foreclosure judgment. Although Judge Burke initially vacated the judgment for fraud on the court, Commissioner Kongable later consolidated the cases and reinstated the judgment. The Court of Appeals ultimately reversed Commissioner Kongable, vacating the default judgment due to the HOA attorneys’ fraud on the court.
Video overview of the ruling
An AI-generated video overview of Cypress on Sunland HOA v. Orlandini (1 CA-CV 10-0142 and 1 CA-CV 10-0235 (Consolidated)). Under A.R.S. § 33-1807(B)(2), a recorded first deed of trust has priority over a homeowners association’s assessment… This plain-language summary was generated from the court’s filings; the court’s own ruling controls.
Listen: audio deep dive on the ruling
An AI-generated audio deep dive walking through the court’s reasoning and disposition in Cypress on Sunland HOA v. Orlandini. Generated from the case filings; verify against the linked ruling below.
Procedural timeline
Cypress on Sunland HOA CC&Rs are recorded in Maricopa County.
Derrick Spearman obtains loans of $190,400 (first deed of trust) and $23,900 (second deed of trust) from American Lending Corporation (ALC).
ALC assigns the first deed of trust to Alliance Bancorp via an unrecorded assignment.
First and second deeds of trust are recorded in Maricopa County.
First deed of trust is assigned to HSBC Bank, USA, as trustee (the Bank).
The HOA records a money judgment against Spearman in the amount of $748.21.
The HOA files a lien foreclosure complaint against Spearman and ALC.
Commissioner M. Scott McCoy enters an ex parte default judgment of foreclosure in favor of the HOA.
Robert Draper purchases the property at a sheriff's sale for $5,599.
The successor trustee of the Bank notices a trustee's sale to foreclose on the first deed of trust.
Attorney for the Bank/Wells Fargo writes to Maxwell & Morgan requesting confirmation of the first deed of trust's priority.
Robert Draper sells the property by warranty deed to Scott Jacoby for $110,000.
The Bank obtains a trustee's deed upon sale following the trustee's sale foreclosure.
Scott Jacoby files a complaint to quiet title against the Bank.
James V. Orlandini purchases the property from the Bank for $80,550.
The assignment of the first deed of trust to HSBC Bank, USA is recorded.
James V. Orlandini and First American Title Insurance Company file a motion to intervene in the quiet title action.
Judge Edward O. Burke issues a minute entry granting the Intervenors' cross-motion for summary judgment, finding fraud on the court, and vacating the default judgment and sheriff's sale.
The court grants the HOA's motion to consolidate the lien foreclosure and quiet title actions.
The Intervenors file a notice of change of judge and a motion to stay proceedings.
Commissioner Kirby Kongable denies the Intervenors' notice of change of judge.
Commissioner Kongable enters a final order reinstating the default foreclosure judgment nunc pro tunc.
Commissioner Kongable enters an order awarding attorneys' fees of $8,710 to the HOA as sanctions under A.R.S. §§ 12-349 and 12-350.
The Arizona Court of Appeals issues a Civil Notice to Counsel in 1 CA-CV 10-0142.
The Appellants' filing fee in 1 CA-CV 10-0142 is paid.
The Court of Appeals issues a Notice to Counsel regarding Appellees' fees due in 1 CA-CV 10-0142.
The Court of Appeals issues a Civil Notice to Counsel in 1 CA-CV 10-0235.
The Appellants' filing fee in 1 CA-CV 10-0235 is paid.
The Court of Appeals issues a Notice to Counsel regarding Appellee's fee due in 1 CA-CV 10-0235.
Clerk of the Court Philip G. Urry issues a letter notifying Jacoby's counsel that his filing fee is past due.
The Court of Appeals issues an order directing the Clerk of Maricopa County Superior Court to transmit the record on appeal.
The Court of Appeals issues a Notice of Oral Argument setting the consolidated cases for hearing on January 4, 2011.
The Court of Appeals hears oral arguments and takes both consolidated cases under advisement.
The Arizona Court of Appeals Division One files its Opinion reversing the reinstatement of the default judgment and the award of attorneys' fees.
Division One transmits the record and Petition for Review to the Arizona Supreme Court.
Counsel for the HOA files a Notice of Change of Address.
The Arizona Supreme Court clerk notifies the parties that the Petition for Review was denied on October 25, 2011.
The Court of Appeals issues the Civil Mandate Package to the Maricopa County Superior Court.
Complete source-document index
This index contains 16 PDFs from the reviewed public source packet. Byte-identical copies are listed once. Files are ordered by the date and sequence in the public filename, and party filings or research materials are labeled separately from court rulings.
0000 Civil Notice To Counsel Appellants
Type: Procedural/service filing
Procedural filing that documents service, appearance, compliance, or a required notice step.
0000 Notice To Counsel Appellees Fees Du
Type: Procedural/service filing
Procedural filing that documents service, appearance, compliance, or a required notice step.
0000 Civil Notice To Counsel Appellants
Type: Procedural/service filing
Procedural filing that documents service, appearance, compliance, or a required notice step.
0000 Notice To Counsel Appellees Fees Du
Type: Procedural/service filing
Procedural filing that documents service, appearance, compliance, or a required notice step.
0000 Letter Re Appellee Fee Past Due
Type: Court/source PDF
Uploaded source file in the case record; read it in sequence with the surrounding filings to follow the procedure.
0000 Civil Record Ordered From Superior
Type: Court order/minute entry
Court or agency order; this is usually the document that tells readers what changed next.
0000 Notice Of Oa Or Conference
Type: Procedural/service filing
Procedural filing that documents service, appearance, compliance, or a required notice step.
0000 Under Advisement Order
Type: Court order/minute entry
Court or agency order; this is usually the document that tells readers what changed next.
0000 Under Advisement Order 2
Type: Court order/minute entry
Court or agency order; this is usually the document that tells readers what changed next.
0000 Enotification Of Opinion
Type: Decision or judgment
Decision document; read it to understand the controlling result before moving to later filings.
0000 Opinion
Type: Decision or judgment
Opinion holding that under A.R.S. § 33-1807(B)(2), a recorded first deed of trust has priority over a homeowners association's assessment lien regardless of when the two instruments were recorded.
0000 Div 1 Petition For Review Transmitt
Type: Court/source PDF
Uploaded source file in the case record; read it in sequence with the surrounding filings to follow the procedure.
0000 Notice Of Change Of Address
Type: Procedural/service filing
Procedural filing that documents service, appearance, compliance, or a required notice step.
0001 Certificate Of Filing And Service
Type: Procedural/service filing
Procedural filing that documents service, appearance, compliance, or a required notice step.
0000 Pr Denied Letter
Type: Court/source PDF
Uploaded source file in the case record; read it in sequence with the surrounding filings to follow the procedure.
0000 Civil Mandate Package
Type: Decision or judgment
Decision document; read it to understand the controlling result before moving to later filings.
FAQ
Does an Arizona HOA assessment lien have priority over a first mortgage or deed of trust?
No. Under A.R.S. § 33-1807(B)(2), a recorded first mortgage or first deed of trust always maintains priority over an HOA assessment lien, regardless of when the mortgages or CC&Rs were recorded. An HOA cannot foreclose its lien to extinguish a senior first mortgage.
Is the Cypress HOA v. Orlandini decision binding precedent in Arizona?
Yes. The decision was issued as a published opinion by Division One of the Arizona Court of Appeals, and the Arizona Supreme Court denied the petition for review. It serves as binding legal precedent across the state of Arizona.
What is 'fraud on the court' in the context of an HOA foreclosure?
In this case, the HOA’s attorneys committed fraud on the court by failing to disclose to the judge in an ex parte default hearing that the bank held a senior first deed of trust, claiming instead that the HOA’s assessment lien had absolute priority and requesting a judgment that purported to extinguish the bank’s interest.
What happens to a buyer who purchases a property at an HOA foreclosure sale?
A purchaser at an HOA lien foreclosure sale takes the property subject to any existing senior liens, such as a first mortgage or deed of trust. The buyer must satisfy the senior debt to avoid losing the property if the senior lender later forecloses.
Can an HOA recover attorneys' fees from a non-owner who challenges a foreclosure?
No. The Court of Appeals ruled that statutory fee-shifting under A.R.S. § 33-1807(H) did not apply because neither party obtained a foreclosure judgment against each other. Furthermore, CC&R provisions allowing attorneys’ fees for collections do not apply to third-party purchasers who are not defaulting lot owners.
Case Dossier
This dossier combines the case metadata, linked court sources, and the explanatory sections below. It distinguishes court rulings from party filings, allegations, and requested relief.
Case Summary
| Case ID / citation | 1 CA-CV 10-0142 and 1 CA-CV 10-0235 (Consolidated) |
|---|---|
| Court / tribunal | Court of Appeals |
| Decision / key date | May 19, 2011 |
| Judge / panel | Hon. Sheldon H. Weisberg, Hon. Donn Kessler, Hon. Diane M. Johnsen |
| Parties | Cypress on Sunland Homeowners Association (HOA) and Scott Jacoby (subsequent purchaser) v. James V. Orlandini, II (purchaser under trustee sale) and First American Title Insurance Company (intervenors) |
| Governing law |
|
| Topics | AssessmentsForeclosureProcedureAttorney Fees |
| Outcome / holding | Under A.R.S. § 33-1807(B)(2), a recorded first deed of trust has priority over a homeowners association's assessment lien regardless of when the two instruments were recorded. Obtaining an ex parte default foreclosure judgment by concealing the existence of a senior first deed of trust and misrepresenting the priority of the HOA assessment lien constitutes a fraud upon the court, justifying setting aside the judgment under Rule 60(c). |
| Primary public source | View source opinion/order |
Parties, Court, and Research Coverage
| Reviewed source package | 16 PDFs |
|---|---|
| Step-by-step docket roadmap | 38 roadmap entries |
| Video overview | Cypress on Sunland HOA v. Orlandini |
| Study / briefing material | 1 section |
| FAQ / homeowner questions | 5 questions |
| Featured download links | 2 download links |
Key Issues & Findings
This consolidated appeal arose from a dispute over residential property in Phoenix, Arizona. A homeowner fell delinquent on HOA assessments, leading the Cypress on Sunland Homeowners Association to file a foreclosure action. Although the property was encumbered by a senior first deed of trust, the HOA's attorneys obtained an ex parte default judgment of foreclosure by asserting that the assessment lien was a superior 'first lien' that extinguished all other interests. A third party purchased the property at a sheriff's sale and sold it to Scott Jacoby. Meanwhile, the bank foreclosed its first deed of trust and sold the property to James Orlandini. Jacoby filed a quiet title action, and Orlandini intervened to set aside the default judgment. The trial court initially set aside the default judgment for fraud on the court, but later reinstated it. The Court of Appeals reversed, holding that a first deed of trust has priority over an assessment lien regardless of recording dates, and that the HOA attorneys' failure to disclose this priority in the ex parte proceeding constituted a fraud on the court.
The Court of Appeals analyzed the plain language and legislative history of A.R.S. § 33-1807(B)(2), rejecting the HOA's 'first-in-time' argument. The court determined that 'first' in 'first deed of trust' designates the relative priority between mortgages or deeds of trust, not the timing of their recording relative to an HOA's covenants. The 1997 statutory amendment explicitly removed the requirement that a first mortgage or deed of trust be recorded prior to the assessment delinquency to maintain priority, proving the legislature's intent to keep first mortgages senior. To hold otherwise would lead to absurd results where no lender would provide condominium or HOA home loans if they could not secure a first-priority position over assessment liens. Furthermore, the court held that deeds of trust are legally equivalent to mortgages under A.R.S. § 33-805, thereby subordinating the HOA's assessment lien under both statutory law and Section 7.9 of the CC&Rs.
Regarding the fraud claim, the court emphasized that attorneys owe a strict duty of candor to the tribunal, particularly in ex parte proceedings under Arizona Supreme Court Rule 42, ER 3.3. The HOA's attorneys failed to disclose that one of the encumbrances was a senior first deed of trust, failed to cite the statutory priority exception under A.R.S. § 33-1807(B)(2), and drafted a default judgment declaring the assessment lien a 'valid first lien' that extinguished the first deed of trust. The court concluded this was not an innocent mistake or excusable zealousness, as evidenced by a post-judgment letter in which the attorneys admitted they knew the first deed of trust had priority. Suppressing these material facts to obtain the default judgment compromised the court's impartial functioning and constituted a fraud on the court, requiring the judgment to be set aside.
For Arizona homeowners and HOA boards, this decision cements the absolute priority of first mortgages and deeds of trust over HOA assessment liens, providing clarity for real estate transactions, foreclosures, and mortgage lending. HOAs cannot extinguish a senior mortgage through an assessment foreclosure, and any attempts to claim absolute priority in court filings without legal basis are invalid and subject to severe scrutiny.
For legal counsel, the case is a stark warning regarding the duty of candor under ER 3.3, especially during ex parte hearings. Attorneys must disclose all material facts and adverse legal authority to the court. Misleading a judge or commissioner—even by omission or by presenting overly broad drafted orders—undermines the integrity of the judicial process, constitutes fraud on the court, and exposes counsel to disciplinary action and the loss of judgments.