Assessments / Lien Priority | A.R.S. section 33-1807 | 2 CA-CV 2010-0177
An HOA argued its assessment liens outranked the lenders’ first deeds of trust. Division Two explained why the plain text of A.R.S. section 33-1807(B)(2) protects a recorded first deed of trust regardless of recording order, and why the association’s position drew Rule 11 sanctions and a frivolous-appeal award.
Last updated July 1, 2026. Case: Villa De Jardines Association v. Flagstar Bank, FSB; 227 Ariz. 91, 253 P.3d 288 (App. 2011); CV200902335.
Scope note: This educational case page summarizes a court ruling for Arizona HOA homeowners, boards, and counsel. It is not legal advice.
The rule in one sentence
A recorded first deed of trust has priority over a planned community association’s assessment lien under A.R.S. section 33-1807(B)(2) regardless of recording order, because the association’s contrary first-in-time reading would render the statutory exception superfluous. The trial court’s summary judgment for the Banks, its Rule 11 sanctions against the association, and its fee award to the Banks as prevailing parties under section 33-1807(H) were all affirmed, and, because the association presented no colorable legal argument, the appeal was deemed frivolous and the Banks were awarded their appellate fees and costs under section 33-1807(H) and, as sanctions, under Rule 25.
Case Participants
Neutral Parties
- Villa De Jardines Association (Plaintiff/Appellant)
Arizona nonprofit planned community association; plaintiff below that sued to judicially foreclose its assessment liens against nineteen parcels, contending its liens had priority over the lenders’ deeds of trust. - Flagstar Bank, FSB (Defendant/Appellee)
Lender/deed-of-trust holder; one of the Banks that moved for and obtained summary judgment on the ground that its recorded first deed of trust had priority over VJA’s assessment lien. - Federal National Mortgage Association (also known as Freddie Mac) (Defendant/Appellee)
The other of the Banks; the opinion notes the entity was named inconsistently in VJA’s pleadings (originally ‘Federal Home Loan Corporation’) and used the entity’s self-designation. Prevailed on summary judgment on lien priority. - Charles Mannino and his wife (Defendant)
Unit owners named as defendants below; filed a separate answer. Not parties to the Banks’ summary judgment or to this appeal’s core lien-priority ruling. - Desert Hills Bank (Defendant)
Named defendant that failed to plead or otherwise defend; default was entered against it under Rule 55(a), but VJA obtained no default judgment. - Countrywide Home Loans, Inc. (Defendant)
Named defendant that failed to plead or otherwise defend; default was entered against it under Rule 55(a), but VJA obtained no default judgment. - Charles E. Maxwell (Counsel)
Maxwell & Morgan, P.C.
Counsel for Plaintiff/Appellant Villa de Jardines Association, of Maxwell & Morgan, P.C., Mesa. - Paul R. Neil (Counsel)
Maxwell & Morgan, P.C.
Counsel for Plaintiff/Appellant Villa de Jardines Association, of Maxwell & Morgan, P.C., Mesa. - Chad M. Gallacher (Counsel)
Maxwell & Morgan, P.C.
Counsel for Plaintiff/Appellant Villa de Jardines Association, of Maxwell & Morgan, P.C., Mesa. - Brian Morgan (Counsel)
Maxwell & Morgan, P.C.
Counsel for Plaintiff/Appellant Villa de Jardines Association, of Maxwell & Morgan, P.C., Mesa. - David N. Ramras (Counsel)
Ramras Law Offices, P.C.
Counsel for Defendants/Appellees Flagstar Bank, FSB and Federal National Mortgage Association, of Ramras Law Offices, P.C., Phoenix. - Virginia C. Kelly (Judge)
Arizona Court of Appeals, Division Two
Authored the opinion of the court. - Garye L. Vasquez (Judge)
Arizona Court of Appeals, Division Two
Presiding Judge; concurred in the opinion. - Peter J. Eckerstrom (Judge)
Arizona Court of Appeals, Division Two
Judge; concurred in the opinion. - Honorable William J. O’Neil (Judge)
Pinal County Superior Court
Trial judge who granted summary judgment for the Banks, imposed Rule 11 sanctions, and denied VJA’s new-trial motion and fee request (Cause No. CV200902335).
What happened and why it matters
Villa de Jardines Association (VJA), an Arizona nonprofit planned community association, filed a judicial foreclosure action in Pinal County Superior Court seeking to enforce its assessment liens against nineteen parcels, contending those liens had priority over the lenders’ deeds of trust. Flagstar Bank, FSB and Federal National Mortgage Association (referred to in the opinion as also known as Freddie Mac), together the Banks, moved for summary judgment. The trial court granted the motion, imposed Rule 11 sanctions on VJA, denied VJA’s own request for attorney fees, and denied VJA’s motion for a new trial. VJA appealed. Division Two of the Arizona Court of Appeals affirmed. The court held that A.R.S. section 33-1807(B)(2) unambiguously grants a recorded first deed of trust priority over an association assessment lien regardless of which was recorded first, because VJA’s contrary first-in-time reading would render the statutory exception superfluous. It upheld the Rule 11 sanctions because VJA had no objectively reasonable basis for its lien-priority position and could not rely on a title company litigation guarantee to avoid Rule 11’s reasonable-inquiry duty. It affirmed the fee award to the Banks as prevailing parties under section 33-1807(H) and rejected VJA’s procedural challenges to the judgment and to the denial of its new-trial motion. Concluding the appeal was frivolous, the court awarded the Banks their attorney fees and costs on appeal under section 33-1807(H) and, as sanctions, under Rule 25, Ariz. R. Civ. App. P., against both VJA and its counsel.
Reviewing summary judgment de novo, the court accepted that the material facts were undisputed, so the outcome turned on statutory interpretation. Under A.R.S. section 33-1807(B), an association’s assessment lien is prior to all other liens and encumbrances except three categories, including ‘[a] recorded first mortgage’ and ‘a recorded first deed of trust on the unit.’ Applying settled canons, the court gave the statute its plain meaning and presumed the legislature does not enact redundant, superfluous, or contradictory provisions. VJA argued that a deed of trust qualifies as a ‘first deed of trust’ only if it is recorded first in time, ahead of the assessment lien. The court rejected that reading because subsection (B)(1) already grants priority to any encumbrance recorded before the assessment lien; if first deeds of trust also had to be recorded first to gain priority, subsection (B)(2) would serve no purpose. The statute therefore unambiguously protects a recorded first deed of trust regardless of recording order.
The court also rejected VJA’s contention that the judgment was ‘overly broad’ by referring to all nineteen parcels and all defendants. The summary judgment ran only in favor of the Banks and gave them no interest in parcels held by other defendants, so it was not a windfall; the Banks never sought relief on behalf of others, making VJA’s standing argument (citing Fernandez v. Takata Seat Belts) inapposite. Nor did the court err by referencing parcels for which default had been entered against Desert Hills Bank and Countrywide, because VJA had obtained no default judgment and was not entitled to one as a matter of law.
On the Rule 11 sanctions, reviewed for abuse of discretion (with the propriety of the legal basis reviewed de novo), the court applied the objective standard of what a competent attorney would do. Because section 33-1807 is clear, no reasonable attorney could argue an assessment lien outranks a first deed of trust, and VJA never argued for an extension or modification of the law. A title company litigation guarantee did not change this: it insures only against loss from incorrect assurances and may guide which parties to name, but it does not trump state law or excuse the duty of reasonable inquiry, and counsel must re-evaluate the client’s position as the case develops. The court further held the trial court properly denied a new trial: Rule 59(c)(1) requires the motion to be in writing, so oral amendment was impermissible and would invite gamesmanship, and no harm arose because the trial court reviewed the entire file sua sponte and found no error. Finally, under section 33-1807(H) the Banks were the prevailing parties, making a fee award mandatory, and because VJA presented no colorable argument the appeal was frivolous, warranting appellate fees and Rule 25 sanctions.
This published, precedential decision resolves a recurring Arizona HOA-collections question: where an association’s assessment lien stands relative to a lender’s first deed of trust. It confirms that A.R.S. section 33-1807(B)(2) protects a recorded first deed of trust regardless of recording order, so an association ordinarily cannot use judicial foreclosure of an assessment lien to eliminate or leapfrog a first mortgage. Boards, community managers, and collection counsel should understand that pursuing foreclosure on the theory that the assessment lien is senior to a first deed of trust is not supported by the statute and can expose both the association and its attorneys to sanctions and fee-shifting.
The opinion also carries broader lessons about litigation conduct and cost exposure. It illustrates that Rule 11 is measured by an objective standard — what a competent attorney would do — and that relying on a title company’s litigation guarantee is no substitute for a reasonable legal inquiry. It underscores that section 33-1807(H) makes a fee award to the prevailing party mandatory in lien-priority actions, and that a party who presses a position contrary to unambiguous statutory text risks not only losing but paying the other side’s attorney fees at trial and on appeal, plus sanctions for a frivolous appeal. For homeowners, lenders, and associations alike, it is a cautionary example of the financial consequences of over-reading assessment-lien priority.
Step-by-step litigation record
Complete uploaded source-document index
This index is generated from every public-facing source file currently present in assets/court_case_downloads/villa-de-jardines-v-flagstar-bank/raw/: 1 PDF. Files are ordered by the date/sequence embedded in the normalized filename; AI-generated review materials are labeled separately and should not be treated as court filings.
Opinion
Type: Decision or judgment
Decision document; read it to understand the controlling result before moving to later filings.
FAQ
Does an HOA’s assessment lien have priority over a bank’s first mortgage or deed of trust in Arizona?
Generally no. Under A.R.S. section 33-1807(B), a planned community association’s assessment lien is prior to most other liens and encumbrances, but the statute lists exceptions, including a recorded first mortgage and a recorded first deed of trust on the unit. In this case the Court of Appeals held that a recorded first deed of trust takes priority over the association’s assessment lien regardless of which was recorded first.
Why did the court reject the association’s ‘first-in-time’ argument?
VJA argued a deed of trust could be a ‘first deed of trust’ only if it was recorded first in time, ahead of the assessment lien. The court rejected this because section 33-1807(B)(1) already gives priority to any encumbrance recorded before the assessment lien. Reading subsection (B)(2) to also require the deed of trust to be recorded first would make it superfluous, and courts presume the legislature does not enact redundant provisions.
What are Rule 11 sanctions and why were they imposed here?
Rule 11 requires attorneys to certify that filings are well-grounded in fact and warranted by existing law or a good-faith argument to change it. Sanctions are required when there was no reasonable inquiry, no chance of success under existing precedent, and no reasonable argument to extend, modify, or reverse the law, judged by an objective standard. The court upheld sanctions because no competent attorney could reasonably argue the association’s lien outranked a first deed of trust under the plain statutory text.
Could the association rely on a title company’s litigation guarantee to justify its position?
No. The court explained that a litigation guarantee does not trump state law. It insures the association only against loss from incorrect assurances and can help identify the parties to name in a foreclosure, but the association could not rely on it exclusively to avoid Rule 11’s duty of reasonable inquiry or to argue the guarantee superseded the statute.
Why did the court refuse to let the association orally amend its motion for a new trial?
Rule 59(c)(1) requires a motion for a new trial to be in writing. The court held that allowing oral amendments would undermine that requirement and invite gamesmanship by letting a party surprise opposing counsel with new arguments at the hearing. It also found no harm, because the trial judge reviewed the entire file on its own initiative and found no error.
What does it mean that the appeal was ‘frivolous,’ and who had to pay the fees?
Under Rule 25, Ariz. R. Civ. App. P., an appellate court may impose penalties for a frivolous appeal, though only with great reservation and not where a colorable argument exists. Because VJA presented no colorable legal argument, the court awarded the Banks their attorney fees and taxable costs on appeal under A.R.S. section 33-1807(H) and, as sanctions, under Rule 25, against both the association and its counsel.
Case Dossier
This generated dossier mirrors the structured data surfaced on the OAH/ADRE case pages. It is added from the curated court-case record and the custom page source package, while the hand-authored analysis below remains intact.
Case Summary
| Case ID / citation | 227 Ariz. 91, 253 P.3d 288 (App. 2011) |
|---|---|
| Court / tribunal | Court of Appeals |
| Decision / key date | April 22, 2011 |
| Judge / panel | Virginia C. Kelly (author), Garye L. Vasquez (Presiding Judge, concurring), Peter J. Eckerstrom (Judge, concurring) |
| Parties | A planned community homeowners association (Villa de Jardines Association) sued to judicially foreclose its assessment liens against nineteen Pinal County parcels, contending its liens had priority over the lenders’ recorded first deeds of trust; Flagstar Bank, FSB and Federal National Mortgage Association (referred to in the opinion as also known as Freddie Mac) defended on the ground that A.R.S. section 33-1807 gives a recorded first deed of trust priority over an association’s assessment lien. |
| Governing law |
|
| Topics | assessmentsforeclosureliensattorneys-feesprocedure |
| Outcome / holding | A recorded first deed of trust has priority over a planned community association’s assessment lien under A.R.S. section 33-1807(B)(2) regardless of recording order, because the association’s contrary first-in-time reading would render the statutory exception superfluous. The trial court’s summary judgment for the Banks, its Rule 11 sanctions against the association, and its fee award to the Banks as prevailing parties under section 33-1807(H) were all affirmed, and, because the association presented no colorable legal argument, the appeal was deemed frivolous and the Banks were awarded their appellate fees and costs under section 33-1807(H) and, as sanctions, under Rule 25. |
| Primary public source | View source opinion/order |
Parties, Court, and Research Coverage
| Uploaded source package | 1 PDF |
|---|---|
| Step-by-step docket roadmap | 5 roadmap entries |
| Video overview | No video embed currently configured |
| Study / briefing material | 1 section |
| FAQ / homeowner questions | 6 questions |
| Curated download aliases | 1 download link |
Key Issues & Findings
Villa de Jardines Association (VJA), an Arizona nonprofit planned community association, filed a judicial foreclosure action in Pinal County Superior Court seeking to enforce its assessment liens against nineteen parcels, contending those liens had priority over the lenders’ deeds of trust. Flagstar Bank, FSB and Federal National Mortgage Association (referred to in the opinion as also known as Freddie Mac), together the Banks, moved for summary judgment. The trial court granted the motion, imposed Rule 11 sanctions on VJA, denied VJA’s own request for attorney fees, and denied VJA’s motion for a new trial. VJA appealed. Division Two of the Arizona Court of Appeals affirmed. The court held that A.R.S. section 33-1807(B)(2) unambiguously grants a recorded first deed of trust priority over an association assessment lien regardless of which was recorded first, because VJA’s contrary first-in-time reading would render the statutory exception superfluous. It upheld the Rule 11 sanctions because VJA had no objectively reasonable basis for its lien-priority position and could not rely on a title company litigation guarantee to avoid Rule 11’s reasonable-inquiry duty. It affirmed the fee award to the Banks as prevailing parties under section 33-1807(H) and rejected VJA’s procedural challenges to the judgment and to the denial of its new-trial motion. Concluding the appeal was frivolous, the court awarded the Banks their attorney fees and costs on appeal under section 33-1807(H) and, as sanctions, under Rule 25, Ariz. R. Civ. App. P., against both VJA and its counsel.
Reviewing summary judgment de novo, the court accepted that the material facts were undisputed, so the outcome turned on statutory interpretation. Under A.R.S. section 33-1807(B), an association’s assessment lien is prior to all other liens and encumbrances except three categories, including ‘[a] recorded first mortgage’ and ‘a recorded first deed of trust on the unit.’ Applying settled canons, the court gave the statute its plain meaning and presumed the legislature does not enact redundant, superfluous, or contradictory provisions. VJA argued that a deed of trust qualifies as a ‘first deed of trust’ only if it is recorded first in time, ahead of the assessment lien. The court rejected that reading because subsection (B)(1) already grants priority to any encumbrance recorded before the assessment lien; if first deeds of trust also had to be recorded first to gain priority, subsection (B)(2) would serve no purpose. The statute therefore unambiguously protects a recorded first deed of trust regardless of recording order.
The court also rejected VJA’s contention that the judgment was ‘overly broad’ by referring to all nineteen parcels and all defendants. The summary judgment ran only in favor of the Banks and gave them no interest in parcels held by other defendants, so it was not a windfall; the Banks never sought relief on behalf of others, making VJA’s standing argument (citing Fernandez v. Takata Seat Belts) inapposite. Nor did the court err by referencing parcels for which default had been entered against Desert Hills Bank and Countrywide, because VJA had obtained no default judgment and was not entitled to one as a matter of law.
On the Rule 11 sanctions, reviewed for abuse of discretion (with the propriety of the legal basis reviewed de novo), the court applied the objective standard of what a competent attorney would do. Because section 33-1807 is clear, no reasonable attorney could argue an assessment lien outranks a first deed of trust, and VJA never argued for an extension or modification of the law. A title company litigation guarantee did not change this: it insures only against loss from incorrect assurances and may guide which parties to name, but it does not trump state law or excuse the duty of reasonable inquiry, and counsel must re-evaluate the client’s position as the case develops. The court further held the trial court properly denied a new trial: Rule 59(c)(1) requires the motion to be in writing, so oral amendment was impermissible and would invite gamesmanship, and no harm arose because the trial court reviewed the entire file sua sponte and found no error. Finally, under section 33-1807(H) the Banks were the prevailing parties, making a fee award mandatory, and because VJA presented no colorable argument the appeal was frivolous, warranting appellate fees and Rule 25 sanctions.
This published, precedential decision resolves a recurring Arizona HOA-collections question: where an association’s assessment lien stands relative to a lender’s first deed of trust. It confirms that A.R.S. section 33-1807(B)(2) protects a recorded first deed of trust regardless of recording order, so an association ordinarily cannot use judicial foreclosure of an assessment lien to eliminate or leapfrog a first mortgage. Boards, community managers, and collection counsel should understand that pursuing foreclosure on the theory that the assessment lien is senior to a first deed of trust is not supported by the statute and can expose both the association and its attorneys to sanctions and fee-shifting.
The opinion also carries broader lessons about litigation conduct and cost exposure. It illustrates that Rule 11 is measured by an objective standard — what a competent attorney would do — and that relying on a title company’s litigation guarantee is no substitute for a reasonable legal inquiry. It underscores that section 33-1807(H) makes a fee award to the prevailing party mandatory in lien-priority actions, and that a party who presses a position contrary to unambiguous statutory text risks not only losing but paying the other side’s attorney fees at trial and on appeal, plus sanctions for a frivolous appeal. For homeowners, lenders, and associations alike, it is a cautionary example of the financial consequences of over-reading assessment-lien priority.