Arizona Court of Appeals Division Two holds that deed of trust provided constructive notice even though it contained an incorrect legal description because it nonetheless correctly identified property by its street address and correctly listed trustors’ names.

After receiving a notice of trustee sale from CitiMortgage Inc. (“Citi”), Donald and Michele Manicom (“Manicom”) filed an action seeking clear title to their property.  The Manicoms claimed to be bona fide purchasers without notice of Citi’s lien.  The trial court granted summary judgment in their favor, finding that they were bona fide purchasers who took the property free of the lien because the deed of trust erroneously described the property and therefore failed to provide notice to the Manicoms.  The trial court cleared title to the property in the Manicoms’ favor.

The Court of Appeals reversed and remanded.  The Arizona Supreme Court has rejected “a theory of strict statutory construction” that would hold any defect in a deed of trust as fatal to providing constructive notice.  In re Bisbee, 157 Ariz. 31, 32-33, 754 P.2d 1135, 1136-37 (1988) (holding that deed of trust “sufficiently apprise[d]” parties of nature and substance of rights claimed by it despite small error in legal description).  Although the deed of trust at issue contained an incorrect legal description, it otherwise correctly identified the property by its street address and by the trustors’ names.  Under the circumstances, the deed of trust was valid and sufficient to give constructive notice.  

The Court of Appeals further reversed the trial court’s grant of summary judgment to the Manicoms on a variety of alternative equitable grounds.  The Court generally noted that the trial court “erroneously relied on equity to circumvent constructive notice” insofar as it found the Manicoms were unsuspecting purchasers who could not have discovered the deed of trust.  The Court, however, noted that there was a disputed issue of fact with respect to a question of waiver that precluded entry of summary judgment on that claim. 

The Court denied Citi’s request for attorney fees on appeal.

Chief Judge Eckerstrom authored the opinion; Judges Miller and Espinosa concurred.