A new Arizona Supreme Court ruling says homeowners may remove mortgage liens tied to unpaid debt - if the statute of limitations has expired
In a ruling that redefines how dormant liens are treated under Arizona law, the state’s Supreme Court has concluded that property owners may quiet title against a deed of trust even when the mortgage debt has not been paid - if enforcement of the underlying debt is barred by the statute of limitations. The March 31 decision in Jose R. Aroca and Kirstin Aroca v. Tang Investment Company LLC marks a significant departure from longstanding precedent and clarifies the limits of lien enforceability for mortgage professionals statewide.
The case involved a 2007 loan agreement in which Jose and Kirstin Aroca executed a $40,000 promissory note in favor of Tang Investment Company LLC. The note was secured by a deed of trust on the Arocas’ real property in Pinal County. Under the terms of the note, the Arocas were to make interest-only payments starting in 2008, with the entire unpaid balance due in a balloon payment on April 30, 2012.
After making only one year’s worth of interest payments, the Arocas stopped paying. Tang Investment never filed a foreclosure or initiated any legal action to collect the debt. More than a decade later, in 2022, the Arocas sued to quiet title, arguing that the statute of limitations on the note—six years under A.R.S. § 12-548(A)(1)—had expired, rendering the lien unenforceable.
Tang did not dispute that the six-year period had lapsed but claimed that the deed of trust remained valid under A.R.S. § 33-714(A)(2), which allows a mortgage or deed of trust to remain on record for 50 years if the final maturity date is not ascertainable from the recorded documents. Because the deed of trust itself did not specify the note’s maturity date, Tang asserted that it retained the right to enforce the lien until 2057.
The trial court accepted Tang’s argument and dismissed the Arocas’ complaint. The Arizona Court of Appeals reversed, holding that the expiration of the statute of limitations to enforce the note also barred enforcement of the deed of trust. The Arizona Supreme Court granted review, framing the case as a conflict between early 20th-century equitable principles and modern statutory law.
Writing for a unanimous Court, Justice King ruled that the statute enacted by the legislature—A.R.S. § 12-1104(B)—governs when a lien can be removed from a property via a quiet title action. That statute provides that if the “remedy for enforcement” of a lien is barred by limitation, the plaintiff is entitled to a judgment barring the lien. The Court emphasized that this statutory right overrides earlier common law decisions, including Provident Mutual Building-Loan Association v. Schwertner, a 1914 case which had required debtors to pay their loan in full before obtaining quiet title, even if the claim was time-barred.
“The holding in Provident may not change or upset the rights set forth in § 12-1104(B),” the Court stated. “Section 12-1104(B) prevails.”
In addressing Tang’s reliance on A.R.S. § 33-714, the justices made a critical distinction. While that statute allows a deed of trust to remain recorded for up to 50 years, it does not function as a statute of limitations for legal enforcement. It merely prescribes the outer boundary for a lien’s duration in the absence of earlier discharge or expiration. Enforcement of the lien—through foreclosure or trustee’s sale—remains subject to the same statute of limitations that governs actions on the underlying debt. In this case, that period was six years from the date the debt became due in 2012.
The Court also cited A.R.S. § 33-816, which requires that foreclosure or trustee’s sale proceedings commence within the same limitations period applicable to the contract secured by the deed of trust. Since Tang had not taken any such action before 2018, its enforcement rights had expired.
As a result, the Court reversed the trial court’s judgment in favor of Tang, affirmed the Court of Appeals' ruling, and remanded the case for entry of judgment in favor of the Arocas.
The ruling is particularly relevant for mortgage lenders and servicers overseeing aging portfolios or liens that have been inactive for long periods. It reinforces that a recorded lien, while still appearing in county records, may become legally unenforceable once the statute of limitations has run. Property owners can then pursue quiet title actions to eliminate those liens from their record, even if they have not paid the underlying debt.
Moreover, the decision confirms that statutory rights enacted by the legislature take precedence over earlier judge-made equitable doctrines. For servicers and counsel managing dormant liens, the case underscores the importance of monitoring limitation periods and acting within enforceable timelines.
In Aroca v. Tang Investment Company LLC, the Arizona Supreme Court has provided definitive guidance: when a lienholder fails to enforce its rights within the statutory period, it may no longer rely on the presence of a recorded deed of trust to assert control over a property.
