When a creditor obtains an Arizona judgment, the first task the Judgment Creditor usually completes is recording the Judgment with the appropriate Arizona County Recorder’s Office, being sure to include a Judgment Debtor Information Statement. Subject to certain homestead exemptions which are outside the scope of this article, the Judgment then becomes a lien on real property owned or subsequently acquired by the Judgment Debtor. This is referred to as the Judgment Lien.

Sometimes a Judgment Debtor has more than one Judgment Creditor. In that case, a Judgment Creditor may be competing with other Judgment Creditors to record their judgment first. The order in which the Judgment Creditor records is important, as it determines priority. When the Judgment Debtor sells the real property subject to the Judgment Lien, priority determines which Judgment Creditor gets paid first, if at all. In Arizona, priority is straightforward. Except for consensual liens like deeds of trust or governmental liens, the first Judgment Creditor to record their judgement has the first priority position.

The following is an example of priority on a property that does not have a homestead exemption:

• Judgment Debtor owns real property worth $500,000.
• On January 1, 2023, Judgment Creditor A records a $300,000 judgment.
• On February 1, 2023, Judgment Creditor B records a $400,000 judgment.

When the real property is sold, after deduction of certain sale-related costs, Judgment Creditor A will be paid in full. Judgment Creditor B will receive the remainder of the available proceeds.

Things become much less straightforward with older judgments. In Arizona, judgments are valid for 10 years, unless they are renewed. A Judgment Creditor generally renews its judgment by filing an affidavit of Renewal that complies with A.R.S. § 12-1612. The question then becomes, should the Judgment Creditor record the Affidavit of Renewal? And if that affidavit is NOT recorded, does the Judgment Creditor lose their priority to be paid from any proceedings from the sale of real property?

The answer to the first question is, yes, the Judgment Creditor should always record the Affidavit of Renewal. The second question is not clearly defined by the Arizona courts; however, there is a single unpublished Court of Appeals case that indicates a Judgment Creditor does lose their priority if they do not file the Affidavit of Renewal.

Using our prior example, if a Judgment Creditor fails to record the Affidavit of Renewal this may happen:

• Judgment Debtor owns real property worth $500,000.
• On January 1, 2010, Judgment Creditor A records a $300,000 judgment.
• On February 1, 2010, Judgment Creditor B records a $400,000 judgment.
• On January 1, 2020, Judgment Creditor A files an Affidavit of Renewal, but fails to record it at the appropriate county recorder’s office.
• On February 1, 2020, Judgment Creditor B files an Affidavit of Renewal, and records it.

When the real property is sold, after deduction of certain sale-related costs, Judgment Creditor B will likely be paid first, because it jumped the proverbial line when Judgment Creditor A failed to record the Affidavit of Renewal on January 1, 2020. Accordingly, Judgment Creditor B will most likely be paid in full (assuming the sale-related costs do not exceed $100,000), and Judgment Creditor A will receive only a small portion of proceeds, if anything.

These hypotheticals show the serious consequences of failing to record an Affidavit of Renewal. If you are a Judgment Creditor, you should consider speaking with a creditor’s rights attorney before pursuing collection efforts.