Property OwnershipIntermediateArizona Exam

In Arizona, a 'lis pendens' recorded against a property means:

AThe property has been surrendered to the lender via deed-in-lieu of foreclosure and the lender has recorded notice of the pending title transfer

BThere is pending litigation that may affect title to the property, putting potential buyers and lenders on notice of the legal disputeCorrect

CA mechanic's lien has been perfected by a contractor and is in the process of being foreclosed through the Arizona Superior Court

DA tax lien has been recorded by the county assessor and the property is scheduled for sale at an upcoming delinquent tax auction

Why There is pending litigation that may affect title to the property, putting potential buyers and lenders on notice of the legal dispute Is Correct

Answer B: There is pending litigation that may affect title to the property, putting potential buyers and lenders on notice of the legal dispute

A lis pendens ('pending suit' in Latin) is recorded to give constructive notice that litigation affecting the property's title is pending. Anyone who purchases or lends against the property after the lis pendens is recorded takes subject to the outcome of the lawsuit.

Exam Tip: Property Ownership

Property ownership questions test the bundle of rights and different forms of ownership. Know the differences between joint tenancy, tenancy in common, and community property, including the right of survivorship.

Key Property Ownership Terms in This Question

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

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Key Terms to Know

Title Insurance

Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.

Abstract of Title

A condensed history of a property's title, summarizing all recorded documents and encumbrances affecting it from the earliest record to the present.

Private Mortgage Insurance (PMI)

Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.

Deed of Trust

A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.

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