Transamerica Financial Services, Inc. v. Lafferty
In Transamerica Financial Services, Inc. v. Lafferty (1993) 856 P.2d 1188 175 Ariz. 310, an Arizona court held that a revived lien is subordinate to a new purchase-money mortgage.
In that case, Robert and Rosalinda Guerrero had a first and second deed of trust on their parcel of real property. At a trustee's sale under the first deed, Carl Lafferty purchased the property. Lafferty then sold the property back to the Guerreros, who in turn executed two deeds of trust in favor of Lafferty. Transamerica Financial Services (Transamerica), the holder of the original second deed of trust, brought an action for declaratory relief.
Transamerica argued that, upon the Guerreros reacquisition or repurchase of the property, its lien reattached and had priority over Lafferty's liens. In addressing the lien priority issue, the court defined a purchase-money mortgage as a " 'mortgage on land executed by the purchaser of the land contemporaneously with the acquirement of the legal title thereto, or afterwards, but as a part of the same transaction . . . .' " Based solely on the automatic priority given to such purchase-money mortgages, the court held that Lafferty's liens were superior to Transamerica's lien. (See Transamerica Financial Services, Inc. v. Lafferty, supra, 856 P.2d at page 1194 175 Ariz. at page 316.)