## Facts

- A developer marketed condominium units in a Phoenix project and entered binding presale purchase contracts with multiple buyers in 2005–2006.
- The buyers paid earnest money and down-payment deposits toward their unit purchases before September 2006.
- A construction lender agreed to fund construction conditioned on substantial presales and purchaser deposits being available for project costs.
- The lender recorded a construction deed of trust on September 1, 2006, after the buyers had contracted and paid deposits.
- The project failed; the developer defaulted on the construction loan; the deed of trust was foreclosed through a trustee’s sale.
- Title passed through the foreclosure chain to 44 Monroe Marketing, LLC, which took the property following the trustee’s sale.
- The unit sales never closed and the buyers did not recover their deposits.
- The buyers sued to quiet title and foreclose equitable vendees’ liens securing repayment of their deposits; the trial court granted summary judgment for the buyers.

## Issues

1. Whether purchasers under executory real estate contracts acquire equitable vendees’ liens to secure return of deposits upon seller default.
2. When a vendee’s lien arises for priority purposes.
3. Whether vendees’ liens are prior to a construction deed of trust recorded after the purchasers paid deposits.
4. Whether contractual “sole and exclusive remedy” provisions or alleged waiver language eliminate or subordinate vendees’ liens.
5. Whether failure to record any lien instrument defeats the lien’s validity or priority, and whether a trustee’s sale under the deed of trust extinguishes the purchasers’ liens.

## Decision

- The court affirmed summary judgment for the purchasers.
- The purchasers acquired equitable vendees’ liens when they paid earnest money and down payments under binding purchase contracts.
- The liens arose at the time of payment and were therefore earlier in time than the construction deed of trust recorded later.
- The vendees’ liens were senior in priority to the lender’s deed of trust and were not extinguished by the trustee’s sale conducted under the junior deed of trust.
- Contract remedy-limitation language did not constitute a waiver because waiver of a vendee’s lien requires explicit language showing actual intent to waive.

## Legal Principles

- An equitable vendee’s lien arises by operation of law in favor of a purchaser for amounts paid toward the purchase price when the seller defaults on an executory real estate contract.
- The lien attaches when the purchaser makes payment under a binding contract; no recording is required to create the lien.
- Priority generally follows “first in time, first in right”: a vendee’s lien arising before a later-recorded deed of trust is senior absent effective subordination or waiver.
- Waiver of an equitable vendee’s lien must be clear and specific; general remedy-limitation clauses (e.g., termination/refund or specific performance as exclusive remedies) are insufficient without express lien-waiver language.
- A trustee’s sale under a deed of trust cannot extinguish senior interests; senior vendees’ liens survive and may be foreclosed against the property.

## Conclusion

The court held that condominium purchasers who paid deposits under binding presale contracts obtained equitable vendees’ liens upon payment, those liens were senior to a later-recorded construction deed of trust, and they survived foreclosure because the contracts did not expressly waive lien rights.


Rigoli v. 44 Monroe Marketing, LLC, 336 P.3d 745 (Ariz. Ct. App. 2014)