Legal Question in Real Estate Law in Arizona

ASAPreal estate purchase contract
are in the process of buying some land with a purchase contract. Earnest money, the rest to be paid in 12 months. Had a previous contract with seller who used contract for collateral for loan, secured loan, then would not honor contract. Trying again with him after striagthening that out. New purchase contract. ARIZONA LAW, can a property with a purchase contract be used as collateral? If he encumbers property again and finds a way to do it over purchase price, and person financing places lien, is the lien enforceable over the purchase price legally?

Asked on 1/20/07, 8:25 am

2 Answers from Attorneys

James Jenkins Jenkins Law Center PLC

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Re: ASAPreal estate purchase contract

It is somewhat difficult to answer your question, in that although you attempted to be brief, your description of the facts is somewhat ambiguous.

You are going to deal with a seller who previously "would not honor contract?" That sounds ill-advised. The old saying, "fool me once..." comes to mind.

The normal collateral used to secure a purchase is a deed of trust. That secures the seller for the buyer's promise to pay on a promissory note. If the buyer does not pay, the seller can foreclose on the property.

The seller may be able to assign or use his note as collateral, but that does not affect your obligation if the deal is properly structured.

Sounds like you need to have this agreement supervised by an attorney. I am not sure you were protected in the first case. One answer to a general question does not give you the protection you need, especially if the seller would not honor a previous contract.

Good luck. See an attorney.

Answered on 1/20/07, 10:51 am

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