Arizona Revised Statutes Title 20. Insurance § 20-1805. Recording of lien by director

A. The director shall, as a condition to granting a permit to an applicant, record with the county recorder of any county a notice of lien against the facility's properties on behalf of all residents and contract holders who enter into life care contracts with the applicant to secure performance of the provider's obligations to residents and contract holders pursuant to life care contracts.

B. From the time of such recording there exists a lien for an amount equal to the reasonable value of services to be performed under a life care contract in favor of each resident and contract holder on the land and improvements of the facility's properties owned by the provider, not exempt from execution, which are listed in the notice of lien filed pursuant to subsection C of this section and which are located in the county in which the notice of lien is recorded.

C. The lien shall be perfected by the director by executing by affidavit the notice and claim of lien, which shall contain:

D. The lien may be released or partially released at the request of the applicant if, in the judgment of the director, such release or partial release inures to the benefit of the residents and contract holders and the performance of the provider's obligations to the residents and contract holders.

E. The lien may be foreclosed by civil action.  Any number of persons claiming liens against the same property pursuant to this section may join in the same action.  If separate actions are commenced, the court may consolidate such actions.  The court shall, as part of the costs, allow reasonable attorney's fees for each claimant who is a party to the action.

F. In a civil action filed pursuant to this section, the judgment shall be given in favor of each resident and contract holder having a lien who has joined in the foreclosure action for the amount equal to the reasonable value of services to be performed under a life care contract in favor of each resident and contract holder.  The court shall order the sheriff to sell any property subject to the lien at the time judgment is given, in the same manner as real and personal property is sold on execution.  The lien for the reasonable value of services to be performed under a life care contract shall be on equal footing with claims of other residents and contract holders.  If a sale is ordered and the property sold and the proceeds of the sale are not sufficient to discharge all liens of residents and contract holders against the property, the proceeds shall be prorated among the respective residents and contract holders.

G. The liens provided for in this section are preferred to all liens, mortgages or other encumbrances upon the property attaching subsequently to the time the lien is recorded and are preferred to all unrecorded liens, mortgages and other encumbrances.  The amount secured by any lien having priority to the lien filed pursuant to this section may not be increased without prior approval of the director.

H. The director shall file a release of the lien upon proof of complete performance of all obligations to residents and contract holders pursuant to life care contracts.

I. The director may subordinate any lien filed pursuant to this section to the lien of a first mortgage or other long-term financing obtained by the provider, regardless of the time at which the subsequent lien attaches.