NOTICE: NOT FOR OFFICIAL PUBLICATION.

UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL

AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

GEORGE R. HAMMON, et al., Plaintiffs/Appellants,

v.

UNIT II PHASE 2 FUNDING LLC, Defendant/Appellee.

No. 1 CA-CV 19-0190 

Appeal from the Superior Court in Mohave County

No. S8015CV201700079

The Honorable Lee Frank Jantzen, Judge

AFFIRMED

COUNSEL

The Barlow Law Firm LLC, Fredonia

By Matthew Israel Barlow

Counsel for Plaintiffs/Appellants

Ramras Legal PLC, Phoenix

By Ari Ramras

Counsel for Defendant/Appellee

FILED 12-19-2019
HAMMON, et al. v. UNIT II

Decision of the Court

2

MEMORANDUM DECISION

Presiding Judge Randall M. Howe delivered the decision of the Court, in 

which Judge David D. Weinzweig and Judge John C. Gemmill1 joined.

H O W E, Judge:

¶1 George Hammon and Christine Cox appeal the trial court’s 

grant of summary judgment in favor of Unit II Phase 2 Funding (“Unit II

Funding”). Hammon and Cox also appeal the trial court’s denial of their 

motion for summary judgment and their motion for a new trial.2

FACTS AND PROCEDURAL HISTORY

¶2 In 1986, members of a church group known as Centennial 

Park Group formed the Deseret Land and Trust (“Trust”) and acquired two 

parcels of land totaling around 1,000 acres in Mohave County, now known 

as Centennial Park. The Trust’s purpose was to acquire property and 

provide the property for the use of its members. A minimum contribution 

of $1,000 was required to become a member of the Trust. The relationship 

between the Trust and its members was that of trustee and beneficiary. The

Trust held legal title to the property in the name of the Trust and certificates 

were to be given to members to show their beneficial interest in the Trust 

estate, although certificates were never issued. The certificates were 

supposed to entitle members to the specific Trust property described in 

their certificates.

¶3 Hammon and his father jointly contributed $10,000 in earnest 

money, which was considered their contribution to become members of the 

Trust and reserved five-acres of land for their use. According to the Trust,

 

1 The Honorable John C. Gemmill, Retired Judge of the Court of 

Appeals, Division One, has been authorized to sit in this matter pursuant 

to Article VI, Section 3 of the Arizona Constitution.

2 We do not consider Hammon and Cox’s argument that the trial court 

erred in denying their motion for a new trial because the argument was first 

raised in their reply brief. See State v. Edmisten, 220 Ariz. 517, 522 ¶ 10 n.2 

(App. 2009).
HAMMON, et al. v. UNIT II

Decision of the Court

3

the five-acre tract consisted of four lots, including Lot 10, which is the focus 

of this dispute.

¶4 In the late 1980s, Hammon took possession of the five-acre 

tract and transferred his interest in the Trust to Cox and another one of his 

religious “wives.” Between the late 1980s and early 1990s, Hammon and 

Cox kept horses and dogs on Lot 10 and built a barn, boxed stalls, and 

corrals. They also installed a septic system and electricity and water lines to 

service the property.

¶5 In 1990, the Trust informed its members that it would be 

subdividing the Trust property “to work towards deeding” the subdivided 

parcels to the individual members, development costs would be assessed 

on a lot-by-lot basis, and members needed to submit applications to obtain 

deeds for their parcels. Cox applied for other lots, but the record is unclear 

whether she applied for Lot 10.

¶6 In October 1991, Cox entered into a one-year, renewable lease 

agreement with the Trust to rent Lot 10 for one dollar per year and pay the 

property taxes. The lot numbers shown on the lease are illegible, but the 

parties do not dispute that Lot 10 was covered under the lease. The lease 

agreement provided that the Trust would “deed the subject property” to 

Cox once the subdivision process was completed “for the consideration of 

and upon receipt to Lessor of the $1,500.00 per acre and the amount of 

subdivision costs, assessments, etc., as equitably and equally prorated to 

this property.” Cox did not renew the lease after the first year and stopped 

paying rent but continued to pay the property taxes to the Trust until 

around 2011, when she started paying the taxes directly to the state. 

¶7 In the early 1990s, after the lease was executed, Hammon and 

Cox moved a single-wide trailer onto the property and began building over 

the trailer to convert it into a house. Around 1998, Hammon and Cox, along 

with their son, moved into the completed house on Lot 10 where they lived

for about five years. Around 2003, Hammon and Cox moved to their other 

property on Johnson Avenue, outside Centennial Park, leaving their son 

and his family to live in the house. Hammon and Cox continued to visit and

use the property to keep horses and dogs and to raise livestock. They also 

continued to use a room in the home as an office for Hammon’s trucking 

company until about 2015. In 2010, the Trust began invoicing Cox for 

subdivision costs that she was required to pay under the terms of the lease 

to obtain the deed to the property. Cox did not satisfy the lease 

requirements to obtain the deed to the property because she did not pay for 

the subdivision costs; she and Hammon believed that while some of the 
HAMMON, et al. v. UNIT II

Decision of the Court

4

improvements were reasonable, others were too extravagant and 

expensive.

¶8 The Trust sold the Trust property in July 1998 to Basic 

Investment Corporation (“Basic”), a financial arm of the Trust. Basic then 

sold a portion of the property, which included Lot 10, to Unit II Phase 2 LLC

(“Unit II LLC”), which was managed by another Trust member, in April 

2008. In February 2009, Unit II LLC borrowed money (to begin subdivision 

improvements) from Unit II Funding, secured by a deed of trust, to improve 

the subdivisions. Unit II LLC later defaulted on the loan. Before the 

property was auctioned, however, Unit II Funding informed Hammon in 

writing that he could lose his interest in Lot 10 if he did not pay the principal 

amount due for Lot 10. Hammon and Cox did not pay the principal amount 

due for Lot 10 and the trustee sold the property at auction in December 

2010. Unit II Funding was the successful bidder and, following the sale, 

notified Hammon and Cox that if they failed to pay their past due taxes and 

development costs, they might forfeit their rights to purchase Lot 10 under 

the lease. Hammon and Cox did not pay the subdivision costs or taxes owed 

but instead brought this action to quiet title by adverse possession.

¶9 Unit II Funding moved for summary judgment arguing that 

Hammon and Cox’s possession of Lot 10 was not hostile because they

signed a lease with the Trust and never made a clear disclaimer of their 

tenancy. Hammon and Cox also moved for summary judgment arguing

that they acquired title to Lot 10 by adverse possession. The trial court 

granted Unit II Funding’s motion for summary judgment, finding that 

Hammon and Cox did not acquire title to Lot 10 by adverse possession 

because they had possessed the lot under a lease. As a result, the trial court 

denied Hammon and Cox’s motion for summary judgment. Hammon and 

Cox then moved for a new trial, which the trial court denied. Hammon and 

Cox timely appealed. 

DISCUSSION

¶10 Hammon and Cox argue that the trial court erred by granting 

Unit II Funding’s motion for summary judgment because they acquired title 

to Lot 10 by adverse possession. We review the trial court’s grant of 

summary judgment de novo. Tritschler v. Allstate Ins. Co., 213 Ariz. 505, 519 

¶ 48 (App. 2006). To succeed on a claim of adverse possession, the plaintiff 

must show that the possession was hostile, exclusive, open and notorious, 

under a claim of right, and continuous for the statutory period. Lewis v. 

Pleasant Country, Ltd., 173 Ariz. 186, 189 (App. 1992).
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¶11 Hammon and Cox’s possession of Lot 10 was permissive 

under the terms of the lease as a matter of law and therefore not hostile. 

When a person obtains possession of property under a lease, A.R.S. 

§ 33–234 prohibits that person from claiming title to the property against 

the landlord. When a lessee holds over and retains possession after the 

expiration of the lease, the holding over creates a tenancy from 

month-to-month. A.R.S. § 33–342. If the holdover tenancy is consensual, the 

terms and conditions of the original lease govern the holdover tenancy. 

Pima Cty. v. Testin, 173 Ariz. 117, 119 (App. 1992). A person whose 

possession is initially permissive may bring an adverse possession claim 

upon a clear disclaimer of the true owner’s title. See Lewis, 173 Ariz. at 191.

¶12 While Hammon and Cox initially entered the property as 

members of the Trust, the board of trustees allowed Hammon and Cox to 

continue their possession and use of Lot 10 under the terms of the lease.

Even though Cox testified that she had never renewed the lease, the fact 

that she held over after the expiration of the lease created a month-to-month 

tenancy governed by the original terms of the lease. See A.R.S. § 33–342; see 

also Testin, 173 Ariz. at 119. Cox even continued to pay the property taxes 

to the Trust, as required under the lease, until around 2011, when she 

started making the payments directly to the state. As a result, the lease 

continued beyond the initial one-year term.

¶13 Even though Basic and Unit II Funding were not parties to the 

lease agreement, they were bound by Cox’s lease with the Trust. A 

subsequent purchaser with notice of a lease is bound by it. Keck v. Brookfield, 

2 Ariz.App. 424, 427 (App. 1965). John Timpson, the President of Basic, and 

Sam Zitting, the sole member of Unit II Funding, were also members of the 

Trust. Because Timpson and Zitting were members of the Trust they were 

both constructively aware of the lease between Cox and the Trust. Zitting 

specifically admitted that he had property next to Lot 10 and that he was 

aware of the lease agreement. Because Basic and Unit II Funding were 

aware of the lease, they were bound by it. See Keck, 2 Ariz.App. at 427. 

Additionally, as subsequent purchasers, they had no duty to inquire about 

Hammon and Cox’s possession of Lot 10, as their possession was consistent 

with the lease. See Valley Nat’l Bank of Ariz. v. Avco Dev. Co., 14 Ariz.App. 

56, 61 (App. 1971). Therefore, Hammon and Cox’s possession of Lot 10 

continued to be permissive even after the property was sold to Basic and 

Unit II Funding and could only become adverse upon a clear disclaimer of 

their tenancy. See Lewis, 173 Ariz. at 191.

¶14 Cox and Hammon never made a clear disclaimer of their 

tenancy and the improvements they made to Lot 10 were not enough to 
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constitute such a disclaimer. “Where the acts of the tenant while in 

possession under a lease are not inconsistent with his or her position and 

rights as a lessee, the possession cannot operate to give him or her title by 

adverse possession.” 52 C.J.S. Landlord & Tenant § 684. Cox admitted she 

had never made any disclaimer of the lease and the parties do not argue on 

appeal that they made any clear disclaimer of their tenancy to the Trust, 

Basic, or Unit II Funding. The lease Cox signed allowed Hammon and Cox 

to make improvements to the property and allowed them to remove any 

buildings, structures, or other improvements if the lease terminated. While 

Hammon and Cox made several improvements to the property, these 

improvements were consistent with their rights under the lease and would 

not constitute a clear disclaimer of their tenancy. See id. Because no clear 

disclaimer of their tenancy was made, Hammon and Cox’s possession of 

Lot 10 remained permissive and did not satisfy the hostility requirement 

for a claim of adverse possession.

¶15 Hammon and Cox argue that they acquired an “equitable 

owner” interest in Lot 10 under the 1987 Trust Agreement, evidenced by 

certificates of membership, and that the Trust held the property for their 

benefit since that time. Hammon and Cox admitted, however, that the Trust 

owned the property and that they never received title to Lot 10. While the 

Trust does state that certificates of membership “shall entitle the member 

of record trust estate property described on or attached to said certificate,” 

Hammon admitted that no certificate was issued, and the record contains 

no certificate. Therefore, Hammon and Cox’s argument that they purchased 

and obtained ownership of Lot 10 through the Trust fails.

¶16 Hammon and Cox also argue that no landlord-tenant 

relationship existed, that no lease existed, that no lease was intended, that 

the terms of the lease were uncertain and indefinite, and that Unit II 

Funding could not enforce the terms of the lease due to a lack of privity. 

Because these arguments were raised for the first time in Hammon and 

Cox’s motion for a new trial, they are waived. See Nickerson v. Green Valley 

Recreation, Inc., 228 Ariz. 309, 315 ¶ 9 (App. 2011).

¶17 Hammon and Cox argue last that the trustee sale to Unit II 

Funding is void because the trustee sale was not properly noticed. But a

trustee’s deed constitutes conclusive evidence that the proper notice 

requirements were met in favor of purchasers for value and without actual 

notice. A.R.S. § 33–811(B). Actual notice under § 33–811(B) refers to 

knowledge of any deficiency in the sale procedure. See Main I Ltd. P’ship v. 

Venture Capital Const. and Dev. Corp., 154 Ariz. 256, 259 (App. 1987).

Knowledge of the trustee is not imputed to the beneficiary. A.R.S. 
HAMMON, et al. v. UNIT II

Decision of the Court

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§ 33–811(B). Because Hammon and Cox do not argue that Unit II Funding 

had actual notice of any alleged defects in the notice of sale, the trustee’s 

deed serves as conclusive evidence that the proper notice requirements 

were met. See A.R.S. § 33–811(B). As a result, the trustee’s sale is valid.

¶18 Because Hammon and Cox were tenants under the lease, and 

no clear disclaimer of the lease was made, they failed to prove that their 

possession of Lot 10 was hostile. As a result, their claim to quiet title by

adverse possession failed, and the trial court correctly granted summary 

judgment in favor of Unit II Funding.3

CONCLUSION

¶19 For the foregoing reasons, we affirm. Unit II Funding requests 

its attorneys’ fees incurred on appeal pursuant to A.R.S. § 12–1103(B) and 

Arizona Rule of Civil Appellate Procedure 21. In our discretion, we grant 

Unit II Funding’s request upon compliance with ARCAP 21.

 

3 We need not address Hammon and Cox’s argument that the trial 

court abused its discretion in denying their motion for summary judgment 

because the denial of summary judgment is not appealable when we affirm 

summary judgment against that party. See McCallister Co. v. Kastella, 170 

Ariz. 455, 457 (App. 1992).