KAZ Construction, Inc. v. Newport Equity Partners, 229 Ariz. 303

Sierra Cobre Estates property (lots 1-56) in Cochise County is at issue; TSA Trust 1025 holds title with Zanderholm as beneficiary.
Zanderholm directed TSA to handle the property; TSA owns legal title; Zanderholm retains a right to profits from sales.
In 2007, Strohbachs loaned Zanderholm $1.98 million, secured by a deed of trust naming the Strohbachs as beneficiaries; TSA not a party.
KAZ proposed site work (Feb 2008); TSA did not sign; 20-day notice to Trust 1025 and Newport, but not to Strohbachs.
KAZ recorded a notice and lien in June 2008; Strohbachs seek to invalidate KAZ lien and assert priority of their deed.
Trial court granted summary judgment for KAZ, declaring Strohbachs’ deed invalid and KAZ lien valid first position; appeal followed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Authority to encumber by beneficiary	Strohbachs: Zanderholm could encumber property under trust terms.	KAZ: TSA must convey; Zanderholm lacked authority per trust terms.	Strohbachs' deed invalid; Zanderholm had no encumbrance power.
Validity of KAZ's mechanic's lien against Strohbachs	Strohbachs: Notice served to trust lender not required; lien valid.	KAZ: Twenty-day notice to construction lender required; notice insufficient or improper.	KAZ lien invalid as to Strohbachs; notice requirement violated.

Lane Title & Trust Co. v. Brannan, 103 Ariz. 272 (Ariz. 1968) (trust governed by instrument and general trust law)
Dunlap Investors Ltd. v. Hogan, 133 Ariz. 130 (Ariz. 1982) (beneficiary may encumber absent contrary agreement)
In re Herbst, 206 Ariz. 214 (Ariz. 2003) (trust terms govern extent of beneficiary interest)
Watson Constr. Co. v. Amfac Mortg. Corp., 124 Ariz. 570 (App. 1979) (recorded deed of trust provides constructive notice)
Delmastro & Eells v. Taco Bell Corp., 228 Ariz. 134 (App. 2011) (purpose of notice statute to ensure payment and communication)