New horse testing me

I just bought my first horse. A 10 yo tb mare. I brought her to my place about 3 weeks ago. She was a dream...super sweet. Until a few days ago. She has now started trying to nip me when I groom her and challenges me by refusing to lunge. Her overall attitude has turned sour. I know she's testing me, but I'm not sure exactly how to handle her in a positive, respect-building way. Does anyone have some advice? Thanks!

I'd just smack her in the neck when she tries to nip. You have a 3 second window after she does something like that to make her think she's going to die, after those 3 seconds she'll have moved on and not have any idea why she's being punished. That alone will build her respect for you a lot because you aren't letting her get away with whatever she wants.
I do that with my mare and even though she was very roughly handled (basically abused but I think that word is overused) she respects and loves me the most out of all the people she comes in contact with, even the ones who see her everyday and feed her. I don't have to smack her very often (maybe once every 3 months or something) because she respects that I AM going to make her work even if she doesn't want to and that bad things happen when she's bad and good things happen when she's good. I had to show her that I am fair (by not flying off the handle about every little bad thing she did, just calmly showing her the consequences for things I could enforce every time, like nipping) and consistent (by not letting her get away with nipping "just this once" because my friends were there or something) and in turn she knows that I'm the one she should be looking to for guidance because she knows that I'm there for her and she doesn't have to be scared anymore in the security she gets from the rules I've set.

Are you positive she knows how to lunge? She may just not understand.

If she doesn't know how to lunge and even if she does, you can work her in the round pen (if you have one) and if not then in the arena and free lunge (without the rope) and drive her forward. That alone will gain some respect....there's different things you can do when free lunging to gain respect, not just driving them forward. Like the other day I went out and turned Thunder loose in the arena to stretch his legs and he would NOT let me catch him. He's only ever done that twice. So I would come close, he would take off, so I would drive him forward and each time I attempted to ask him to whoa then ask him to come to me, If he didn't drove him forward again. Then he started licking an chewing and he came to me and I was able to halter him and cool him down. Just an example of gaining the respect back. Good luck!

I would move her away and start to make her work. Very similar to what free_sprtd suggested

Take her in the round pen and do a Join-up. See monty Roberts web site, good videos there. I was having some issues with Hunter when I first started to work with him. He would try and charge me in the middle of the round pen. I did the join-up and now every day we seem to be having a breakthrough. I had a really hard time getting him to free lunge to the left. He'd put his ears back and try to charge me, but I cracked the whip between us and he got back into position. It took a few times yesterday but now he goes either way without a complaint or challenge. Make sure if you do the join up you see the four signs. Inner ear turned towards you, licking and chewing, nose to the ground and smaller circles. I swear ever since I did it Hunter follows me around like a puppy dog.

Oh yeah. I would also read what Monty says about lunging on a rope/lungeline. It is really bad for your horses spine, best to free lunge.

Three words: Parelli Seven Games :)