Arizona
When
you develop a definite plan of action with
well-timed, well-informed steps, you can stop
the foreclosure process and save your home. We
have outlined the foreclosure process for the
state of Arizona.
Judicial foreclosure available: Yes
Non-judicial foreclosure available: Yes
Trustee
A trustee may conduct the foreclosure sale out
of court under a power of sale clause if the
borrower defaults on the loan. Alternatively, a
trustee (or the lender) may sue to foreclose. A
trustee may also sue the borrower for physical
abuse to the property, waste, or other
impairment of the security, but only so long as
the borrower was in possession or control of the
property when the damage was done. The trustee
cannot conduct a foreclosure sale under the
power of sale clause until a lawsuit to
foreclose is dismissed. Under Arizona law, a
bank, trust company, Savings & Loan or other
institutional lender can be a trustee. Arizona
licensed attorneys, real estate brokers, and
insurance agents can also be trustees. The
lender for any reason may appoint a substitute
trustee if they record a Notice of Substitution
of Trustee and mail a copy to the borrower. A
trustee may resign by recording a Notice of
Resignation of Trustee.
Preliminary Notices
Contents
The trustee will give written notice of the time
and place of sale including legal description of
the property, by each of several methods.
Recording
The trustee must record a notice of the sale in
the county recorder’s office in the county
where the property is located.
Advertising
Once a week for four consecutive weeks, the
notice must appear in a newspaper in the county
where the property is located. The last notice
must be published not less than ten days prior
to the date of the sale.
Posting
(1) If it can be done without a breach of the
peace, the trustee can post the notice at least
20 days prior to the date of the sale, in some
conspicuous place on the property to be sold.
(2) He or she can post the notice at the
courthouse or at a specified place at the place
of business of the trustee in the county in
which the property is located.
Mailing
The trustee or lender must mail, within five
days after recording the notice of sale, by
certified mail, a copy of any notice of sale to
each of the persons who are parties to the trust
deed except the trustee. It must be addressed to
the mailing address specified in the trust deed.
The notice must set for the nature of the
borrower’s breach or nonperformance under the
trust deed. In addition, any person will be
entitled to receive a copy of the trustee’s
foreclosure notice if such a person records a
statutory Request for Notice form.
Special Procedure
For a fee up to $20, the trustee can provide
information on the unpaid balance, the name and
address of the owner, the date the trustee’s
notice was recorded and a list of encumbrances.
A trustee must honor a written request, and may
honor an oral request.
Sale Procedures
Time and Place
The time and place of the foreclosure must be
designated in the notice of sale.
Manner of Sale
The trustee or the trustee’s agent must
conduct the sale. The sale is for cash to the
highest bidder, except that the lender can make
a “credit bid,” which means to cancel out
some part (or all) of the money the borrower
owed the lender on the lien, instead of paying
cash. A successful high bidder must pay the bid
price by 5p.m. of the day after the bid, other
than a Saturday or legal holiday. Every bid is
an irrevocable offer until the sale is
completed, which happens when the bidder pays
the bid price to the trustee’s satisfaction.
If the high bidder fails to make the payment by
5:00 p.m., the day after being notified of the
option to buy, then the trustee may postpone the
sale.
Postponement
The trustee may postpone the sale to another
time, or another place, by giving notice of the
new date, time and place by public declaration
at the last place and time the property was
offered for sale. No other notice is required. A
trustee may also, by written agreement, extend
the time for a buyer to come up with the
payment.
Post-Sale Matters
The sale proceeds will go to the payment of the
obligations secured by the trust deed that was
foreclosed, then to junior lien holders in order
of their priority. The successful bidder gets a
trustee’s deed, which constitutes conclusive
evidence that the trustee conducted the
foreclosure sale property.
Deficiency
An Arizona deed of trust permits the real estate
that is the collateral for a loan to be sold at
a foreclosure sale by a trustee. The proceeds of
the sale will be paid to the lender, or the
lender can take title to the property and cancel
out the debt in exchange for the deed, called a
“credit bid.” Under a new Arizona law, a
lender may not bring a subsequent deficiency
suit against a person who lost a property that
is 2.5 acres or less at a foreclosure, provided
the property was a single one-family or a single
two-family dwelling. This is so even if the high
bid at foreclosure was less than the balance due
on the loan. In foreclosures against other types
of property, a deficiency is limited to the
difference between the balance owed and the fair
market value of the property, and then only if
the suit is brought within 90 days of the power
of sale foreclosure.
Redemption
Arizona does not recognize a subsequent right of
redemption on foreclosure sales.
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