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State Foreclosure Information
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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