Arizona Foreclosure Law
The Arizona State Foreclosure Law dictates that lenders may avail of the Judicial and Non-Judicial Foreclosure processes to foreclose deeds of trusts or mortgages in default. The typical time of process last about 90 days and the deeds of trust and mortgages are the security instruments used. In Arizona the Right of Redemption is not allowed and Deficiency Judgments varies, depending on the process employed.
In Judicial Foreclosure, petitioners must file a lawsuit for an order to foreclose. Generally, when the court declares a foreclosure, the property will be auctioned off and awarded to the highest bidder. Non-Judicial Foreclosure is used when a power of sale clause exists in the security instruments. “Power of Sale” is the process wherein the borrower agrees to sell the property to settle the remaining balance from a loan in case of default. Its difference from the judicial foreclosure is that it doesn’t need any court order to auction off the property. The lender or their representative, commonly referred to as the “trustee,” may execute the “power of sale”.
Arizona Power of Sale Foreclosure Guideline
Should the security instruments contain a power of sale clause, the terms specified therein should be strictly followed. Otherwise, the non-judicial foreclosure should be carried out through the following process:
- The trustee must file a notice of sale in the Office of the Recorder of the county in which the property is located.
- Within 5 days of the recording, the trustee must send, through certified mail, a copy of the notice to all the parties in the deed of trust. The notice must also appear in a county newspaper of the property’s locale once a week for 4 consecutive weeks, the last of which should be published not less than 10 days before the date of sale.
If it can be done without a disturbance of peace, the trustee may post the notice, at least 20 days before the sale, in a conspicuous place on the property to be sold and/or at the courthouse or at the trustee’s place of business in the county.
- The trustee or his agent must conduct the sale, which must be done through an auction. The lender may use a “credit bid,” where instead of paying cash, it would cancel out, in part or in full the amount owed by the borrower. The successful bidder must pay the bid price by 5p.m. of the following working day. All bids are irrevocable. Should the winning bidder fail to make the payment on or before the prescribed time, the trustee may postpone the sale. The trustee may also extend the time for the buyer to come up with payment through a written agreement.
- Once the sale is completed, the proceeds will go to the payment of the obligations of the foreclosed property, then to the junior lien holders in order of their priority. The winning bidder gets a trustee’s deed as a proof that the foreclosure sale has been conducted.
A lender may not file for a deficiency suit against a person who lost a property, which is 2.5 acres or less, at a foreclosure, provided the property was a single one- or two-family dwelling. This holds even if the winning bid at foreclosure was less that the balance due on the loan. However, in foreclosures against other types of property, a deficiency suit is allowed, though limited to the difference between the balance owed and the fair market value of the property. The suit should be filed within 90 days of the power of sale foreclosure sale.
Arizona Foreclosure Help - Local HUD Offices
Phoenix HUD Office
Dept. of Housing and Urban Development
One North Central Avenue,
Suite 600
Phoenix, AZ 85004
Phone: (602) 379-7100
Fax: ((602) 379-3985
TTY: (602) 379-7181
Jurisdiction: Arizona area from Casa Grande North
Tucson HUD Office
Dept. of Housing and Urban Development
160 North Stone Avenue
Tucson, AZ 85701
Phone: (520) 670-6000
Fax: (520) 670-6207
Jurisdiction: Arizona area South of Casa Grande
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