If you are experiencing foreclosure, contact Chase Law Firm  at (480) 499-5334 for a case-specific consultation. In this article we offer only general information about foreclosure in Arizona. Your rights and remedies will depend on the facts of your case.

There are generally two types of (involuntary) foreclosure in Arizona, judicial and non-judicial.

The judicial foreclosure process is basically a lawsuit brought by the lender against the homeowner. The process begins with the homeowner being served a Complaint and a Summons to appear in court. The “judicial” part, therefore, refers to the fact that foreclosure is being done through a court proceeding. In Arizona, judicial foreclosure is more likely to be used with commercial mortgages and purchase agreements.

The non-judicial process, also known as foreclosure by sale, does not require the filing of a lawsuit. The process actually begins with a “Notice of Trustee’s Sale,” see A.R.S. 33-808. The lender or trustee is required to record, post, and publish the Notice of Trustee’s Sale, and mail a copy to the homeowner after recording it. The Notice is to be posted in a conspicuous place on the trust property. Generally, it’s posted to the front door.

The Notice should describe the property to be sold and state the time, date, and place of the sale. The homeowner generally has 90 days from the date of recording a Notice of Trustee’s Sale (which may differ from when the homeowner actually receives a copy of the Notice) before a trustee’s sale can be scheduled.*

The trustee may voluntarily continue the sale to another date. If so, they are not required to provide a second notice of the new date. If a trustee’s sale is cancelled, a Notice of Cancellation must be filed.

Power of Sale

When someone buys a house or gets a home equity loan, they may sign a “Deed of Trust” on the homeowner’s property granting the property to the lender “in trust” until the loan is paid. The Deed of Trust also contains language granting the “power of sale” to the lender as trustee. This allows the lender to retake possession by selling the home at auction if the homeowner defaults on the loan. In addition, the lender may appoint a separate entity to act as trustee and hold the trustee’s sale, which is often the case.

The “power of sale” contained in the Deed of Trust allows the trustee to foreclose without filing messy court paperwork. The trustee simply follows certain procedures before holding a public sale. At a trustee’s sale, the lender may convey the property to a third party or take possession if there are no buyers.

Trustee’s Deed Upon Sale

Upon the sale of the property, the trustee issues a “Trustee’s Deed upon Sale” to the new buyer. The Trustee’s Deed constitutes a final sale or conveyance of the property to the buyer.

In Arizona, The Trustee’s Deed is considered “presumptively valid,” meaning the burden rests on the homeowner in any lawsuit or proceeding to void the sale.

Since the homeowner is no longer the owner they must vacate the property after a sale. The new buyer is entitled to immediate possession and may file eviction proceedings against anyone still living there after the trustee’s sale occurs.

Right of Redemption

Before a foreclosure is final, either by judgment or by sale (by 5pm prior to the day of), the homeowner has a right of redemption. To redeem the homeowner must become current on their mortgage, including payment of all interest and fees.

If the homeowner cannot become current or if the right to foreclose is disputed, they may need to file an emergency lawsuit (with injunctive relief) or bankruptcy. Neither of these options guarantee the homeowner will retain possession of the property, but they may give the homeowner more time to become current on their mortgage or to find a new home if they are unsuccessful.

There are many options for homeowners facing foreclosure, even if you cannot afford to keep your home. If you are facing foreclosure, contact Chase Law Firm now at 480-499-5334.

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Note: This article does not address the Protecting Tenants at Foreclosure Act of 2009 which may effect the rights of non-owner tenants. It does not address the Homeowner Bill of Rights under the National Mortgage Settlement, see http://www.nationalmortgagesettlement.com/.