Arizona Foreclosure Process
Jan 19th, 2009 by Vinny
Note: I am not a lawyer so do not take anything here as legal advice. Always consult a lawyer first.
The foreclosure process in Arizona does not always involve a judge. Many people do not realize, but the majority of deeds in Arizona are called “Deeds of Trust”, and that is much different than a standard mortgage.
Deed of trust: security instrument that transfers title of property to a third person (trustee) as security for a debt or other obligation that is owed by a borrower (trustor) to the lender (beneficiary). In this case if you are getting a loan, you are the trustor and the bank is the beneficiary (they get your interest money). The trustee in this can be any kind of company such as a lawyer, licensed real estate broker, escrow agent, or an insurance broker. The trustee cannot be involved in the real estate transaction when it is created (conflict of interest).
Here are the steps of a non-judicial (no court involved) foreclosure for a deed of trust (most Arizona deeds)
- The beneficiary or lendor lets the trustee know that the borrow has defaulted and to start the process.
- Notice of default and intent to sell is filed with the county, sale must be 90 days away and cannot be accelerated unless judicially foreclosing in court.
- Trustee includes time and place of sale in the notice
- Sale must be advertised in paper once a week for four weeks
- Trustee sends notice to all persons who have a recorded interest (possible liens or other loans) in the property by filing request of notice
- Notice of sale must be personally delivered or posted on property prior to sale
- Sale cannot take place until at least 91st day after notice of default filed
- Property is auctioned and sold to the highest bidder, who immediately receives title and possession.
With this kind of sale there is no statutory period of redemption. This means that the borrower who lost the property does not get a chance to buy it back. All rights are lost. The buyer gets a trustee deed, with no waiting period. If the previous owners are still occupying the property, the buyer must start an eviction.
The 90 day period is known as period of reinstatement where the borrower can make the loan current without paying it off (this include interest, payments, and expenses).
If you have received a notice of default, don’t wait a minute! There are only 90 days to take action, don’t procrastinate. In upcoming articles I will talk about what you can do to avoid the credit destroying foreclosure process.
