In Arizona, when a borrower defaults on their home loan, their lender can institute a non-judicial foreclosure trustee sale by recording a foreclosure notice of sale in the county where the property is located. The trustee must mail a copy of the notice by certified mail to the borrower and all parties listed on the deed of trust within 5 days after the foreclosure notice has been recorded. The notice must be published in a newspaper of general circulation in the county where the property is located for 4 consecutive weeks. The notice must contain the following information:
- Date, time and place of sale
- Legal description of the property
- The tax assessor’s parcel number
- Name of the beneficiary and trustee and the trustee’s telephone number
If the borrower and the lender are unable to work out a foreclosure prevention solution, the home is sold at foreclosure auction sale.
Trustee Foreclosure Sales
Non-judicial trustee foreclosure sales are the preferred method of foreclosure in Arizona. However, if the deed of trust or mortgage does not contain a power of sale clause, then the lender can institute a judicial foreclosure by filing a lis pendens action and complaint in court. The major difference between a non-judicial foreclosure and a judicial foreclosure is the judicial foreclosure requires court approval. All foreclosure auction sale proceeds go towards the payment of the borrower’s loan obligation to their lender and any junior lien holders (second mortgages).
A trustee foreclosure auction sale cannot take place any sooner than 90 days from the date of the filing of the notice of sale, and not less than 10 days from the date of the last publication of the notice. Within 20 days of the sale, the notice of sale must be posted on the property. The trustee conducts the sale, and the property is auctioned to the highest bidder. Anyone can bid on the property. The property must be paid for in cash at the end of the sale. The new buyer receives a trustee’s deed after the sale.
Deficiency Judgments and Redemption Rights
Arizona law does not allow the lender to obtain a deficiency judgment against the borrower for any balance owed the lender after the sale proceeds are distributed on property that is 2.5 acres or less if the property is a single-family or two-family dwelling. Deficiency judgments are allowed on other types of properties if the lawsuit is instituted within 90 days after a power of sale foreclosure. Under Arizona law, the borrower has no rights to redeem the property after the foreclosure sale.
Consult with an Attorney
If your lender has instituted foreclosure proceedings against you, it is recommended that you consult with a foreclosure defense attorney immediately. The attorney can help you defend yourself against the foreclosure and recommend other options to prevent foreclosure.
