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Judicial foreclosure available: Yes
Non-Judicial foreclosure available: Yes
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.
The trustee will give written notice of the time and
place of sale including legal description of the property, by each of several
The trustee must record a notice of the sale in the
county recorders office in the county where the property is located.
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
(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.
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 specific in the trust deed. The notice
must set for the nature of the borrowers breach or nonperformance under
the trust deed. In addition, any person will be entitled to receive a copy of
the trustees foreclosure notice if such a person records a statutory
Request for Notice form.
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
trustees notice was recorded and a list of encumbrances. A trustee must
honor a written request, and may honor an oral request.
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 trustees 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 lean, 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
trustees satisfaction. If the high bidder fails to make the payment b
5:00 p.m., the day after being notified of the option to buy, then the trustee
may postpone the sale.
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.
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 trustees
deed, which constitutes conclusive evidence that the trustee conducted the
foreclosure sale property.
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
that 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.
Arizona does not recognize a subsequent right of
redemption on foreclosure sales.