Arizona Foreclosure Laws
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Arizona principally works as a title theory state in which a property’s title stays as security till the complete reimbursement of the loan is made. Foreclosure, inside this theory, is non-judicial.
A deed of trust is a document that keeps the title secured, and in Arizona, it is also called a trust deed.
In Arizona, a mortgage also serves the purpose of a lien on a property and can also be used to follow judicial foreclosure through courts.
The provision of power of sale in a trust deed hastens the foreclosure process and is consequently the primary method used to foreclose quickly.
A non-judicial foreclosure is the process used to foreclose on a property in Alaska. This process involves no court action, but a foreclosure by advertisement notice is mandatory. To sell a property to take care of the loan that has been defaulted upon, a trustee can make use of the power of sale clause which is generally included in the trust deed at the origination stage. The sale, which usually occurs as an auction, is brought into effect by the trustee who acts as the lender’s representative.
Being a non-judicial process, very strict requirements for notices, and the inclusion of the power of sale clause in the mortgage are compulsory to follow this methodology of foreclosure.
A notice of foreclosure sale date must be published in a general circulation newspaper in the county where the property is, for a period of four successive weeks, at least once every week. A notice needs to be placed at the property which is going to be foreclosed twenty days within the planned sale. The proposed sale’s notice must also be registered with the recorder at the location of the trust property.
The notice of foreclosure sale includes information like the sale’s time and place, the date, the street address and the trust property’s legal description, the original principal balance as it appears on the trust deed, the parcel number of the county tax assessor, the name of the lender (beneficiary) including the qualifications and phone numbers of the trustee.
The public auction sale has to take place at the date and place mentioned in the notice of sale and should take place in between 09:00 and 17:00 hrs on days other than Saturdays and legal holidays. The auction is conducted by the trustee and goes to the highest bidder; this could be the lender too, and a credit bid can be made by only by the lender. A declaration would need to be provided by the sale’s conductor if the foreclosure sale needs to be postponed within ninety days of the original schedule of the sale. This declaration would include the changed time, date and location. In the case where a sale is to take place during an ongoing undisclosed bankruptcy (thereby violating the automatic stay), it is usually postponed by twenty eight days. At least ninety days would need to pass from the day the notice of foreclosure sale is filed, ten days from the day it was last published, before the sale can take place. Upon the completion of the sale, a trustee’s deed is issued.
Lenders in Arizona can also pick a judicial foreclosure system via a court, where the foreclosure’s final decision is prepared by the court. If a power of sale clause is not present in the deed of trust, the lender has to seek judicial foreclosure. The property is then auctioned at a sale that has been publicly announced. A complaint needs to be filed in the court along with a lis pendens, which is a document that is used to announce publicly, the foreclosure on the property.
The documents used are called the deed of trust or trust deed; or a security agreement in cases of commercial transactions. The security agreement is, at times, merged with the mortgage document. The filing of a mortgage is essential to authenticate the loan in question and the repayment terms, which are incorporated in the note.
A non-judicial foreclosure normally takes about a hundred and twenty days to take effect if it is not contested, depending on the time required for various notices. If a borrower opts to contest the foreclosure in court asking for the sale to be postponed, or if bankruptcy is filed, the process can be deferred.
In Arizona, a statutory right of redemption does not exist.
If a property sells for less than the amount remaining on the loan in question at the public sale, a deficiency statement can be obtained by a lender. However, when it comes to foreclosures involving land size in excess of 2.5 acres or less and the property was being used as a single one-family dwelling or a single two-family dwelling, the statute (33-729) prohibits lenders from obtaining a deficiency judgment. Actions of deficiency should be brought within a period of ninety days from a power of sale foreclosure. Judgments are restricted to the difference in property’s fair market value and the balance that is owed.
The laws governing foreclosures in Arizona are found in Article 33, Chapters 6, 6.1 of Arizona Revised Statutes.
