Most Arizona property foreclosures are by Trustee’s Sale, which is an out-of-court legal process defined by state laws. The process takes a minimum of 91 days from the first legal action, which is the recording of a Notice of Trustee’s Sale, to the date of the actual sale by open public auction. Until the property is sold at public auction, the property owner has the ability to sell or refinance the property, because they are still the owner.
A property owner facing the foreclosure can sell the property. Ideally, the sale will close escrow prior to the auction date. Your title company should be in contact with the foreclosure trustee as soon as escrow is opened.
The Notice of Trustee’s Sale:
The foreclosure process starts with the recording of a Notice of Trustee’s Sale with the Office of the County Recorder. This Notice describes the property being sold, the date, time and place of the auction, the original borrowers, the lender and the trustee. It also states the original principal balance of the loan.
The Notice of Trustee’s Sale is published in the newspaper, posted at the county courthouse and on the property, and mailed to everyone with a recorded lien or interest in the property.
During the foreclosure process, property owners and junior lienholders can request a reinstatement quote of the amount needed to bring the loan payments current and cure any default. This is not public information. Upon written request, Trustees must respond within 5 business days.
Also, property owners and junior lienholders can request a payoff quote. Upon written request, Trustees must respond within 14 business days. The original loan balance is stated in the Notice of Trustee’s Sale.
Other Available Information from Trustees:
Upon request and payment of a small fee, the Trustees will provide the unpaid principal balance remaining, the name and address of the owner, and a list of liens or encumbrances recorded against the property.
Credit Bid Quote:
Starting at 9:00 a.m. on the last business day prior to the auction date, the Trustee must make available the opening credit bid for the sale.
The Date of the Sale:
The Trustee can continue the sale to a new date within the next 90 days and can postpone a sale an unlimited number of times. If the sale is continued, the Trustee will provide the new date and time upon request.
The property will be sold at public auction at the time, place, and date stated in the Notice of Trustee’s Sale. The starting point will be the bid by the lender that is foreclosing, who can bid any amount up to the total amount owed, including the fees and costs for the foreclosure process.
The property will be sold at public auction at the time, place, and date stated in the Notice of?
Bidders who wish to participate at the auction must bring a bidder’s deposit of $10,000 in ht form acceptable to the Trustee. Most often the Trustee requires a cashier’s check made payable to the Trustee. Check with the Trustee’s office for their requirements before the day of the sale. The highest bidder must pay the balance of their bid by 5:00 p.m. on the following business day to the Trustee.
Trustee’s Deed Upon Sale:
Once sold, the Trustee issues a Trustee’s Deed Upon Sale to the highest bidder within 7 business days. This Trustee’s Deed Upon Sale conveys title without any covenant or warranty. Bidders at a Trustee’s Sale must do their own title and property research prior to the auction date. The former property owner has no right of redemption. The foreclosure process eliminates any liens that are subordinate or junior to the deed of trust that was foreclosed.
If the IRS has recorded a federal tax lien, then they have the option of redeeming the property for the amount of the bid within 120 days from the date of the sale.
If the property sells for more than the opening bid by the lender, the extra money from the sale is typically deposited with the County Treasurer, along with a civil complaint and a judge eventually decides how to divide up the funds.
If representing a seller of the property in foreclosure, have the escrow close well before the date of the Trustee’s Sale. Encourage your escrow officer to stay in contact with the foreclosure trustee. A postponement of the date of the foreclosure sale is not freely given.