Arizona Non-Judicial Foreclosure Process (a/k/a Trustee’s Sale)

I recently posted some information for homeowners who are considering a short sale, deed-in-lieu or foreclosure as a way to get out of an underwater property. As I explained in my post, when it comes to foreclosure there can be different processes for foreclosing, either a “judicial foreclosure” or a “non-judicial foreclosure,” which is more commonly known as a “trustee’s sale.” Since judicial foreclosures are uncommon in Arizona, I am focusing this post on the process for non-judicial foreclosure (trustee’s sale).

1. A borrower must be at least 31 days behind in payments before a lender can direct the trustee to record a notice of default/sale (Notice).  However, the lender can direct the trustee to record the Notice anytime after the 31 day period, and most lenders attempt their own internal loss mitigation process before the Notice is recorded.
2. Within 5 days of recording the Notice the trustee will mail (certified or registered) a copy of the Notice to the borrower.
3. An additional Notice will be sent to all parties with a recorded interest in the property within 30 days of recording the Notice.
4. The trustee will publish the Notice as required by statute.
5. At least 20 days before the date of the trustee’s sale (listed in the Notice) the trustee must post notice of the sale of the property in a public place (Superior Court) that is permissible under the statute.
6. Before 5:00 p.m. on the last day (other than a Saturday or legal holiday) before the date of the trustee’s sale the borrower can pay all amounts due and reinstate the loan and maintain title to the property.
7. If not reinstated, the property will be sold on the sale date contained in the Notice.
8. Once the property is sold at the trustee’s sale the borrower will receive (as required by statute) a notice from the new property owner that the property has been purchased and that the borrower is required to vacate the property within 5 days.
9. If the borrower fails to vacate, an eviction action can, and likely will, be filed seeking possession of the property, reasonable rent, costs, and fees.

A homeowner facing foreclosure is encouraged to consult with an experienced attorney for more detailed information regarding the foreclosure process, and the homeowners various rights and obligations.