Arizona Foreclosure Laws

Expected Timeline: Three to four months
Security Instrument: Deed of Trust most common in Arizona
Type of Process: Nonjudicial foreclosure most common. Judicial foreclosure used under a mortgage or if trustee chooses it under a deed of trust.
Protections for Servicemembers: Ariz. Rev. Stat. Ann. § 6-1260(L)
Time to Respond: Notice of sale must be recorded at least ninety days before sheriff sale. Homeowners must be notified via certified mail within five days of recording of notice of sale.
Reinstatement Period: Allowed until day before auction date in nonjudicial foreclosure. Reinstatement allowed anytime before complaint is filed in judicial foreclosure.
Protections for High-Cost Mortgages: None.
Redemption Period: None under nonjudicial foreclosure. Six months after auction date under judicial foreclosure, but only for properties not abandoned and not agricultural land.
Eviction Process: New owner demands that previous owners leave. No specific time line. New owner may go to court to sue fora writ of possession.
Deficiency Judgments: Not allowed in nonjudicial foreclosures. Allowed in judicial if deficiency judgment lawsuit is filed within ninety days of foreclosure auction.
Limits on Deficiency Judgments: No deficiency judgment on a purchase money mortgage for one- or two-family properties on less than two and a half acres. A deficiency may be allowed if a court decides the owners committed waste.
Cash Exempted in Bankruptcy: $150
State Statutes: Ariz. Rev. Stat. § 33-741 to 33-749, 33-801 to 33-821, 12-1281 to 12-1283, 12-1566

The Judicial Foreclosure process in Arizona is rarely used. It would be followed only if the original loan documents do not contain a power of sale clause, or if the lender is planning to sue for a deficiency judgment. If this process is used, the lender sues the borrower to obtain a decree of foreclosure and an order of sale.

The Non-Judicial Foreclosure process is the most common practice in Arizona. The lender's trustee first records a notice of sale in the county in which the property is located. The borrower must be served a copy of the notice within five (5) days of it being recorded. The serving may be done by mail or certified mail. A copy of the notice must be posted at the county courthouse at least twenty (20) days before the sale.

Also, the notice must be published in a newspaper for four consecutive weeks. The last publication of the notice of sale can not be less than ten (10) days before the scheduled sale date.

The trustee conducts the sale and the property is sold to the highest bidder. The purchaser of the property must pay the trustee by 5:00 pm on the next business day following the sale of the property. If the high bidder does not make payment, the sale may be continued or rescheduled for another time or place. However, the trustee may offer the property to the second highest bidder. The deed the highest bidder receives upon payment and completion of the sale is a trustee's deed. The lender will usually bid the amount that is due for the loan, plus costs that have accrued. This way, if no one else puts a bid on the property, ownership will revert to the original lender.

Deficiency judgments are not allowed if the foreclosed property consisted of 2.5 acres or less, and was a single family or two family dwelling. Deficiency judgments may be sought on any other types of property and the deficiency suit must be filed by the 90th day after the sale.

State Website: www.azleg.state.az.us