How Arizona trustee sales work

Most Arizona home loans are secured by a deed of trust. When the borrower defaults, the lender usually does not go to court. A trustee named in the deed of trust sells the property at public auction under a statutory power of sale, following Title 33, Chapter 6.1 of the Arizona Revised Statutes, which starts at A.R.S. § 33-801. This guide follows that process in order, with the statute for each step.

The three parties

A.R.S. § 33-801 defines them. The trustor conveyed the property as security, normally the borrower. The beneficiary is the lender or whoever now holds the loan. The trustee holds the power of sale, which A.R.S. § 33-807(A) confers “by virtue of his position” and which may be used after a breach or default. The beneficiary may instead foreclose in court like a mortgage; see trustee sales versus judicial foreclosure.

Step 1: the notice of trustee sale

A.R.S. § 33-808(A) requires notice of the time and place of sale, with a legal description, given four ways:

1. Recording it with the county recorder in each county where the property sits.
2. Mailing it as required by A.R.S. § 33-809.
3. Posting it on the property at least 20 days before the sale (if that can be done without a breach of the peace) and at a superior court building in the county.
4. Publishing it in a newspaper of general circulation in the county once a week for four consecutive weeks, the last at least ten days before the sale.

Within five business days of recording, the trustee must mail a copy to the parties to the deed of trust with a statement of the breach (A.R.S. § 33-809(C)). Within thirty days it must also mail one to anyone who recorded a request for notice, to each person with a recorded interest in the property, and, for single-family homes, to the property address (A.R.S. § 33-809(B)). The recorded notice is what investors track; our notice of trustee sale guide explains each field.

Step 2: the 91-day minimum

It is often called “the 90-day period.” Precisely, the power of sale “shall not be exercised before the ninety-first day after the date of the recording of the notice of the sale” (A.R.S. § 33-807(D)), and the sale date in the notice must be no sooner than that day (A.R.S. § 33-808(C)(1)). The sale cannot be set for a Saturday or legal holiday. A new notice therefore gives you about three months before the earliest possible auction, not a guaranteed sale date.

Step 3: reinstatement until the day before the sale

Under A.R.S. § 33-813(A), the trustor, a subordinate lienholder of record, or the beneficiary of a junior deed of trust may reinstate the loan before 5:00 p.m. mountain standard time on the last day before the sale that is not a Saturday or legal holiday. They pay what is then due as if no default had occurred (not accelerated principal), cure other defaults, and pay the costs in A.R.S. § 33-813(B), including a trustee’s fee capped at the greater of $600 or one-half of one percent of the unpaid principal. The trustee then records a cancellation of the notice of sale (A.R.S. § 33-813(E)).

Anyone with a defense to the sale must get a court order under Rule 65 of the Arizona Rules of Civil Procedure by 5:00 p.m. on the last business day before it; otherwise the trustor and everyone mailed notice waive their objections (A.R.S. § 33-811(C)).

Step 4: information before the auction

From thirty days after recording, while the loan can still be reinstated, the trustee must on written request provide, if actually known, the unpaid principal balance, the owner of record and a list of recorded liens, for a fee of no more than $100 (A.R.S. § 33-809(E)). From 9:00 a.m. on the last business day before the sale, the trustee must also make available the actual bid or a good-faith estimate of the beneficiary’s credit bid; if it cannot, it must postpone the sale (A.R.S. § 33-809(F)). That figure is the closest thing to an opening bid.

Step 5: the auction

The sale is held at the time and place in the notice, on a business day between 9:00 a.m. and 5:00 p.m. mountain standard time, on the property, at a superior court building, or at the trustee’s place of business in the county (A.R.S. § 33-808(B)).

Under A.R.S. § 33-810(A), the trustee offers the property at public auction for cash to the highest bidder. Anyone may bid, but only the beneficiary may make a credit bid, paying by reducing the debt rather than in cash (A.R.S. § 33-801 limits its size). Every bid is irrevocable until the sale is completed, and the trustee controls the manner of the auction.

Every bidder other than the beneficiary must give the trustee a $10,000 deposit “in any form that is satisfactory to the trustee” (A.R.S. § 33-810(A)). The statute does not name a form such as a cashier’s check; each trustee decides what it accepts, so confirm before sale day. Deposits of everyone except the winner are returned.

Step 6: paying the bid

The winner, other than the beneficiary to the extent of its credit bid, must pay by 5:00 p.m. mountain standard time the following day, excluding Saturdays and legal holidays (A.R.S. § 33-811(A)), at the trustee’s office or another place it designates, unless the trustee agrees in writing to a later time (A.R.S. § 33-811(B)). A winner who fails to pay forfeits the deposit, is liable for resulting losses, and may be barred from the trustee’s later sales; the trustee may reopen bidding or offer the property to the second-highest bidder.

Step 7: the trustee’s deed

Within seven business days after payment, the trustee signs the trustee’s deed and submits it for recording; recording is delivery to the buyer (A.R.S. § 33-811(B)). If recorded within fifteen business days, the sale is perfected as of the sale date (A.R.S. § 33-810(A)). The deed raises a presumption that the sale requirements were met and is conclusive evidence of that for purchasers for value without actual notice (A.R.S. § 33-811(B)).

What happens to other liens

Under A.R.S. § 33-811(E), the trustee’s deed conveys title “absolute without right of redemption and clear of all liens, claims or interests that have a priority subordinate to the deed of trust” and “subject to all liens, claims or interests that have a priority senior to the deed of trust.”

• Junior liens are wiped out. A second deed of trust behind the foreclosed loan does not survive.
• Senior liens stay. Buy at a sale on a second loan and the first loan remains. Check lien position before you bid.
• Federal tax liens are different. If a federal tax lien was junior to the foreclosed loan, the United States may redeem within 120 days of the sale, or longer if local law allows (26 U.S.C. § 7425(d)).

Excess proceeds

A.R.S. § 33-812(A) sets the order of payment from the sale price: sale costs and trustee and attorney fees; the secured debt; other obligations under the deed of trust the beneficiary paid; a condominium or planned community association with a subordinate lien; junior lienholders by priority; and finally the trustor, or the owner of record at the sale if the property had been transferred. If money remains after the first three, the trustee must mail notice of excess proceeds to the trustor within fifteen days (A.R.S. § 33-812(B)). The trustee may instead deposit the balance with the county treasurer and file a superior court action, where people with an interest in the property apply for it (A.R.S. § 33-812(C), A.R.S. § 33-812(G)).

Postponements and deficiency

The sale date is a plan, not a promise. The trustee may postpone by public announcement at the time and place last set, to a fixed date within ninety calendar days, with no other notice (A.R.S. § 33-810(B)); see postponed and cancelled sales. After the sale, no deficiency action is allowed for trust property of two and one-half acres or less used for a single one- or two-family dwelling (A.R.S. § 33-814(G)), with exceptions in A.R.S. § 33-814(H).

What this means for an investor

• A recorded notice gives you about three months before the earliest sale. Use it for research.
• Expect cancellations after reinstatement or payoff, and expect dates to move.
• Get the credit-bid figure from the trustee in the statutory window; the notice’s original principal is not the opening bid.
• Bring the $10,000 deposit in an accepted form and have the balance ready by 5:00 p.m. the next business day.
• Confirm lien position, and plan separately for possession and condition.

For current sales, see the Maricopa County trustee sale page.

Frequently asked questions