Arizona Foreclosure Laws

Foreclosure Laws in Arizona

Arizona allows both judicial and non-judicial foreclosures, depending on the presence of a Power of Sale clause in a mortgage, which allows lenders to pursue foreclosures without the supervision of a court. Typically, non-judicial foreclosures only take at least three months from the issue of a Notice of default to complete.

For judicial proceedings, the lender must first file a suit against the defaulted homeowner known as a Lis Pendens. The homeowner is notified of this action, and if they do not respond within a certain period of time, the court will rule against them and decide on the amount owed to the lender. The county clerk and Sheriff then schedule a date for the foreclosure sale of the property.

In the case of mortgages allowing non-judicial foreclosures, the lender simply schedules a date for a foreclosure sale at least three months in advance, and serves the homeowner with a Notice of Sale. The homeowner or any junior lien holders on the property may stop the sale at any time up until 5 pm on the day before the sale is scheduled to take place.

When dealing with judicial foreclosures, the county Sheriff oversees a foreclosure auction of the property, which usually takes place at least 45 days after the court has ruled in favor of the lender. Anyone may bid, and the winning bidder must submit payment to the Sheriff by 5pm on the day following the sale. After this happens, the winning bidder is issued a certificate of sale. Unless the property in question is abandoned, the original owner retains a six month period of redemption, during which they can retrieve all rights to ownership by paying off the loan debt owed, as well as any applicable costs. If this does not occur, the Sheriff transfers ownership of the property to the winning bidder.

For non-judicial foreclosures, the lender or trustee of the sale must issue a Notice of Sale containing all of the details of the sale and serve it to the homeowner and any other invested parties at least 3 months before the sale is scheduled to take place. The Notice of Sale must also be published once a week for four weeks in a local newspaper, with the last notice appearing no less more than ten days before the sale date. The Notice must also be posted on the county courthouse and the property in questions no less than 20 days before the sale takes place. The trustee is also required to provide the amount of the opening bid of the sale to anyone who inquires.

On the day of the sale, all bidders must provide a fully refundable $10,000 deposit. The trustee keeps the deposit of the winning bidder. The sale is held in the style of an auction, usually at the county courthouse, the lender's offices, or at the property itself. The sale can be postponed for up to 90 days, and this must be announced at the original date set for the sale. The winning bidder has until 5 pm on the day following the sale to pay the full amount of their bid. The trustee then transfers ownership of the property to the winning bidder within seven days. The original homeowner retains no rights to redemption in a non-judicial foreclosure.