Two Paths After Default
Arizona gives the lender two options when a borrower defaults. The first, and far more common, is a trustee sale. This is sometimes called a non-judicial foreclosure. The trustee sells the property at public auction without court involvement. The second option is judicial foreclosure, which goes through the court system.
By virtue of his position, a power of sale is conferred upon the trustee of a trust deed under which the trust property may be sold, in the manner provided in this chapter, after a breach or default in performance of the contract or contracts, for which the trust property is conveyed as security, or a breach or default of the trust deed.
A.R.S. § 33-807(A)The power of sale exists automatically. The deed of trust does not need to include specific language granting it. Once a default occurs, the trustee can move forward with the sale process by recording a notice of trustee sale.
Timing and Restrictions
The trustee cannot rush the process. Arizona law requires at least 91 days between recording the notice of sale and the actual sale date. The sale cannot be set for a Saturday or legal holiday. The trustee may schedule more than one sale for the same date, time, and place.
The power of sale of trust property conferred upon the trustee 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)If the lender files a judicial foreclosure, the trustee sale must stop. If the trustee sale has not yet occurred, the lender can still switch to judicial foreclosure. But the two processes cannot run at the same time.
What This Means for Property Owners
The 91-day waiting period gives borrowers time to explore options. They may be able to reinstate the loan, negotiate a modification, or sell the property before the trustee's deed transfers ownership. After the sale, the trustee executes and records a trustee's deed that conveys title to the winning bidder.
For families dealing with inherited property that has a defaulted loan, understanding the trustee's power of sale is critical. The timeline is fixed by statute, and missing key deadlines can result in the loss of the property.