The Priority Order for Sale Proceeds
A trustee sale is not a free-for-all. Arizona law sets a clear pecking order for who gets paid and when. The trustee must follow this sequence exactly, and no party lower on the list receives anything until the parties above have been satisfied in full.
The trustee shall apply the proceeds of the trustee's sale in the following order of priority: 1. To the costs and expenses of exercising the power of sale and the sale, including the payment of the trustee's fees and reasonable attorney fees actually incurred. 2. To the payment of the contract or contracts secured by the trust deed.
A.R.S. § 33-812(A)(1)-(2)After costs and the primary loan balance are covered, any remaining proceeds go to junior lienholders in the order their liens were recorded, then to condominium or planned community associations with valid lien claims, and finally to the former property owner.
What Happens to Excess Proceeds
If money remains after everyone in the priority chain has been paid, the trustee must notify the former owner within fifteen days of the sale. The trustee can also deposit surplus funds with the county treasurer for safekeeping while the court determines who is entitled to them. Excess proceeds left unclaimed for two years are presumed abandoned and eventually transferred to the Arizona Department of Revenue. The trustee must complete distribution or deposit within ninety days of the sale, or forfeit entitlement to fees and face interest penalties.