The Right to Reinstate Before Sale
Falling behind on a mortgage does not automatically mean losing the property. Arizona gives borrowers a defined window to catch up. The trustor, a successor in interest, or any party with a subordinate lien may reinstate the loan. They do so by paying all amounts currently due, curing any other defaults, and covering the associated costs.
The trustor or the trustor's successor in interest, any person having a subordinate lien or encumbrance of record thereon or any beneficiary under a subordinate trust deed, before 5:00 p.m. mountain standard time on the last day other than a Saturday or legal holiday before the date of sale or the filing of an action to foreclose the trust deed, may reinstate by paying to the beneficiary, the trustee or the trustee's agent in a form acceptable to the beneficiary or the trustee the entire amount then due.
A.R.S. § 33-813(A)The deadline is firm: 5:00 p.m. MST on the last business day before the sale date, meaning business days other than a Saturday or legal holiday. After that, the right to reinstate is gone. Reinstatement does not require paying off the entire loan balance. It requires bringing the loan current, plus covering trustee fees, recording costs, and reasonable attorney fees.
What Reinstatement Costs
The expenses for reinstatement include reasonable mailing and photocopying costs, recording and publication fees, and postponement fees. The trustee's fee is capped at $600 or one-half of one percent of the unpaid principal, whichever is greater. Attorney fees the lender incurred are also included. On request, the trustee must provide a good faith estimate of the total reinstatement amount.
Once the trust property is reinstated, the trustee must record a cancellation of the notice of sale. Failure to record that cancellation within thirty days makes the trustee liable for actual damages. This protects the real property records from showing a stale notice that could confuse future buyers or lenders.
How Reinstatement Affects Families
Many families facing foreclosure do not realize they can reinstate even after a notice of sale is recorded. This right exists right up until the last business day before the sale. In practice, this gives homeowners weeks or even months to gather the funds needed to catch up.
Reinstatement resets the loan as if no default had occurred. The original terms stay in place. This means that families who can find a way to cure the default keep their home and their existing mortgage, without needing to refinance or negotiate new terms.