Understanding Trustee's Sales in Real Estate Transactions
Explore the intricacies of trustee's sales in real estate deals, covering important aspects such as who is entitled to notice, exceptions affecting title, and the process to follow in case of breach. Learn about the importance of accurate information in trustee's sales and the potential repercussions of missing critical details.
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Trustees Sales Ari Ramras ramraslegal.com
The TSG Jacket
The TSG Assures (indemnifies) against loss by reason of incorrectness of: Who has title (Sch. A) subject to exceptions (Sch. B) Who is entitled to notice where to mail Where the land is where to publish and post
The TSG Exceptions Any matter affecting title May be disclosed in recording order Not necessarily in order of priority
The TSG Who is entitled to notice who gets what Trustor and original beni (5-day notice after recording NTS) With statement of breach Anyone recording a request for notice and anyone with an interest (30-day notice after recording NTS) Subordinate interest holders also receive statement of breach and that interest subject to being terminated
The TSG Who is entitled to notice where do they get it Addresses of trustor and original beni To address specified in the deed of trust Notice also mailed to the property address of a single family residence Addresses of other interest holders To address set forth in document Even if returned to sender undelivered OR if none, c/o person to whom document was directed to be mailed when recorded; OR to any other address known or ascertained by trustee
The TSG Can re-foreclose if you miss something CS&W Contractors, Inc. v. Southwest Sav. & Loan Ass n, 175 Ariz. 55 (Ariz.App. 1992), vac. in part on other grounds, 180 Ariz. 167 (1994) (trustee s sale can be reconducted when lienholder inadvertently omitted from the list of those given notice)
The TSG Where the land is A.R.S. 33-808(C): the NTS must contain the street address, if any, or identifiable location as well as the legal description of the trust property and the APN
The TSG Where the land is A.R.S. 33-808(E): Any error in the legal description of the trust property shall not invalidate a trustee's sale if considered as a whole the information provided is sufficient to identify the trust property being sold. If there is an error or omission in the legal description so that the trust property cannot be identified the trustee shall record a cancellation of notice of sale.
The TSG Where the land is Does not necessarily need to match the legal description in the deed of trust What if the legal in the DOT is wrong? It may still be valid Manicom v. CitiMortgage: Although a legal description is the preferred method of identifying trust property what is essential is that the property be identified with a sufficient certainty in the public record. It could be re-recorded is some cases Has a third party or bankruptcy intervened? The NTS cannot be re-recorded
What description is sufficient? Examples
What description is sufficient? Examples
What description is sufficient? Examples
What description is sufficient? Examples
Any Doubt? Foreclosing could exacerbate the problem A.R.S. 33-420 slander of title exposure Stauffer v. U.S. Bank: a Notice of Trustee s Sale is a document that asserts an interest in real property within the meaning of A.R.S. 33-420 SWC Baseline and Crimson Investors v. Augusta Ranch: a beneficiary under a deed of trust may be liable under A.R.S. 33-420 when it has constructive knowledge through the Recorder s Office that title [to the trust property] was held by someone other than the trustor
The TSG Note other insurability concerns? e.g. lack of access
Insuring Post-Trustees Sale Statutory Protections A.R.S. 33-811(C): The trustor, its successors or assigns, and all persons to whom the trustee mails a notice of a sale under a trust deed pursuant to 33-809 shall waive all defenses and objections to the sale not raised in an action that results in the issuance of a court order granting relief pursuant to rule 65, Arizona rules of civil procedure, entered before 5:00 p.m. mountain standard time on the last business day before the scheduled date of the sale. Notice required in the first paragraph of the NTS.
Insuring Post-Trustees Sale Statutory Protections A.R.S. 33-811(B): The trustee's deed shall raise the presumption of compliance with the requirements of the deed of trust and this chapter relating to the exercise of the power of sale and the sale of the trust property, including recording, mailing, publishing and posting of notice of sale and the conduct of the sale. A trustee's deed shall constitute conclusive evidence of the meeting of those requirements in favor of purchasers or encumbrancers for value and without actual notice. Knowledge of the trustee shall not be imputed to the beneficiary.
Insuring Post-Trustees Sale Statutory Protections A.R.S. 33-811(E): The trustee's deed shall operate to convey to the purchaser the title, interest and claim of the trustee, the trustor, the beneficiary, their respective successors in interest and all persons claiming the trust property sold by or through them, including all interest or claim in the trust property acquired subsequent to the recording of the deed of trust and prior to delivery of the trustee's deed. Still moving 5-day window for IRS liens If IRS lien recorded more than 30 days before the actual sale date, notice must be given to the IRS 25 days before the sale
Insuring Post-Trustees Sale Statutory Protections A.R.S. 33-811(E) continued: The conveyance shall be absolute without right of redemption and clear of all liens, claims or interests that have a priority subordinate to the deed of trust and shall be subject to all liens, claims or interests that have a priority senior to the deed of trust Junior liens may reattach if trustor purchases
Insuring Post-Trustees Sale Statutory Protections Governmental liens (e.g. abatement liens) recorded after the notice of trustee s sale is recorded? Some ordinances require trustee and beneficiary to report to the municipality if the property is abandoned
Trustees Sales HUD Non-Judicial Foreclosures Judicial Foreclosures Notice 91-day notice: Anyone with an interest at time of recording NTS 21-day notice: Anyone with an interest 45 days before sale Service per rules of civil procedure Deed operates to convey interests acquired after recording DOT Potential gap Notice of lis pendens may be recorded Anyone mailed notice waives defenses Including subordinate claimants with actual knowledge and claimants under statutory liens Conclusive evidence of compliance with requirements for BFPs
