Everybody knows that law can be technical. The instrument you use defines your rights! I just had a case for an out of state lender. The lender had decided it would loan money on real property using a mortgage. I was not involved with their making the loan. The lender contacted me when there was a default. I had to inform them that under Arizona law, the only method of taking back property where the loan is secured by a mortgage is to foreclose in Superior Court. That is a time-consuming process which requires the filing of a complaint, obtaining a judgment of foreclosure and then getting the Sheriff to conduct a sale – yes, you guessed it – the courthouse steps. Not only that but after the sale the property can’t be sold until the former owner’s (and any subsequent lender’s) right to redeem the property has expired!
So, what’s the solution? Use a Deed of Trust. Under a Deed of Trust, the lender gets the same security in the real property but if there is a default, the lender can conduct a private “trustee’s sale” under Arizona law. That usually takes around ninety days from the recording of the Notice of Sale.
If you are a lender and need advice as to the correct instrument to secure your loan or are a lender who is experiencing a default in your borrower’s obligation, please contact us for assistance. We are experienced in all aspects of foreclosure, trustee’s sales, deeds in lieu and working out troubled loans including problems raised in bankruptcy.
In case you are wondering, we solved this lender’s problem in an innovative way. I was able to negotiate a Deed in Lieu of Foreclosure and avoid the necessity of going to court!
