AZ3: Liens and Foreclosures in Arizona Flashcards
Hypothecation
A pledge of real property as security without giving possession of the property to the lender.
Satisfaction of Mortgage
Defeasance (payoff). Lender is required to deliver satisfaction of mortgage within 30 days of payoff.
Steps in a Judicial Foreclosure
A. Lawsuit is filed, Lis Pendens is recorded and the debt is accelerated. A lis pendens states that litigation s pending against the property owners.
B. Court Action
C. Sheriffs sale is held. The highest bidder receives a Sheriffs Certificate of Sale.
D. Begin the six-month statutory redemption period.
E. If no redemption, certificate holder receives a Sheriffs Deed which conveys full title.
Equity of Redemption
Prior to a Sheriffs Sale…An equity of redemption, or legal right to redeem, is that right which the owner of the property has to regain the complete title to his/her property by the payment to the purchaser of the amount for which the property was sold, with interest and penalties, in accordance with the provisions of the statute.
Statutory right of redemption
After a Sheriffs sale… refers to a mortgagor’s right to regain their ownership of property that has been foreclosed. Statutory redemption laws allow the borrower a limited amount of time (usually one year) to redeem their property if they are able to pay the amount that the property was sold for at a foreclosure sale.
Deed of Reconveyance
Defeasance (payoff). The document that evidences the release of a deed of trust. The beneficiary (lender) instructs the trustee to send the Deed of Reconveyance to the trustor. This must be done within 30 days of payoff.
Lien Theory vs Title Theory
A. Lien Theory states the mortgage or trust deed does not convey any ownership to the lender.
B. Title Theory states legal title is conveyed to the lender
C. Arizona is a lien theory state.
Deficiency Judgement
A judgement obtained by a lender when a foreclosure sale brings less than the amount owed.
Notice of Default and Trustees Sale
A notice owner that said property is in default and if not settled will result in a Trustees Sale.
Right of Reinstatement
The trustor (borrower) can cure default by paying back payments (plus costs and penalties) at any time before the forced sale.
Trustees Sale
Trustee sale is held and Trustees Deed is delivered to the highest bidder.
Forfeiture Action
Land contract in default
A. Option 1: Judicial Foreclosure
B. Option 2: Forfeiture Action
Seller gives buyer a grace period to reinstate payments. The grace period may be as short as 30 days or as long as 9-months; depending on the percentage of purchase price already paid by the buyer.
Default
The failure to comply with any terms of the note or mortgage.
