No Transfer of Ownership Until Trustee's Deed is Recorded by Investor
Chris Combs is a respected Attorney that our Keller Williams Office often refers to when needing legal opinions about all sorts of Real Estate related issues. Here Chris has a frank discussion about Trustee Deeds and Ownership and the complications and implications involved in the transfer of deed during a trustee sale. If you need Chris' assistance, you can reach him at: 602.957.9810
By: Christopher Combs, Attorney at Law, Combs Law Group, P.C. 602.957.9810
A trustee's sale is a foreclosure auction usually occurring at an attorney's office or the courthouse steps. Although the mortgage lender foreclosing the deed of trust has historically been the only bidder at the trustee's sale, investors now are frequently successful bidders at the trustee's sale.
If an investor is the successful bidder at the trustee's sale, the investor has until 5:00 P.M. the next day to make full payment. The investor then needs answers to several questions. When does the investor have to start to pay homeowners' association fees? When does the investor become liable for damage to the real property, e.g., what if the real property is destroyed by fire a few days after the trustee's sale? When can the investor serve the five-day notice for possession on the owner of the real property? The answers to these questions depend on the date that the trustee's sale is recorded.
First, after a trustee's sale the trustee does not have a duty to record the trustee's deed, but only has a duty to deliver the trustee's deed to the investor within seven business days after receipt of payment from the investor. See A.R.S. §33-811(B). Second, if the investor records the trustee's deed within fifteen business days after the trustee's sale, then the trustee's sale is "perfected" as of the date of the trustee's sale. If the investor does not record the trustee's deed until a later date, e.g., twenty days after the trustee's sale, then the trustee's sale is "perfected" as of that later date. See A.R.S. §33-810(A).
In other words, if the trustee's deed is "perfected" by the investor as of the date of the trustee's sale, the investor at that time is liable for the HOA fees, is liable for the condition of the real property, and is entitled to deliver the five-day notice of possession.
Note: The delivery and recording of the trustee's sale are simply ministerial acts. A.R.S. §33-810(A). Therefore, although the sale is not "perfected" until the recording of the trustee's deed, the actual transfer of the real property occurs on the date of the payment by the investor.
If you would like assistance regarding commercial or residential transactions, financing, potential litigation, HOA issues, estate planning or other legal matters, please call our office at 602.957.9810 and arrange for an initial consultation with one of our real estate attorneys.