The United States Bankruptcy Court certified two questions to the Arizona Supreme Court. The Arizona Supreme Court answered one, and declined to answer the second. The question presented was “Is the recording of an assignment of deed of trust required prior to the filing of a notice of trustee’s sale under A.R.S. § 33-808 when the assignee holds a promissory note payable to bearer?” The answer is no; Arizona law imposes no such requirement.
The Supreme Court answered a question referring to established law, which established law, during the wave of real estate foreclosures was being questioned. The Supreme Court examined several arguments involving A.R.S. § 33-412(B) and A.R.S. § 33-817.
As to A.R.S. § 33-412(B) the court held while an unrecorded document may create issues for the assignee, it does not affect a deed’s validity as to the obligor. The clear import of the language is that obligor’s repayment duties are not going to be disturbed if an assignment is not recorded.
Likewise, examining A.R.S. § 33-817 the court concluded “Arizona law also expressly provides that the transfer of a contract secured by a deed of trust ‘shall operate as a transfer of the security for such contract’.” When the note is transferred to the assignee, the deed of trust is transferred by operation of law.
The Supreme Court addressed other statutory based arguments, and disposed of them quickly. The Supreme Court affirmed the law in Arizona. Based on the attorneys and organizations that briefed the issues, it would be fair to say that some creditor’s were waiting for this decision to be issued before additional trustee’s sales were scheduled. It would not be surprising to see an uptick in foreclosures, following the release of this decision.
The discussion provided herein is information only, and should not be relied on as legal advice. Every legal issue is unique to the facts that help form the issue. If you are facing an issue similar to the subject of this blog, contact a professional for legal advice. If you would like to discuss this matter with me, my phone number is (602) 266-1327.
