What are Excess Sale Proceeds in Arizona?
Excess sales proceeds are monies left over after a trustee’s sale.
Once the trustee’s sale has been completed there may be monies left over because the lender who foreclosed has been paid in full. These extra monies are called “excess sales proceeds”. All junior lienholders and the property owner at the time the property was sold have a right to apply for those funds. The Trustee conducting the Trustee’s Sale will deposit (in most cases) the funds with the County Treasurer or Assessor, a complaint will be filed by the Trustee and served on everyone listed on the title policy.
The Junior Lenders and the Owner Can File an Application for the Funds
At that point the junior lienholders and/or the old property owner can file an application with the Court. There are notice requirements and most likely the court will have a hearing on the distribution of any monies. See Arizona Revised Statutes – 33-812. In order of obtain the funds the applicant must have a signed, certified copy of the final Order from the Court, plus a fee payable to the Treasurer (of Assessor) and a signed W-9.
BEWARE: Vultures are circling those who have lost their homes due to a trustee’s sale or foreclosure.
These vultures are committing fraud in order to steal the majority, if not all, of the equity that should be paid to the homeowners. There could be a lot of equity or “excess sale proceeds” depending on the market. Client Review about Diane & Jay’s work
Some Case Law
What Happens to Excess Proceeds From a Foreclosure Sale
VERY IMPORTANT: The old homeowner must own the home at the time of the foreclosure (trustee’s sale) in order to apply for the excess sale funds. NEVER assign this right to someone else.
These vultures are aware of this requirement and approach the owners a day or two before the auction, offering to buy the house for a low price. They neglect to inform the homeowner that after the sale is completed, there will most likely be several thousand dollars available, but that only the person who owns the home on the day of the trustee’s sale can request these funds. Know your rights and get legal advice from an experienced attorney who is a member of the Arizona State Bar. Request referrals from other experienced lawyers.
What a travesty! Two examples of trusting homeowners dealing with con-artists (one was a lawyer, now suspended by Arizona Supreme Court).
One example: On or about December 4, 2005 at 4:30 pm R. G. approached one of my clients, indicating that my client may have a right to $90,399.05 in equity after his home had been sold in a trustee’s sale. Mr. G’s business card indicates that he is a case specialist with The Alliant Group, Equity Division. The flyer my client received was from Reach for My Home, Inc, a Non-Profit Organization, and includes Mr. G’s name and number as the only contact information. According to my client, Mr. Garrett showed him a thick booklet from Reach for My Home detailing how Reach could help my client. At this time my client had lost everything, his home, his business, and his dignity. His only place to move was a trailer on his sister’s property. Mr. G offered a “deal”. If my client signed a contract with them he would receive approximately $40K in about 3-4 weeks, with no guarantees. This would be 50 percent of the excess sale proceeds, minus a large fee for the Alliant Group. The trustee’s sale had been conducted on November 16, 2005. Had my client agreed to these outrageous terms he would have lost almost $50,0000.
Another example: Case number CV 21006-004541 – one homeowner was entitled to $42,779.79, but assigned all his rights to Alliant (recorded 2/24/06 at instrument 2006-0253595). The homeowner allegedly agreed to accept only $16,250.00 out of the $42,779.79. Ms. Warrick’s Contract for Services indicates that “It is further acknowledged that pursuant to Arizona law, the excess proceeds may not be disbursed for twelve (12) months or more.” ARS Section 33-812 controls the time frame – there is no reference to 12 months. Ms. Warrick filed the application for the proceeds on April 21, 2006 and the order approving the funds was signed on August 4, 2006. According to this Contract for Services Ms. Warrick was to receive $2,500.00, plus costs, plus $225 per hour for “answering any objections, court appearances, etc”. Plus, the client agreed to pay a “third Party Provider” an additional fee of $2,500.00 for “any services that the Client may require prior to the release of any excess proceeds”.