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Diane L. Drain | Arizona Bankruptcy Lawyer

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Excess Sale Proceeds – Arizona Specific

Learn about your rights.

Excess Sale Proceeds – Arizona SpecificSite Producer2022-08-22T11:33:56-07:00

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

Article about scams, including a disbarred attorney

READ MORE BELOW

Some Case Law

Senior lienholder is not entitled to the excess proceeds generated from a judicial foreclosure of a junior lien

Tortosa Homeowners Ass’n v. Garcia August 1, 2022. The Arizona Court of Appeals, Div. Two, held that a senior lienholder is not entitled to the excess proceeds generated from a judicial foreclosure of a junior lien under A.R.S. § 33-727(B). Under the statute, liens and other interests terminated by a foreclosure attach to the surplus in order of the priority they enjoyed prior to the foreclosure. Lienholders with higher priority to the foreclosing lienholder who remain unaffected by the foreclosure have no right to the excess proceeds. Therefore, as relevant here, the successful bidder at a foreclosure sale who takes the property subject to a senior lien has no right to the excess proceeds that the junior lien’s foreclosure generates.

Excess Money

What if you cannot find the funds?

If the foreclosure sale was held several years ago, it is likely that any excess proceeds that survived the claims of any junior liens (e.g., HOA, 2nd DOT) were “escheated” to the State as “unclaimed property”. If so, those “excess proceeds” would no longer appear on the Treasurer’s list – a far more likely explanation than that the lender just kept the money….

To recover those proceeds, if any, after they have been turned over to the State as unclaimed property, you will have to follow the procedures specified by the unclaimed property division, see http://www.azunclaimed.gov.

Please call us if you want to discuss how you can claim excess sale proceeds.

Thief taking money

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”.

Money exchanged under the table

Excessive Fees

Charges to “Help” in the Collection of Excess Sale Proceeds are limited by law yet many people ignore the law.

The law Arizona Revised Statutes – 33-812. A claimant may enter into an agreement with a third party to pay for the recovery of or for assistance in the recovery of excess proceeds on deposit with the county treasurer. The agreement shall be in writing, signed by the claimant, and the claimant’s signature shall be acknowledged by a notary public or other person authorized to accept an acknowledgment pursuant to section A.R.S 33-511. Any agreement entered into before the expiration of thirty days after the date the trustee’s sale was held, but not including the date of the sale, is void and unenforceable. Any fee or payment provided for in an agreement shall be reasonable.

The fee or payment shall be presumed to be unreasonable and the obligation to pay the fee or payment is unenforceable if the fee or payment agreed on exceeds two thousand five hundred dollars excluding attorney fees and the costs of filing the claim and providing the statutorily required notices. Any person seeking a fee or payment exceeding two thousand five hundred dollars may apply to the court for additional compensation but the person has the burden of establishing that the additional compensation is reasonable under the circumstances. This subsection does not preclude a claimant from contesting the reasonableness of any fee or payment that is provided for in an agreement for the recovery of or for assistance in the recovery of excess proceeds.

ARIZONA SUPREME COURT SUSPENDS (LONG TERM) INGRID-JOY WARRICK (AKA INGRID W. JOIYA) .

By final judgment and order dated December 21, 2018, the presiding disciplinary judge accepted an Agreement for Discipline by Consent by which Ingrid-Joy Warrick, Phoenix, was suspended for three years effective the date of the order. Ms. Warrick also was assessed costs and expenses of the disciplinary proceeding of $1,200. Ms. Warrick was convicted (by a guilty plea) of one count of Facilitation to Commit Money Laundering (associated with a medical marijuana business), a designated Class 6 felony. She failed to self-report her conviction as required by Rule 61(c)1, Ariz. R. Sup. Ct.

Aggravating factors were prior disciplinary offenses, multiple offenses, failure to report her conviction, refusal to acknowledge wrongful nature of conduct, substantial experience in the practice of law, and illegal conduct. The only mitigating factor was imposition of a criminal conviction and a substantial fine ($10,000). Warrick violated Rule 42, Ariz. R. Sup. Ct., ERs 8.4(b) and (c); and Rules 54(c) and (g), Ariz. R. Sup. Ct.

According to the State Bar of Arizona’s web site: “By judgment and order dated July 5, 2013, Ingrid-Joy Warrick, Phoenix, was reprimanded and ordered to pay restitution and assessed the costs and expenses of the disciplinary proceeding. Ms. Warrick, a suspended member, possessed a business card, which a member of the public obtained, that identified her as “Ingrid W. Joiya, Esq., Member/Manager” of Elements Therapeutic Dispensary Systems, LLC. (ETD). Ms. Warrick was also ordered to pay restitution in satisfaction of monies owed under the terms of a promissory note that she signed on behalf of ETD.

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