Bidding at a Trustee’s Sale

Question: Two years ago we loaned my wife’s sister $70,000 to buy a small home in Glendale. The $70,000 loan was secured by a $70,000 promissory note and a deed of trust on the home. My wife’s sister never made one monthly mortgage payment to us, and she moved back to Iowa a few months ago. She has refused to sign a deed to us because she eventually wants to come back to Arizona. We started foreclosure proceedings with the title company that drafted the original paperwork, and a foreclosure sale is scheduled next month. What do we need to do at the foreclosure sale to get title to the home and be able to rent the home again?

Answer: You and your wife should attend the foreclosure sale, which is normally at the courthouse steps, at a title company’s office, or at an attorney’s office. The trustee named in the deed of trust should make an opening credit bid for you in the amount of the unpaid balance of the loan, interest, late fees, and the costs of foreclosure. Most foreclosure sales have no other bidders other than this opening credit bid by a trustee. If there are any other bidders at the foreclosure sale who bid more than your opening credit bid, however, you can engage in an auction with the other bidders. The highest bidder gets the trustee’s deed to the home. If you get the trustee’s deed to the home, and your wife’s sister has abandoned the home, you should have the right to immediate possession of the home. If your wife’s sister has rented the home to somebody, however, you will have to file a lawsuit for eviction.