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HB2780 - 572R - H Ver
House Engrossed
judicial foreclosure;
excess proceeds sale
State of Arizona
House of Representatives
Fifty-seventh Legislature
Second Regular Session
2026
HOUSE BILL 2780
AN
ACT
amending sections 42-18201, 42-18204,
42-18233, 42-18234, 42-18235 and 42-18236, Arizona
Revised Statutes; relating to judicial foreclosure of right of redemption.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it
enacted by the Legislature of the State of Arizona:
Section 1. Section 42-18201, Arizona Revised
Statutes, is amended to read:
START_STATUTE
42-18201.
Action to foreclose right to redeem; subsequent certificates of
purchase by assignment
A. Except as provided in subsection B of this
section, at any time beginning three years after the sale of a tax lien but not
later than ten years after the last day of the month in which the lien was
acquired pursuant to section 42-18114, if the lien is not redeemed, the
purchaser or the purchaser's heirs or assigns, or the state if it is the
assignee, may bring an action to foreclose the right to redeem.� The action to
foreclose the right to redeem shall be filed in the superior court in the
county in which the real property is located and shall name the county
treasurer as a party to the action
and may include the request
to determine if the sale of the property to recover excess proceeds is
reasonable pursuant to section 42-18204, subsection B
.� If any
applicable law or court order prohibits bringing an action to foreclose the
right to redeem, the limitation provided herein shall be extended twelve months
following the termination of such prohibition.
B. For a subsequent year certificate of purchase by
assignment issued under section 42-18121, subsection B, at any time
beginning three years after the date the subsequent year certificate of
purchase was assigned but not later than ten years after the last day of the
month in which the tax lien was assigned under section 42-18121, if the
lien is not redeemed, the purchaser or the purchaser's heirs or assigns, or the
state if it is the assignee, may bring an action to foreclose the right to
redeem the lien represented by certificates of purchase acquired by assignment
and held by the party that filed the action to foreclose.� All certificates of
purchase held by other parties remain in place. The action to
foreclose the right to redeem shall be filed in the superior court in the
county in which the real property is located and shall name the county
treasurer as a party to the action.� If any applicable law or court order
prohibits bringing an action to foreclose the right to redeem, the limitation
provided in this subsection shall be extended twelve months following the
termination of the prohibition.
END_STATUTE
Sec. 2. Section 42-18204, Arizona Revised
Statutes, is amended to read:
START_STATUTE
42-18204.
Judgment foreclosing right to redeem; effect
A. In an action to foreclose the right to redeem:
1. If the court finds that the tax lien sale is
valid, the tax lien has not been redeemed and the defendant's request for an
excess proceeds sale is unreasonable or the defendant did not request an excess
proceeds sale, the court shall enter judgment:
(a) Foreclosing the right of the defendant to
redeem.
(b) Directing the county treasurer to expeditiously
execute and deliver to the party in whose favor judgment is entered, including
the state, a deed conveying the property described in the certificate of
purchase.
2. If the court finds that the tax lien sale is
valid, the tax lien has not been redeemed and the defendant's request for an
excess proceeds sale is reasonable, the court shall enter judgment:
(a) Foreclosing the right of the defendant to
redeem.
(b) Directing the sale of the property pursuant to
article 6 of this chapter.
(c) Setting the opening bid for the property as the
total of the amounts described in subsection B, paragraph 1, subdivisions (a),
(b), (c) and (e) of this section and any other reasonable fees as determined by
the court.
B. A property owner whose right to redeem is being
foreclosed
or a certificate of purchase holder
may
request the court to determine if the sale of the property to recover excess
proceeds is reasonable
at any time before the court's judgment
is effective pursuant to court rules
. The court shall
determine that the sale of the property for excess proceeds is reasonable if
the sale price of the property is likely to be more than $2,500 above the total
of the amounts described in paragraph 1 of this subsection. If a
request is made for an excess proceeds sale, the following information shall be
provided to the court for the purposes of determining if an excess proceeds
sale is reasonable:
1. The certificate of purchase holder shall provide
all of the following:
(a) The costs related to filing the claim to
foreclose the right to redeem, including estimated attorney fees and costs to
be incurred through the date of the excess proceeds sale, if ordered.
(b) The amount for which the real property tax lien
was sold, with interest at a rate of sixteen percent per annum from the date of
the tax lien sale through the date of the excess proceeds sale, if ordered.
(c) The amount of any statutory fees the certificate
of purchase holder paid in connection with the certificate of purchase, except
the processing fee imposed by section 42-18116, subsection C, with
interest at a rate of sixteen percent per annum from the date of the tax lien
sale through the date of the excess proceeds sale, if ordered.
(d) The amount of all other recorded state liens or
encumbrances on the state property as indicated on a title report provided by
the certificate of purchase holder, including other years in which taxes are
delinquent. For the purposes of this subdivision, the certificate of
purchase holder does not have to determine the actual balance owed on any lien
or encumbrance on the property, except for property taxes owed.
(e) The estimated cost of the sale of property
pursuant to article 6 of this chapter.
(f) Any other evidence relating to the value of the
property or objecting to the excess proceeds sale that the certificate of
purchase holder deems necessary.
2. The property owner whose right to redeem is being
foreclosed shall provide a reasonable estimate of the market value of the
property.
C. After entering judgment the parties whose rights
to redeem the tax lien are thereby foreclosed have no further legal or
equitable right, title or interest in the property subject to the right of
appeal and stay of execution as in other civil actions.
D. The foreclosure of the right to redeem does not
extinguish any of the following:
1. An easement on or appurtenant to the property.
2. A lien for an assessment levied pursuant to title
48, chapter 4, 6, 14 or 18 or section 9-276. For the purposes
of this paragraph, assessment does not include an abatement lien imposed under
section 9-499.
3. If the court finds that the request for an excess
proceeds sale is reasonable, the property owner's interest in the excess
proceeds from the sale of the property pursuant to article 6 of this chapter.
END_STATUTE
Sec. 3. Section 42-18233, Arizona Revised
Statutes, is amended to read:
START_STATUTE
42-18233.
Date, time and place of sale
The sale shall be held:
1.
except as otherwise provided in
this article,
not later than sixty days after the date of a judgment
entered pursuant to section 42-18204, subsection A, paragraph 2.
2. On a day other than a Saturday, Sunday or legal
holiday.
3. Between 9:00 a.m. and 5:00 p.m. mountain
standard time.
4. At a specified place on the property, at a
specified place at any building that serves as a location of the superior court
or at a specified place at a place of business of the qualified entity
conducting the sale, in any county in which the property to be sold is
situated.
END_STATUTE
Sec. 4. Section 42-18234, Arizona Revised
Statutes, is amended to read:
START_STATUTE
42-18234.
Sale by public auction; bidder requirements; postponement of sale
A. On the date and at the time and place designated
in the notice of sale, the qualified entity shall offer to sell the property at
public auction for cash to the highest bidder. The minimum bid shall
be the
total of the amounts described in section 42-18204,
subsection B, paragraph 1
amount set pursuant to section
42-18204, subsection A, paragraph 2, subdivision (
c
)
.�
The qualified entity may schedule more than one sale for the same date, time
and place.
B. Any person, including the qualified entity or the
certificate of purchase holder, may bid at the sale. Only the
certificate of purchase holder may make a credit bid in lieu of cash at the
sale. The qualified entity shall require every bidder, except the
certificate of purchase holder, to provide a nonrefundable deposit in an amount
equal to ten percent of the opening bid or $2,500, whichever is greater, in any
form that is satisfactory to the qualified entity as a condition of entering a
bid.
C. The qualified entity or the qualified entity's
auctioneer may control the means and manner of the auction, except the opening
bid shall be an amount equal to the
total of the amounts
described in section 42-18204, subsection B, paragraph 1
amount set pursuant to section 42-18204, subsection A, paragraph
2, subdivision (
c
)
. Every bid shall be
deemed an irrevocable offer until the sale is completed, except that a
subsequent bid by the same bidder for a higher amount shall cancel that
bidder's lower bid. The qualified entity shall return deposits to
all but the bidder whose bid resulted in the highest bid price. The
sale is deemed completed on payment by the purchaser of the price bid in a form
satisfactory to the qualified entity.
D. The subsequent execution, delivery and recording
of the qualified entity's deed as prescribed by section 42-18235 are
ministerial acts. If the qualified entity's deed is recorded in the
county in which the property is located within fifteen business days after the
date of the sale, the sale is deemed perfected at the appointed date and time
of the sale.�
E. The qualified entity may postpone or continue the
sale from time to time or change the place of the sale to any other location
authorized pursuant to this chapter by giving notice of the new date, time and
place by public declaration at the time and place last appointed for the sale.�
Any new sale date shall be a fixed date within sixty calendar days after the
date of the declaration. After a sale has been postponed or
continued, the qualified entity, on request, shall make available the date and
time of the next scheduled sale and, if the location of the sale has been
changed, the new location of the sale until the sale has been conducted or
canceled and providing this information shall be without obligation or
liability for the accuracy or completeness of the information. Other
notice of the postponed, continued or relocated sale is not required.
F. A sale is postponed by operation of law to the
next business day at the same scheduled time and place if an act of force
majeure prevents access to the sale location for the conduct of the sale.
G. Except for the assessments provided in section 42-18204,
subsection D and property tax liens on the property, a sale concluded under
this article extinguishes any other liens and encumbrances held by this state
on the property, whether satisfied or not from the proceeds of the
sale. To the extent not satisfied from the proceeds of the sale,
liens and encumbrances held by this state as to the
delinquent
taxpayer
and the
delinquent
taxpayer's other property are not
affected.
END_STATUTE
Sec. 5. Section 42-18235, Arizona Revised
Statutes, is amended to read:
START_STATUTE
42-18235.
Payment of bid; qualified entity's deed
A. The highest bidder at the sale, other than the
judgment holder to the extent of the credit bid, shall pay the price bid by
not later than
5:00 p.m. mountain standard time of the day after
the sale, other than a Saturday, Sunday or legal holiday.� If the highest
bidder fails to pay the amount bid for the property struck off to the bidder at
the sale, the qualified entity, in the qualified entity's sole discretion,
shall either continue the sale to reopen bidding or immediately offer the
property to the second highest bidder who may purchase the property at that
bidder's bid price. The deposit of the highest bidder who fails to
pay the amount bid shall be applied to the costs of facilitating the sale and
the balance, if any,
and
treated as additional sale
proceeds to be distributed pursuant to section 42-18236, subsection
A. If the second highest bidder does not pay that bidder's bid price
by 5:00 p.m. mountain standard time of the next day, excluding Saturdays,
Sundays and legal holidays after the qualified entity offers the property to
that bidder, the qualified entity shall either continue the sale to reopen
bidding or offer the property to each of the prior bidders on successive days
excluding Saturdays, Sundays and legal holidays in order of their highest bid,
until a bid price is paid, or if there is no other bidder, the sale shall be
deemed to be continued to a time and place designated by the qualified entity,
or if not designated, the sale shall be continued to the same place and at the
same time twenty-eight days after the last scheduled sale
date. If the twenty-eighth day is a Saturday, Sunday or legal
holiday, the sale shall be continued to the next business day. If
the sale is continued, the qualified entity shall provide notice of the
continuation of the sale by registered or certified mail, with postage prepaid,
to all bidders who provide their names, addresses and telephone numbers in
writing to the qualified entity. In addition to the forfeit of
deposit, a highest bidder who fails to pay the amount bid by that bidder is
liable to any person who suffers loss or expenses as a result, including
attorney fees. In any subsequent sale of property, the qualified
entity may refuse to accept any bid of that person. In any sale that
is continued pursuant to this subsection, the qualified entity shall reject a
bid from any previous bidder who elected not to pay that bidder's bid price.
B. The price bid shall be paid at the office of the
qualified entity or the qualified entity's agent, or any other reasonable place
designated by the qualified entity. The payment of the bid price may
be made at a later time if agreed on in writing by the qualified entity.�
Within seven business days after receipt of payment by the qualified entity or
the qualified entity's agent, made in a form that is satisfactory to the
qualified entity, the qualified entity shall execute and submit the qualified
entity's deed to the county recorder for recording and, on request, shall
provide an unrecorded copy of the signed qualified entity's deed to the
purchaser. The recording of the qualified entity's deed on sale
constitutes delivery of the deed to the purchaser.� The qualified entity is not
liable for any damages resulting from the failure to record the deed on sale
after physical delivery of the deed to the purchaser. The deed shall
include the following information:
1. The date, court action number and name of the
judgment ordering the sale of the property.
2. The name of the purchaser.
3. The property description.
4. The date of the conveyance.
5. A formal acknowledgment by the qualified entity.
C. All persons to whom the qualified entity mails a
notice of a sale pursuant to section 42-18232 shall waive all defenses
and objections to the sale not raised in an action that results in an
injunction before the scheduled date of the sale. A copy of the
injunction shall be delivered to the qualified entity within twenty-four
hours after the order is entered.
D. A sale is not complete if the sale violates
subsection C of this section because of an undisclosed order entered by the
court within the time provided for in subsection C of this
section. A sale held in violation of subsection C of this section
shall be continued to a date, time and place announced by the qualified entity
at the sale and shall comply with section 42-18234. If not
announced, the sale shall be continued to the same place and at the same time
twenty-eight days later.� If the twenty-eighth day falls on a
Saturday, Sunday or legal holiday, the sale shall be continued to the next
business day.
E. The deed conveyed pursuant to this section shall
operate to convey to the purchaser title of the purchased
property. That conveyance shall be absolute without right of
redemption and clear of all subordinate liens, claims or interests.
END_STATUTE
Sec. 6. Section 42-18236, Arizona Revised
Statutes, is amended to read:
START_STATUTE
42-18236.
Disposition of proceeds of sale
A. The qualified entity shall distribute the proceeds
of the sale as follows:
1. To the qualified entity, an amount equal to the
cost of facilitating the sale of the property, including the costs of providing
the notice required by section 42-18232, subsection A.
2. To the certificate of purchase holder, an amount
equal to the amounts provided in section 42-18204, subsection B,
paragraph 1, subdivisions (a), (b) and (c).
3. To the county treasurer to redeem any other
property tax liens on the parcel and pay current taxes due, then other state
lien and
encumbrance holders, an amount equal
to their respective lien or encumbrance as indicated on a title report provided
by the certificate of purchase holder and provided to the court pursuant to
section 42-18204, subsection B, paragraph 1, subdivision (d), adjusted by
any lien or encumbrance amount that has been paid or increased due to
delinquencies since the title report was provided to the court.
4. To the property owner whose right to redeem was
foreclosed, any remaining proceeds of the sale. The property owner
is not required to be present at the excess proceeds sale in order to receive
the property owner's distribution of proceeds from the sale under this
subsection.
B. The qualified entity shall distribute the
proceeds of the sale pursuant to subsection A of this section within ninety
days after the sale of the property and notify the court that the distributions
have been made. The qualified entity shall dispose of any monies
unclaimed after ninety days pursuant to title 44, chapter 3. If the
qualified entity fails to comply with this subsection, the qualified entity
shall pay interest at the rate provided for judgments pursuant to section 44-1201
from the date of completion of the sale until the qualified entity complies
with this subsection. Any party in the action to foreclose the right
to redeem relating to the property
that is entitled to a portion
of the proceeds of the sale under this section
may commence a civil
action against the qualified entity for the qualified entity's failure to
comply with this subsection. The court may award the prevailing party its
reasonable attorney fees and costs incurred in that civil action.
END_STATUTE