Everybody is familiar with the part of a wedding where the audience is given an opportunity by the person officiating to express why the couple about to be married should not proceed with the ceremony, telling all present to “speak now or forever hold your peace.” Does that concept, where the failure to immediately object will bar any later objection, appear anywhere in the law? The answer is “yes,” as it is very much alive and well in the context of non-judicial foreclosures, or trustee’s sale. In particular, A.R.S. § 33-811(C) states:
The trustor, its successors or assigns, and all persons to whom the trustee mails a notice of sale under a trust deed pursuant to section 33-809 shall waive all defenses and objections to the sale not raised in an action that results in the issuance of a court order granting relief pursuant to rule 65, Arizona rules of civil procedure, entered before 5:00 p.m. mountain standard time on the last business day before the scheduled date of the sale.
The strict application of this statute can result in some very harsh results. Say, for example, you refinance your property, with the intention of paying off your secured lender, and in fact honestly believed that you had done so. However, due to an error by the title company, your lender never received the payoff. Later, the lender commences foreclosure, and mails you a Notice of Trustee’s Sale, setting trustee’s sale date of Friday, July 31. While you might be tempted to just ignore the Notice, thinking it has to be a mistake, doing so will result in severe consequences, because unless you go to court and obtain an injunction stopping the Trustee’s Sale, by no later than 5:00 p.m. on Thursday, July 30, you will be deemed to have “waived” any objection to the Trustee’s Sale, and you will not have any legal recourse against the party to whom the title to your property was transferred by a Trustee’s Deed following the Trustee’s Sale.
In the 2018 Arizona Supreme Court case of Zubia v. Shapiro, a homeowner alleged that her name was forged on a promissory note and deed of trust. After she was given notice of a Trustee’s Sale, but failed to take any action to stop the sale before it took place, she filed a lawsuit seeking to quiet her title to her home, and asserting claims for wrongful foreclosure and money damages. The Court held that her failure to obtain an injunction before the Trustee’s Sale resulted in the waiver of all claims depending upon the invalidity of the sale.
This concept of waiving your rights unless you take immediate legal action is in contrast the statutory “statute of limitations” period during which legal action can usually be taken to redress a wrong. You generally have six years following the breach of a written contract to bring a lawsuit to recover your damages. Similarly, you have three years following the commission fraud against you to recover your damages. However, in order to protect the sanctity of Trustee’s Sales, so that a buyer at such sale does not have to worry about having their title challenged at some point in time several years after the sale, A.R.S. § 33-811(C) mandates that any legal action objecting to the Trustee’s Sale must be raised by not later than the day before the sale, or those objections, no matter how otherwise valid they may be, cannot be used to void the sale after-the-fact.