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POST-FORECLOSURE EVICTIONS: Arizona

Posted By USFN, Wednesday, April 30, 2014
Updated: Monday, October 12, 2015

April 30, 2014

 

by David W. Cowles
Tiffany & Bosco, P.A.
USFN Member (Arizona, Nevada)

Judges in Arizona who preside over forcible entry and detainer (FED) actions no longer have discretion to deny a request to impose a stay pending appeal, notwithstanding the fact that the governing statute and rules plainly confer such discretion. That is the holding of Grady v. Barth ex rel. County of Maricopa, 233 Ariz. 318, 312 P.3d 117 (Ct. App. 2013), issued by the Arizona Court of Appeals late last year.

Before Grady, when a stay pending appeal was contested, and the FED action was one brought by a plaintiff who acquired the residence at a trustee’s sale, the judge decided the issue by assessing the defendant’s likelihood of success, the harm a stay might cause to plaintiff or defendant, and public policy. That the judge had discretion was clear. “The appeal ... shall not stay execution of the judgment unless the superior court so orders.” A.R.S. § 12-1182(B). And the eviction rules of procedure recognize that a stay request could be denied by providing for appellate review of a “court’s decision denying a stay.” ARIZ . R.P. Evic. A 17(c).

Arizona law makes issues of title irrelevant in these cases, and an FED defendant cannot prevail by contending that the trustee’s sale was improperly held and thus that plaintiff has no right to possession of the property. A.R.S. § 12-1177(A) (“On the trial of an action of forcible entry or forcible detainer, the only issue shall be the right of actual possession and the merits of title shall not be inquired into.”); Curtis v. Morris, 186 Ariz. 534, 925 P.2d 259 (1996) (reasoning that interpreting § 12-1177(A) otherwise “would convert a forcible detainer action into a quiet title action and defeat its purpose as a summary remedy”). Before Grady, judges had no difficulty finding no chance of success on appeal on the part of a defendant whose only defense was the contention that the trustee’s sale was improper in some way, and, consequently, they had no difficulty denying the request for a stay pending appeal.

Grady changes the landscape, and reads discretion right out of the statute. Oddly, Grady’s holding is based on reasoning that applies only to commercial FED actions. In a commercial FED, there is no discretion. Arizona’s supreme court held some time ago that the discretion given by A.R.S. § 12-1182(A) is taken away by the more specific A.R.S. § 33-361, which applies only to a commercial landlord-tenant relationship. Tovar v. Superior Court, 312 Ariz. 549, 647 P.2d 1147 (1982). Grady uses this inapplicable reasoning to support holding that in a residential trustee’s sale FED, the judge has no discretion to deny a request for a stay pending appeal.

Bad reasoning aside, Grady changes things. Going forward, one who acquires occupied residential property at a trustee’s sale may be saddled with the pre-sale occupant for the entire time it takes an appeal to run its course — about 18 months. Investors who purchase properties at trustee’s sales to refurbish and resell them may well shy away from bidding on occupied properties. Relocation assistance agreements under which the occupant agrees to vacate the property by a date certain in exchange for a sum certain are commonplace and, after Grady, they may become an invaluable tool. If, all things considered, it is better that the property be unoccupied and immediately marketable, it is now worthwhile to consider offering more attractive relocation assistance agreements precisely to avoid facing a stay pending appeal.

© Copyright 2014 USFN. All rights reserved.
Spring 2014 USFN Report

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