Arizona Judgment Domestication: Collecting Community Property

"Arizona Judgment Domestication"In a previous post we discussed collecting from both spouses when one spouse incurs a debt in Arizona. What happens when a judgment creditor obtains a foreign judgment, and wants to collect the judgment in Arizona? First, the judgment must be domesticated in Arizona. If the judgment was obtained against a married person in a separate property State, and the creditor wants to collect the judgment in Arizona, the creditor must take care to avoid common mistakes in Arizona judgment domestication actions.

In many cases, Arizona law allows a judgment creditor to domesticate a foreign judgment against both spouses, even if the foreign judgment was entered against only one spouse. In Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Greene, Charles Greene signed a promissory note that was governed by the laws of New York. When he signed the note, both Charles and his wife were residents of Texas. When Charles defaulted on the note, National Union made payment and afterwards filed suit against Charles in New York, where judgment was entered against Charles. His wife was not served, did not become a party to the suit, and was not named in the judgment (which would have been required had the lawsuit been filed in Arizona). Thereafter, Charles and his wife moved to Arizona and National Union sought to enforce the judgment in Arizona.

In Greene, the court held that Arizona may not impress Arizona procedural law upon a foreign judgment, and cannot refuse to recognize a foreign judgment merely because Arizona law was not followed in obtaining it. Therefore, Arizona could not require the creditor to name the spouse in the New York proceeding, even though joining the spouse would have been required in Arizona. Since New York did not require (or even allow) the creditor to join the spouse, due process did not require joining both spouses in New York to obtain a valid judgment against the marital community in Arizona. The creditor was able to collect the foreign judgment against the Greens’ community property, even though the New York judgment was entered only against Charles.

If you are a creditor with a foreign judgment against a married person, and you wish to domesticate and enforce the judgment in Arizona, you must follow Arizona procedural requirements to enforce the judgment against the marital community in Arizona. Without providing due process to the debtor’s spouse, the domesticated judgment may be unenforceable.

Experienced judgment domestication attorneys will be familiar with the steps required to enforce a foreign judgment against a debtor’s spouse, and will know how to give you the best chance at collection. If you need a judgment domesticated in Arizona, or are facing a creditor domesticating a foreign judgment against you, you should hire a knowledgeable attorney with experience dealing with these issues.

The attorneys at Windtberg & Zdancewicz, PLC provide clients with experienced legal representation in all litigation and bankruptcy matters. We are experienced in creditor’s rights prosecuting and defending garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance with your collection matters, please contact us at (480) 584-5660.

Timeline for Trustee’s Sales in Arizona

Stripping Liens in Bankruptcy: Can my debtor do this?The non-judicial foreclosure process in Arizona is known as a Trustee’s Sale. The requirements to complete a valid trustee’s sale fully set forth in statute. For those professionals that are statutorily identified as being qualified to act in a trustee capacity, the process is a “paint by numbers” procedure.

A Trustee’s Sale is, by statutory design, meant to be quick and relatively simple. The entire Trustee’s Sale process occurs over a period of 91 days. Generally, if the Trustee follows the statutory requirements, a valid sale will occur unless another party takes action to stop the sale before the sale occurs. The basic timeline for a trustee’s sale is below.

Day 1
The Trustee records the Notice of Trustee’s Sale.

Day 5
The Trustee mails the Notice of Trustee’s Sale and Statement of Breach to those listed in the Deed of Trust (and those defined by statute).

Day 30
The Trustee mails the Notice of Trustee’s Sale and Statement of Breach to those in the Deed of Trust and those that have an interest in the Property.

Usually between day 20 and day 69
The Notice of Sale is posted at the property being sold and at the Superior Court Courthouse at least twenty days before the sale at (1) some conspicuous place on the property to be sold (if it can be done without a breach of the peace), and (2) at the places in the county courthouse provided for the posting of public notices.

Usually between day 20 and day 79
The Notice of Trustee’s Sale is published in a newspaper of general circulation in the county in which the trust property is located. The Notice must run once a week for four consecutive weeks with the date of last publication not less than ten days prior to the sale.

Day 91
The Trustee sells the property at the Trustee’s Sale.

Usually within 10 days after the sale
The Trustee’s Deed is recorded.

Once the sale occurs and the Trustee’s Deed is executed and delivered, the property will be vested in the party that purchased at the Trustee’s Sale, either the beneficiary or a third party.

There are many “behind the scenes” actions being taken by the trustee and their staff, to ensure that there is full statutory compliance. From the “outside looking in” perspective, the above timeline describes what will happen.

The statutes define many other items that must be completed. For example if a property owner believes the Trustee’s Sale is invalid, and the borrower wants to ‘stay’ a Trustee’s Sale, the stay must be obtained at least one business day prior to the scheduled Trustee’s Sale. If no stay is obtained, and the sale occurs, the issuance of the Trustee’s Deed brings with it a statutory presumption that all requirements to complete the sale were properly completed. If you are facing a Trustee’s Sale, retain counsel without delay. Time passes quickly, and if you want to stop the process, you must move promptly.

The attorneys at Windtberg & Zdancewicz, PLC provide clients with experienced legal representation in all litigation and bankruptcy matters. We are experienced in creditor’s rights prosecuting and defending garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance with your collection matters, please contact us at (480) 584-5660.