No Need to ”Show the Note” for a Non-Judicial Trustee’s Sale


[authors: Richard H. Herold and Colleen E. Schiman]

On May 18, 2012, the Arizona Supreme Court issued an opinion in Hogan v. Washington Mutual Bank, N.A., et al., CV-11-0115-PR, holding that Arizona’s non-judicial foreclosure statutes do not require the beneficiary to show the original promissory note for the trustee to notice and conclude a non-judicial trustee’s sale.

Affirming the two underlying decisions of the Arizona Court of Appeals, the Court noted that a non-judicial foreclosure sale, or a trustee’s sale, is governed by statute in Arizona. The Court emphasized that A.R.S. § 33-807 empowers the trustee to sell the property and that no Arizona statute requires the beneficiary to show possession of, or otherwise document its right to enforce, the underlying promissory note. Commenting that non-judicial foreclosure sales are meant to operate quickly and efficiently, “outside of the judicial process,” the Court reasoned that “[r]equiring the beneficiary to prove ownership of a note to defaulting trustors before instituting non-judicial foreclosure proceedings might again make the ‘mortgage foreclosure process … time-consuming and expensive,’ and re-inject litigation, with its attendant cost and delay, into the process.”

Assuming the truth of Hogan’s factual allegations under Arizona Rule of Civil Procedure 12(b)(6), the Court affirmed the lower courts’ dismissals of Hogan’s complaints.