Julia V. Vasquez v. Saxon Mortgage, Inc. et al – 11/22/2011

December 2, 2011

Supreme Court of Arizona (en banc) Holds That The Recording of An Assignment of Deed of Trust Is Not Required Under A.R.S. § 33-808 Prior to the Filing of A Notice of Trustee’s Sale When The Assignee Holds A Promissory Note Payable to Bearer.

The United States Bankruptcy Court certified two questions of statutory interpretation to the Arizona Supreme Court regarding the effect on a trustee’s foreclosure sale of an assignee’s failure to record the assignment of a deed of trust.  Trustee’s sales are governed by A.R.S. § 33-808, which expressly requires that a notice of trustee’s sale be recorded. The statute, however, does not require that an assignment of a deed of trust be recorded before recording the notice of trustee’s sale.  The Court declined to read such a requirement into the statute.  Because Arizona law provides that “[u]nrecorded instruments, as between the parties and their heirs . . . shall be valid and binding,” the failure to record an assignment might leave an assignee unprotected against creditors’ claims.  A.R.S. § 33-412(B). It would not, however, affect a deed’s validity as to the original obligor.  Neither would A.R.S. § 33-411.01, which protects assignees from creditors’ claims by permitting assignees the choice of recording the transfer.  Thus, the Court held that A.R.S. § 33-808 does not require the recording of an assignment of a deed of trust prior to a foreclosure sale of an obligor’s property.

The Court declined to answer the second certified question, which asked whether the beneficiary of a deed of trust being foreclosed must have the right to enforce the secured obligation.  The Court only answers questions which may be determinative of the cause of action, and here, it was clear that the beneficiary had such a right to enforce the obligation.

Vice Chief Justice Hurwitz authored the en banc opinion.