Subordinate Deed of Trust Lien Is Exempt
Robert P. Lindfors
Judicial foreclosure reports are being issued in
increasing volume. Lenders and contractors rely upon these reports to enforce
their realty mortgages and claims of lien. The title reports disclose the owners
and lien claimants who are entitled to notice/service of process in the
beneficiary who is holding a subordinate deed of trust must be identified in
Schedule C of the title reports. The beneficiary is the lien claimant who is
entitled to notice/service. See A.R.S. §§
33-981, et seq.
trustee of the junior deed of trust is not to be identified in Schedule C of the
litigation guaranty as a junior lien claimant. The trustee of the deed of trust
is exempt from being served by statute.
A.R.S. § 33-807(E) provides:
The trustee need only be joined as
a party in legal actions pertaining to a breach of the trustee's obligation
under this chapter or under the deed of trust. Any order of the court
entered against the beneficiary is binding upon the trustee with respect to
any actions that the trustee is authorized to take by the trust deed or by
this chapter. If the trustee is joined as a party in any other action, the
trustee is entitled to be immediately dismissed and to recover costs and
reasonable attorney fees from the person joining the trustee.
event of wrongful service of process upon the trustee, this statute authorizes
the trustee to recover its attorney’s fees and court costs incurred to compel
its dismissal. The foreclosing creditor is then subjecting itself to liability.
Rather than risk causing a foreclosing customer to sustain a loss, do not
require the trustee of the junior deed of trust be served when issuing the
This article is
made available with the understanding that it is informational only, and it has
not been prepared to provide specific legal advice that may be relied on by a
reader. The author is under no obligation to update the information in the event
of a change in the law.