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Maricopa County, Arizona, Sheriff’s Bidding Requirements at a Sheriff’s Execution Sale of a Judgment Debtor’s “Homestead” Residence
By Larry O. Folks • September 2020 (reprinted with permission of author) 10/29/20
Relevant Background Facts
Judgment Creditor obtains a money judgment (“Judgment”) against an individual Judgment Debtor. The Judgment is recorded with the Maricopa County Recorder (“County Recorder”) while Judgment Debtor owns a residence located in Maricopa County that is the Judgment Debtor’s “homestead” residence (“Homestead Residence”).1
Judgment Creditor obtains a Writ of General Execution  from the Clerk of the Superior Court to direct the Sheriff of Maricopa County, Arizona (“Sheriff”), to schedule a Sheriff’s execution sale of the Homestead Residence. The Writ of General Execution is delivered to the Civil Enforcement Division of the Sheriff’s Department along with an initial $200 fee deposit. The Sheriff will schedule an execution sale of the Homestead Residence to enforce the Judgment only if all of the legal requirements discussed below are satisfied (“Sheriff’s Execution Sale”).
The Sheriff’s Execution Sale of the Judgment Debtor’s Homestead Residence will be scheduled by the Sheriff after:

• it is determined that the legal requirement of A.R.S. § 33-1105(A) is met, that the value of the Homestead Residence exceeds the total of any senior liens upon the property plus the $150,000 statutory homestead exemption amount due to the Judgment Debtor pursuant to A.R.S. § 33-1101(A) (the “Homestead Exemption Amount”);
• the Sheriff makes demand upon the Judgment Debtor to pay the Judgment, and the Judgment Debtor fails to pay the Judgment balance; and
• the Sheriff determines that the Judgment balance cannot be collected by selling the Judgment Debtor’s personal property.

The Sheriff initially enforces the Writ of General Execution by recording it with the Maricopa County Recorder as the act of levying upon the property. In addition, the Sheriff must publish the Notice of Sale for three weeks prior to the date of sale and post the Notice of Sale at three designated public places at least 15 days prior to the date of the Sheriff’s Execution Sale. The Sheriff will mail a copy of the Notice of Sale to the Judgment Creditor well in advance of the Sheriff’s
Execution Sale date.

The Sheriff’s Bidding Requirements Imposed Upon the Judgment Creditor at the Sheriff’s Sale the Residence
LEGAL ANALYSIS
The Arizona statute, which includes the conditions that must be complied with before the Sheriff will even schedule a Sheriff’s Execution Sale of a Homestead Residence, is set forth in full below:

33-1105. Sale by judgment creditor of property subject to homestead exemption
A judgment creditor other than a mortgagee or beneficiary under a trust deed may elect to sell by judicial sale as specified in title 12 the property in which the judgment debtor has a homestead under section 33-1101, subsection A, provided that the judgment debtor’s interest in the property shall exceed the sum of the judgment debtor’s homestead plus the amount of any consensual liens on the property having priority to the judgment. A bid shall not be accepted by the officer in charge of a sale under this section which does not exceed the amount of the judgment debtor’s homestead plus the amount of any consensual liens on the property having a priority to the judgment plus the costs of the sale allowable under title 12. After receipt of a sufficient bid, the officer shall sell the property. From the proceeds, the officer shall first pay the amount of the homestead to the judgment debtor plus the amount of any consensual liens on the property having a priority to the judgment and then pay the costs of the sale. The remaining proceeds shall be applied in accordance with the provisions of section 12-1562, subsection A.

The Sheriff’s interpretation and implementation of the A.R.S. § 33-1105 to schedule a Sheriff’s Execution Sale of a homestead Residence and accept a Judgment Creditor’s bid is set forth below:

• In advance of the Sheriff’s Execution Sale date, the Judgment Creditor must provide the Sheriff with the dollar amount of unpaid real property taxes upon the Homestead Property to be paid to the Maricopa County Treasurer upon completion of the sale good through two (2) weeks and one (1) day after the scheduled date of the Sheriff’s Execution Sale (“Senior Real Property Tax Lien Amount”).
• In advance of the Sheriff’s Execution Sale date, the judgment Creditor must provide the Sheriff with payoff amounts of all Deeds of Trust and other liens of record senior upon the Homestead Property that are senior to the money Judgment being enforced good through two (2) weeks and one (1) day after the scheduled date of the Sheriff’s Execution Sale (the “Senior Lien Payoff Amount”).
• The Judgment Creditor is required by the Sheriff to bid $1.00 over the total amount of the Senior Real Property Tax Lien Amount + the Senior Lien Payoff Amount + the $150,000 Homestead Exemption Amount as its opening credit bid at the Sheriff’s Execution Sale.2

The Judgment Creditor must have a representative physically present at the Sheriff’s office to attend the Sheriff’s Execution Sale, which is a public auction. The representative must fully understand the bidding process and make the Judgment Creditor’s opening credit bid and any additional higher bids during the auction sale.
At the beginning of the public auction Sheriff’s Execution Sale, the Sheriff will announce the total judgment principal amount, interest accrued upon the  judgment amount until the date of sale, and the Sheriff’s sale commission and other hard costs. This is known as the Judgment, Interest and Costs (“JIC”) announced amount for informational purposes. For a Homestead Residence execution sale, the actually bidding begins at $1.00 over the total amount of the Senior Real Property Tax Lien Amount + the Senior Lien Payoff Amount + the $150,000 Homestead Exemption Amount as the Judgment Creditor’s opening credit bid at the Sheriff’s Execution Sale. For a Sheriff’s Execution Sale that does not involve a Homestead Residence, the bidding begins at $1.00 as the Judgment Creditor’s opening credit bid, and the Judgment Creditor can credit bid up to the full balance of its Judgment.
If the Judgment Creditor is the successful bidder at the Sheriff’s Execution Sale, it will be responsible for paying the Sheriff’s costs of sale. Those costs, which typically total in the $200-$400 range, primarily consist of amounts for:
• Service
• Levy
• Return
• Posting Sale Notice
• Certificate of Sale
• Recording fees
• Mileage Fees for Service of Process
• Fee to Vacate Levy.
The only significant cost is the Sheriff’s commission, which is calculated by multiplying the successful credit bid amount x 8%, subject to a capped commission amount of $2,000. As examples, if the credit bid is $10,000, the Sheriff’s commission is that amount x 8%, or $800.
Regardless of the credit bid amount, the Sheriff’s commission cannot be more than $2,000. As an example, if the successful credit bid is $100,000 instead, an $8,000 commission ($100,000 x 8%) would be the capped amount of $2,000.00.
Bidding Examples
Following is a mathematical example of the Judgment Creditor’s opening credit bid at the Sheriff’s Execution Sale of a Homestead Residence:
$5,000 Senior Real Property Tax Lien Amount
+
$200,000 Senior Lien Payoff Amount
+
$150,000 Homestead Exemption Amount
=
Subtotal: $355,000
+
$1.00 over for the Judgment Creditor’s opening credit bid of
$355,001.00.
If no other party bids at the sale, then the Judgment Creditor will have to pay:

• $355,000 in cash to the Sheriff to pay off the Senior Real Property Tax Lien Amount and Senior Lien Payoff Amount; and
• the Sheriff’s costs of sale and sale commission within five (5) calendar days after the date of the Sheriff’s Execution Sale.

In exchange, the Judgment Creditor will receive a Certificate of Sale from the Sheriff and ultimately the Sheriff’s Deed to the Homestead Property after the applicable six month redemption period expires.
If another party bids, the Judgment Creditor will need to bid to protect its position. The Judgment Creditor will bid up to an amount until it would be happy to receive the funds from the other third-party bidder to credit toward the balance of its Judgment.
The Sheriff would then distribute the funds to pay the:

• Senior Tax Lien Amount to the Maricopa County Treasurer;
• Senior Lien Payoff Amount to the senior lien holders;
• Sheriff’s costs of sale; and
• $150,000 Homestead Exemption Amount to the Judgment Debtor.3

Following is another mathematical example:

• Value of the Homestead Residence=$500,000
• Judgment Creditor’s Opening Credit Bid=$355,001

The Judgment Creditor could bid up to $144,999  ($500,000 minus $355,001) to protect its position and recover the equity in the property for itself. This is assuming the judgment Creditor is willing and able to write a check to the Sheriff for $355,000 within 24 hours.
Typically, the Judgment Creditor would not bid up to the full $144,999 – because it should take into account that it will incur Real Estate Owned (“REO”) carrying costs and realtor commissions to sell the property if it is the successful bidder at the Sheriff’s Execution Sale and takes title to the property. The Judgment Creditor may be satisfied to be paid funds from a third-party bidder that will compensate it for the net recovery it would receive if it took the property into REO and had to sell it itself.
As an example, assuming a 6% real estate commission of $30,000 (based upon a $500,000 value) plus $10,000 of REO carrying costs, the Judgment Creditor would bid up to $104,999.00 (in lieu of the full $144,999.00 amount of equity in the property) and be happy to accept that amount from a third-party bidder.
Following is an example of how a typical bid works at a Sheriff’s sale in which the successful credit bid is $50,000 when dealing with a Non-Homestead Residence property (such as vacant land, commercial property, or an investment residence) in which the bidder does not have to pay off the Senior Real Property Tax Lien Amount and the Senior Tax Lien Amount and Senior Lien Payoff Amount:
$ 269,182.40 Judgment Principal
$       1,347.76 Interest from the date of entry of judgment to the date of sale
$          129.60 Sheriff’s hard costs of the Sheriffs Sale
$     2,000.00 Sheriff’s commission, capped at $2,000 ($50,000 x 8% would be $4,000, so the $2,000 cap amount applies)
$ 272,659.00 Judgment, Interest and Costs (“JIC”) announced at the sale
$ (50,000.00) Successful Credit Bid
$ 222,659.00 Amount still owing on Judgment which will be
reflected in the Sheriff’s Return Of Sale
In this example, the successful bidder would need to come out of pocket only to pay the Sheriff the $129.60 in hard costs + the $2,000 commission for a total of $2,129.60. The original $200 deposit delivered to the Sheriff with the Writ of General Execution will be credited against the $2,129.60, for a total remaining balance due of $1,929.60 to be paid at the time of the sale.
If the property being sold is a Homestead Residence, the change to the above example is that the Judgment Creditor would have to pay off the Senior Real Property Tax Lien Amount + the Senior Lien Payoff Amount + the $1,929.60 due to the Sheriff ($2,129.60 – $200 deposit) + the $150,000 Homestead Exemption Amount to the Sheriff within five (5) days after the date of the Sheriff’s Execution Sale.
Conclusion
To even pursue this remedy, the Judgment Creditor must perform the due diligence and conclude that there is sufficient equity in the value of the Homestead Residence above and beyond the total of the Senior Tax Lien Amount + the Senior Lien Payoff Amount + $150,000 Homestead Exemption Amount + the Sheriff’s costs of sale and sale commission.
In addition, the Judgment Creditor must be ready, willing and able to pay cash in an amount to pay off the senior liens, the $150,000 Homestead Exemption Amount, and the Sheriff’s costs and sales commission within five (5) calendar days’ after the date of the Sheriff’s Execution Sale. Further, the Judgment Creditor must understand that it will receive a Certificate of Sale as a result of the Sheriff’s Execution Sale and must wait six (6) months for the redemption period to expire before it will receive an actual Sheriff’s Deed to the property.
The bottom line is that, if the Judgment Creditor locates a Homestead Residence with a significant amount of equity in it over and above the Senior Lien Tax Amount + the Senior Lien Payoff Amount + the Homestead Exemption Amount + the Sheriff’s costs and sales commission and has the ability to pay the required sums in cash within five (5) days after the date of the Sheriff’s Execution Sale if it is the successful bidder, then this can be a powerful  collection remedy. In that circumstance, it is very possible that a third-party bidder will pay a sufficient amount to pay up to the balance the Judgment Creditor will bid at the sale. If not, then the Judgment Creditor will obtain title to the property and can sell it out of REO to capture the equity from the property for its benefit.

1 The requirements for real property to qualify as a Judgment Debtor’s “homestead” property and for the $150,000 homestead exemption to apply are set forth at A.R.S. § 33-1101 et. seq.
2 If the Sheriff’s Execution Sale is of real property that is not a homestead property, then the Judgment Creditor does not have to pay cash to pay off the senior liens on the property and is only responsible for paying the Sheriff’s fees to schedule and conduct the sale. Also, under this circumstance, the Sheriff’s procedure is to have the Judgment Creditor bid $1.00 as its opening bid. The Judgment Creditor and other bidders must do their due diligence to understand what liens will have to be paid off if they are the successful bidder and plan their bidding strategy accordingly. In addition, the Sheriff’s hard costs and sale commission must be verified with the Sheriff and taken into account by any bidder at a Sheriff’s Execution Sale.
3 If the Judgment Creditor decides to bid on the property, the Judgment Creditor is responsible for paying the $150,000.00 Homestead Exemption Amount, the
prior unpaid real property taxes, the prior consensual liens and the Sheriff’s costs of sale. Any additional amount over the foregoing sums generated by the bidding process would go toward satisfying the Judgment (when the homestead exemption does not apply, the Judgment Creditor is only responsible for paying the Sheriff’s fees for the sale of the property). Should the property be more valuable than the homestead exemption, prior consensual liens, Judgment amount and Sheriff’s costs of sale, any bid over that amount is sent to the Clerk of the Superior Court as excess proceeds (and if the Judgment Creditor was the high bidder, the Judgment Creditor would be responsible dollar-for-dollar any amount over the satisfaction of the Judgment, homestead exemption, prior consensual liens and Sheriff’s fees).

Larry Folks
Folks Hess, PLLC
1850 N. Central Ave., Suite 1140
Phoenix, Arizona 85004
602-256-5906 Direct Line
[email protected]  www.AzDefaultLegalServices.com

Note – Rob Benner, the head Deputy of the Sheriff’s Department who runs all of the execution sales, reviewed this article and agreed that Mr. Folks has accurately described all of the Sheriff’s procedures.

.fusion-body .fusion-builder-column-1{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-1 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-1{width:100% !important;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-1{width:100% !important;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:980px) {.fusion-title.fusion-title-1{margin-top:15px!important;margin-bottom:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-1{margin-top:10px!important;margin-bottom:10px!important;}}MUSINGS BY DIANE:The legal process described in this blog is very complicated and only applies to Arizona collections.  I know you think you can understand the law, but you can’t.  It is just that simple.  I have practiced this area of law for over 30 years and still need to read and re-read the law, draw a diagram or spreadsheet and talk to other attorneys before I can be comfortable with the process and how to advise my clients. Please don’t try to do this on your own because you will lose your home. 
Many times there are simple answers – such as filing for bankruptcy protection, or offering of lender a settlement.  I cannot emphasize this too much – you don’t do your own surgery, so don’t to your own legal work.

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The post Arizona Sheriff’s Sale Process – Collection of Debt appeared first on Diane L. Drain - Phoenix Arizona Bankruptcy Attorney.

If you’ve decided to file a Chapter 13 bankruptcy, then you’re probably wondering why the bankruptcy court appointed a trustee over your case. Bankruptcy trustees are there to guide debtors in creating their repayment plan and make sure that the three-to-five-year payment plan is followed to the letter. 
Under bankruptcy law, there is nothing you can do to dismiss your trustee when filing bankruptcy. Instead, understanding their duties and obligation will help you as a debtor have a smoother bankruptcy process. Aside from being your guide in court, your bankruptcy trustee normally checks your tax returns before your bankruptcy filing, collects your payments and handles liquidation to your creditors, watches over your income and expenses, and oversee that you pay off your nondischargeable debts. 
However since they cannot give you legal advice, you should work with a bankruptcy attorney to negotiate a fair plan and apply certain bankruptcy exemptions to your case.
Chapter 13 Trustee Roles
How active bankruptcy trustees are dependent on whether you reside in a suburban or rural judicial district or in districts where there is a high number of Chapter 13 bankruptcies filed. Below are the duties and responsibilities of a bankruptcy overseer:

• Review Bankruptcy Forms. The trustee verifies the information you provided by cross-checking your official forms and looking over relevant data about income, living expenses, assets, debts, paychecks, bank statements, and accounts. It is important to ensure that you have all the needed documents before filing your petition. Don’t misrepresent any data or fail to declare certain information to avoid jeopardizing your case.
• Oversee the Bankruptcy Petition. A borrower declaring a Chapter 13 bankruptcy will have to propose a new repayment plan that outlines how they can repay some or all of what they owe to their lenders. The trustee is there to make sure that the conditions are fair between you and a lender. Borrowers also receive financial help in terms of creating a realistic budget that fits their intent to repay creditors.
• Assess Property Value. When you file bankruptcy, you will need to give up certain non-exempt properties on assets in an estate and a hearing is conducted to appraise the value of each property. You can get a list of exemptions in your state online or from any bankruptcy law firm near you. Trustees attend this court meeting and may opt to invite an appraiser to help get a more accurate estimate of your assets’ net worth.
• Administer the Meeting of Creditors. One month after filing for bankruptcy, the trustee will call for a meeting with creditors. The filer will answer questions related to their bankruptcy paperwork under oath to determine the viability of their proposed repayment plan. Any creditor present during this meeting may also raise any question on your case. Should you lack supporting documentation, the meeting may be postponed to another date. Your trustee will also protect you from any unlawful claims filed by a creditor with no proper documentation.
• Monitor monthly payments. A month after your filed bankruptcy, you should start giving payments to your bankruptcy trustee following the terms of your proposed plan. It remains a proposal until the court approves or denies it. If approval is granted, the trustee who currently holds the funds will start releasing it to the lending companies or individuals. 
• Attend Court Confirmation. If a lender has any objection to the court confirmation, you will have to create an opposition to support the plan. The trustee then attends a confirmation hearing to advise the bankruptcy judge if your plan meets all legal requirements. 
• Modify repayment plans. Should you miss out on your payments, a trustee can provide you a reprieve. For the most part, you have control over your money after filing for bankruptcy provided that you regularly pay off secured debts. Should your financial situation change, such as when your regular income increases or a property value becomes raised, the trustee can have your payment schedule amended. The opposite is also true: if your earnings are lower, the trustee can adjust the payment terms or even advise you to convert to a Chapter 7 bankruptcy.

Trustee in Bankruptcy
In exchange for these numerous services, the court-appointed trustee normally gets a percentage of the money disbursed to creditors. This is perhaps one of the things that bankruptcy filers forget to consider when deciding to apply for bankruptcy. 
Are you going through financial problems and need help in reviewing your bankruptcy paperwork, checking for compliance with bankruptcy laws, or exploring bankruptcy options? Contact Northwest Debt Relief Law Firm today.
Our bankruptcy attorneys have filed numerous Chapter 7 and 13 bankruptcy cases in the past and can give you a free consultation to get you started on the road to financial recovery and debt management.
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The post What A Trustee Does in A Chapter 13 Bankruptcy Case appeared first on Vancouver Bankruptcy Attorney | Northwest Debt Relief Law Firm.

https://nypost.com/2020/10/22/brooklyn-roasting-company-files-for-bankruptcy-will-close-its-shops/ Originally appeared on New York Post The pandemic has hit another beloved Big Apple hot spot.Brooklyn Roasting Company, known for its colorful logo and flavorful coffee, filed for bankruptcy protection on Thursday and said it’s planning to permanently close its remaining retail locations at 50 W. 23rd St. and at 25 Jay St. in Dumbo Brooklyn, according to its Brooklyn bankruptcy court documents.It will keep three other Brooklyn locations open, including at 200 Flushing Ave. and 45 Washington Ave., a spokesman said.The company is also hoping to save its wholesale business, however, which sells to New York institutions like Columbia University and Goldman Sachs as well as the airports.Founded in 2009 by Jim Munson, a former partner in The Brooklyn Brewery, BRC became a beloved New York brand with as many as seven locations across the city at its peak.But its problems began before the pandemic as the company over-expanded in an effort to be acquired, according to the filing.The coffee roaster had been in discussions in 2018 to be acquired for $22 million by an investment group including the former chief executive of Dunkin’ Donuts, the filing states. At the behest of its investors, BRC invested in new real estate and staff, but the acquisition never happened.By the beginning of 2019, “BRC’s financial condition was poor,” and revenues declined for the first time in 2018 to $9.7 million, according to the filing.Just as the company was getting its footing back — with revenues climbing to $10.3 million in 2019 — the pandemic wiped out more than half of the company’s retail sales. It’s wholesale business was also decimated.It reported an “extraordinary COVID expense” year to date without providing details about the debt.BRC received a $727,000 in federal stimulus loans, but the money ran out in August even as its sales remained “severely depressed,” according to the filing. Munson controls 13 percent of the company, the filing said.“This was a one two punch,” said distressed asset expert Adam Stein-Sapir. “They had a failed acquisition and all the additional costs they signed up for in anticipation of that and then Covid.”

Filing for bankruptcy is not an easy decision. Many people will try to find ways to avoid filing, often moving debt from one credit card to another or borrowing more money to pay for existing obligations. One of the reasons people choose to avoid bankruptcy is they do not understand the process and are intimidated […]
The post How to File for Chapter 7 Bankruptcy in California appeared first on The Bankruptcy Group, P.C..