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The Supreme Court restored some order late last week by publishing its trust deed foreclosure decision in BT CAPITAL v. TD SERVICE COMPANY (May 4, 2012). The Court of Appeals opinion (which I blogged on earlier here) was vacated in favor of simplier sanity. The Supreme Court said that trustee’s sales are creatures of statute, not of common law, so that the inquirer must read the statutes to understand the applicable rules. The pertinent statute to the appeal, A.R.S. Sec. 33-810(A), says a trust deed non-judicial sale is over when the trustee sings – specifically, when the trustee collects from the high bidder the price bid “in a form satisfactory to the trustee.” If the trustee doesn’t accept the payment, even if it should, then the sale isn’t final.

In this case, the trustee TD acted like a corporate knucklehead (didn’t follow the explicit instructions of the trust deed beneficiary, among other things) but it formally rejected the payment of the bid price from one of the trustee’s sales tendered by BT Capital. So, said the court, whether TD is liable to BT Capital for damages is a different issue from whether BT had ownership rights in the property that was auctioned, then auctioned some more.

The Supreme Court also pointed out that the trustee’s sale statutes don’t allow a third party to assert claims for breach of contract against the trustee or its principal, the beneficiary. So there you have it: If you want satisfaction as a stakeholder in the foreclosure process, make sure you understand, follow, and encourage others to follow the state’s statutes in this area. Avoid the smoke of confusion and costly, uncertain litigation.