Arizona Commercial Real Estate Loans: Trustee Sales & Deficiency

Commercial property loans in Arizona use the same programs as every other state — SBA 504, DSCR loans, bridge loans, bank and life-company permanent loans. What Arizona changes is short and mostly sits on the default side: a constitution that bars new transfer taxes, a flat recording fee, a trustee’s sale that can be held 91 days after notice, no redemption once the sale is done, and a 90-day deadline for the lender to pursue a deficiency — including against guarantors.

Closing costs: no percentage transfer tax, flat recording fees

Arizona’s constitution bars the state, every county and city, and any taxing district from imposing a new tax, fee, stamp requirement or other assessment on the act of selling, buying or transferring an interest in real property; only charges in place on December 31, 2007 are excepted. One that applies to a sale is a $2 real estate transfer fee on each deed or sale contract, and it is included in the county recorder’s standard fee: $30 per instrument for documents whose fee is not otherwise set by statute. The deed of trust records for the same flat $30, whatever the loan amount.

Example: a $2,000,000 commercial building bought with a $1,400,000 loan.

• Recording the deed, including the $2 transfer fee: $30
• Recording the deed of trust: $30 — the same at $400,000 or $14,000,000
• All together: $60

On the same example, Nevada charges $7,800 to $10,200 in transfer tax depending on the county, California’s county transfer tax alone is $2,200, and North Carolina’s deed excise tax is $4,000. Title insurance, escrow and lender fees are still part of an Arizona closing; put them in the budget with the commercial mortgage calculator.

The deed must carry an affidavit of legal value (the Department of Revenue’s “affidavit of property value” form), signed by the buyer and seller or their agents, that reports the price, the cash down payment and whether the purchase was financed with a new third-party loan, a seller loan or an assumed loan. The recorder will not record a deed without one unless the deed notes a statutory exemption — transfers that only provide or release security for a debt, for example, are exempt.

Foreclosure: the 91-day trustee’s sale

When an Arizona commercial loan is secured by a deed of trust, the trustee holds a power of sale by statute even if the deed of trust does not spell it out. The lender may still choose to foreclose in court as a mortgage; a trustee’s sale needs no court filing. The trustee records a notice of sale with the county recorder, mails it within 30 days to the parties of record, posts it on the property at least 20 days before the sale and publishes it once a week for four consecutive weeks. The sale cannot be held before the 91st day after the notice was recorded.

Until 5:00 p.m. on the last business day before the sale, the borrower — or a junior lienholder — can stop it by reinstating: paying what is then due, without the accelerated principal, plus costs and a trustee’s fee of up to $600 or 0.5% of the unpaid principal, whichever is greater. Anyone who wants to object to the sale must get a court order stopping it by that same deadline, or may lose those defenses.

Example: on a loan with $1,400,000 of unpaid principal, the trustee’s fee on reinstatement can be up to $1,400,000 × 0.5% = $7,000, because that is greater than $600.

At the sale, every bidder except the lender must post a $10,000 deposit, and the winning bidder pays the balance by 5:00 p.m. the next business day. The trustee’s deed conveys the property without any right of redemption — unlike a court foreclosure, where the borrower generally has six months after the sale to redeem. If a sale or refinance is your way out of a troubled loan, start at the first missed payment, and use DSCR to see how far the property’s income has fallen short.

Deficiency: 90 days, measured against fair market value

Arizona’s anti-deficiency rule for trustee’s sales protects only parcels of two and one-half acres or less used for a single one- or two-family dwelling. A commercial borrower — and anyone who signed a personal guarantee — can be sued for the shortfall after a trustee’s sale, but the statute limits that suit in two ways.

First, the lender has 90 days after the sale to bring it. If no action is filed in time, the sale proceeds, whatever they were, are treated as full satisfaction of the debt. Second, the court subtracts the property’s fair market value on the sale date or the sale price, whichever is higher — so a low winning bid does not by itself set the size of the deficiency. The borrower or guarantor can ask the court to hold a hearing on fair market value. A deed of trust can also waive deficiency recovery entirely by its own terms.

Example: $1,500,000 is owed on the sale date and the building sells at the trustee’s sale for $1,100,000. If the court finds the fair market value was $1,250,000, the deficiency is $1,500,000 − $1,250,000 = $250,000, not $400,000. Whether a non-recourse carve-out or a guarantee reaches that amount is a question for your loan documents and your attorney.

C-PACE: not yet authorized

Arizona has no C-PACE statute. A 2026 bill, HB 2824, would let cities and counties set up C-PACE programs for energy, water and other long-lived building improvements; as of October 2026, no C-PACE program appears in the Arizona Revised Statutes. Energy and water upgrades on an Arizona building are financed with the mortgage itself, a construction loan or equipment financing, not a property assessment.

Where to start

Choose the program — SBA 504 for an owner-occupied building, a DSCR loan or permanent loan for an income property, a bridge loan for a transition — and read the deed of trust and any guarantee for the remedies section before you sign. Size the loan with the commercial mortgage calculator. For financing that isn’t tied to real estate, the Arizona business loan guide covers SBA offices and state programs.

Ready to compare? Start a commercial real estate loan request — one application, compared across our lender network.

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Sources: Ariz. Const. art. IX, § 24; A.R.S. § 11-475; A.R.S. §§ 11-1132, 11-1133, 11-1134; A.R.S. §§ 33-807, 33-808, 33-809, 33-810, 33-811, 33-813, 33-814; A.R.S. § 12-1282; HB 2824, Arizona House of Representatives, 57th Legislature, Second Regular Session (2026). Checked 2026-10-27.