Public Auction Procedure for Landlord Selling Tenant Property


Public Auction Procedure for Landlord Selling Tenant Property

This article will outline the process for liquidating via public auction a tenant’s personal property left on a commercial rental property located in Arizona and provide examples of the necessary notices. 

Please note that, while this article accurately describes applicable law on the subject covered at the time of its writing, the law continues to develop with the passage of time. Accordingly, before relying upon this article, care should be taken to verify that the law described herein has not changed.

I. Procedure

Pursuant to Ariz. Rev. Stat. § 33-362(A), a landlord “shall have a lien on all property of his tenant not exempt by law, placed upon or used on the leased premises, until rent is pa Id. ” The purpose of the landlord’s lien is to secure the payment of rent.[1]

If a tenant fails to pay rent due, the landlord may seize as much personal property of the tenant located on the premises and not exempted by law as is necessary to secure the payment of rent.[2]  Furthermore, Arizona courts hold that a landlord is entitled to seize all of the tenant’s property not exempt by law in exercise of a landlord’s lien and is not limited to only seizing property sufficient to cover the amount owed.[3]

If the tenant does not pay the rent due within sixty days after seizure of the personal property, the landlord may sell the seized property at a public auction pursuant to statutory procedures.[4]  Then, if (1) rent remains unpaid after the expiration of the sixty-day period, (2) the tenant resides in the county where the property is located, and (3) the landlord wants to liquidate the seized property at public auction, the landlord must provide the tenant with ten days’ notice to pay the rent or the property will be sold at auction.[5]  If the tenant does not reside in the county where the property is located, the landlord is not required to give the ten-day opportunity to cure before proceeding to sell.[6]  In all circumstances, however, a five-day notice of the public auction is required.[7]  If the tenant can be found, the landlord must provide the tenant with five days’ notice of the time and place of sale.[8]  If the tenant cannot be found, the landlord must provide this five-day notice by two publications in a newspaper published in the county.[9]

After that five-day period, the property may be sold at a public auction and the proceeds from the sale may be used to satisfy the rent due.[10]  Any remaining balance from the proceeds must be paid to the tenant, or, if the tenant cannot be found, to the department of revenue.[11]

II. Examples

The following is an example of a ten-day notice to cure which would be sent to the tenant if the tenant resides in the county in which the property is located:
[Date]

[Tenant]

[Address]

Dear [Tenant]:

Notice is hereby given to [Tenant] that the undersigned retained possession and claimed a lien for sixty days under the provisions of Ariz. Rev. Stat. §§ 33-361 and 33-362 for the payment of rent in the amount of $ upon the following described property located at [property address]: [description of property].

Notice is further given that if you fail to pay said amount within ten days from receipt of this Notice, the property will be sold at public auction pursuant to Ariz. Rev. Stat. § 33-1023 to foreclose the lien and satisfy the charges.

DATED: __________

____________________________________   
[Signature of Landlord]
 The following is an example of a five-day notice of public auction:
NOTICE OF SALE

Notice is hereby given that the undersigned, in order to foreclose the lien in the amount of $________ for unpaid rent which is claimed by [Landlord] pursuant to Ariz. Rev. Stat. §§ 33-361 and 33-362, will sell at public auction to the highest bidder for cash on the ________ day of ________, 20__, at the hour of ________, at [full address of the sale], Arizona, the following described property of [name of property owner]: [description of property]

DATED: __________

____________________________________   
[Signature of Landlord]
1 Childers v. 2525 E. Ariz. Biltmore Circle Corp., 731 P.2d 1239, 1243 (Ariz. Ct. App. 1986); United States v. Globe Corp., 546 P.2d 11, 14 (Ariz. 1976) (the lien is for rent due or to become due).

2 Ariz. Rev. Stat. § 33-361(D). 

3 Janes v. Country Escrow Serv., 660 P.2d 482, 485 (Ariz. Ct. App. 1982). 

4 Ariz. Rev. Stat. § 33-361(D).

5 Ariz. Rev. Stat. § 33-1023(A); see In re Glob. Aircraft Sols., Inc., 2011 WL 3300241, at *5 (B.A.P. 9th Cir. May 11, 2011).

6 Ariz. Rev. Stat. § 33-1023(A).

7 Ariz. Rev. Stat. § 33-1023(B).

8 Id.

9 Id.

10 Ariz. Rev. Stat. § 33-1023(A).

11 Id.


If you have questions regarding a possible landlord-tenant law matter, or to arrange for a consultation concerning your legal matter, please contact Robert Mitchell at rdm@tblaw.com or at (602) 452-2730.
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