What happens after a trustee sale
What happens after a trustee sale: the trustee's deed, who gets surplus funds, whether the borrower still owes, and how possession works, state by state.
Blog · Foreclosure process
30 days
How long a California trustee has, after the trustee's deed is signed, to tell everyone with a recorded interest that surplus proceeds exist.
Key takeaways
- The winning bidder pays within hours or a day and receives a trustee's deed, which carries the borrower's title with no warranty. Liens senior to the foreclosed deed of trust survive; junior ones are wiped out.
- The price is paid out in a fixed order: costs of the sale, then the foreclosed debt, then junior liens in priority order, and anything left to the former owner as surplus funds.
- Surplus is held and claimed differently by state: a California trustee must send notice within 30 days of the deed, an Arizona trustee within 15 days of the sale, and Washington surplus sits with the court clerk until a judge orders it paid.
- Whether the borrower still owes the shortfall depends on the state. California and Washington bar a deficiency judgment after a trustee sale; Nevada allows one if the lender applies within 6 months.
When the auctioneer says "sold", a trustee sale is not over. The winning bidder still has to pay, the trustee still has to record a deed, the money still has to be paid out to whoever had a claim on the property, and whoever is living there still has to leave. Some of that takes hours, some of it takes months, and every part of it is set state by state. This article follows a property through the weeks after the auction, from the point of view of the buyer, the former owner and the lienholders, with each rule quoted from the statute that sets it.
The first day: payment and the trustee's deed
Within hours or a day of a trustee sale the winning bidder pays in full and the trustee signs a trustee's deed, which completes the sale once it is recorded.
Payment is near-immediate. In California the sale is completed by the fall of the hammer [1], and an Arizona bidder must pay by 5 p.m. the following business day [2]. How to buy at a trustee sale covers the bidding and payment rules in detail.
Once paid, the trustee signs a trustee's deed to the buyer. Recording it is what makes the sale stick in several states. An Arizona sale is deemed perfected as of the auction if the deed is recorded within fifteen business days [3], and a Washington sale is final as of the accepted bid if the deed is recorded within fifteen days [4]. Two exceptions keep a sale open longer. A California sale of a one-to-four-unit home is not final for 15 days, and 45 if an eligible bidder gives notice of intent [5]. North Carolina reopens a sale for 10 days after each upset bid [6].
If the lender's credit bid was the highest, there is no cash to collect. The lender takes the property back through the same deed, and nothing further happens to the proceeds, because there are none.
What the trustee's deed gives the buyer
A trustee's deed gives the buyer whatever title the borrower had, without warranty, and in California and Arizona its recitals that the sale was properly noticed are conclusive for a good-faith buyer.
The deed conveys the borrower's interest as it stood, including anything the borrower acquired after signing the deed of trust [7]. It does not promise that the title is clean or the house is sound.
What it does give a buyer is protection from arguments about the process. In California the recitals that notice was mailed and published are conclusive evidence of compliance in favor of bona fide purchasers for value and without notice [8]. Arizona says the same of the trustee's deed itself [9]. Arizona goes further for the borrower's side: anyone given notice of the sale waives every defense and objection not raised in a lawsuit that won an injunction before the sale [10]. A borrower who thought a notice was defective had to say so before the auction, not after.
Which liens survive a trustee sale
A trustee sale wipes out the deed of trust being foreclosed and every lien recorded after it, but liens senior to it, including property taxes, survive and stay with the property.
Think of the liens on a property as a queue ordered by recording date. The sale clears the foreclosed deed of trust and everything behind it: a second deed of trust, a later judgment lien, most homeowners' association liens. It does not reach anything ahead of it. If the notice was for a second deed of trust, the buyer takes the property still subject to the first, and unpaid property taxes generally survive whatever is foreclosed.
The junior lienholders who are wiped out do not simply lose. Their claims move from the property to the money, which is the next section.
Where the sale money goes
A trustee pays out the proceeds of a trustee sale in a fixed order: the costs of the sale, then the foreclosed debt, then junior liens in priority order, and whatever remains to the former owner.
California and Arizona set out the same order in statute. A California trustee must distribute the proceeds "in the following order of priority" [11]: the costs of the sale and the trustee's fees, the obligation secured by the foreclosed deed of trust, then junior liens "in the order of their priority" [12], and last "the trustor or the trustor's successor in interest" [13]. Arizona's list is the same in substance [14], with a step for condominium and planned-community associations before other junior lienholders, and payment to the trustor only after every junior lien is paid in full [15].
Washington handles it differently. The trustee pays the costs of the sale and the foreclosed debt, then deposits the rest with the clerk of the superior court [16], and every lien the sale eliminated attaches to that surplus in the order it held against the property [17]. The court, not the trustee, decides who gets it.
Most trustee sales produce no surplus at all. When the lender's credit bid wins, the sale price is the debt, and the waterfall stops at step two. Surplus exists only when a third-party bidder pays more than the lender is owed, which is why it shows up most often on properties with substantial equity.
Who can claim surplus funds after a trustee sale
Surplus funds from a trustee sale belong first to junior lienholders and then to the former owner, who are notified by the trustee in California and Arizona and must petition the court for Washington surplus.
| State | Who holds the surplus | Notice of surplus | How it is paid out |
|---|---|---|---|
| California | The trustee, unless it files an interpleader action | To everyone with a recorded interest, within 30 days of the trustee's deed [18] | By the trustee, to claimants in the order of priority [11] |
| Arizona | The trustee, or the county treasurer pending a court order [19] | To the trustor, within 15 days of the sale [20] | By the trustee, or by the superior court if deposited with the treasurer |
| Washington | The clerk of the superior court in the county of the sale [16] | Mailed by the trustee to everyone sent the notice of sale | Only on a court order, after a motion [21] |
If you were the owner, the place to start is the trustee named in the notice of sale, quoting the trustee sale number. If you held a junior lien, your claim is to the surplus rather than the property, and it is paid in the priority it held on the title.
Surplus attracts recovery companies that trace former owners and offer to claim it for a share, often a large one. The claim is usually one an owner can make directly, through the trustee or the court. Read the fee before signing anything, and check the state's rules on assigning the right to surplus.
Does the borrower still owe money after a trustee sale?
Whether a borrower owes the shortfall after a trustee sale depends on the state: California and Washington bar a deficiency judgment, Arizona bars one on most homes, and Nevada allows one if the lender applies within 6 months.
A deficiency judgment is a court order for the part of the debt the sale did not pay. Several deed-of-trust states rule it out after a trustee sale:
- California: after a sale under the power of sale, "no deficiency shall be owed or collected, and no deficiency judgment shall be rendered" [22].
- Arizona: after the trustee's sale of a home on two and a half acres or less, no action may recover the difference between the sale price and the debt [23].
- Washington: no deficiency judgment against a borrower, grantor or guarantor after a trustee's sale [24], with exceptions for some commercial loans.
- Nevada: a deficiency judgment is available, but only on application within 6 months of the sale and after a hearing [25].
Other states set their own windows and limits, and trustee sale laws by state sets each one out with its statute.
A deficiency is not the only bill. The IRS treats a foreclosure as a sale by the borrower, which can produce a gain or a loss [26]. Where the debt was more than the property was worth and the lender cancels the rest, the canceled amount may be ordinary income [27], unless one of the exclusions in IRS Publication 4681 applies. A former owner should expect a Form 1099-A or 1099-C and talk to a tax advisor before filing.
Can the former owner get the property back?
In most deed-of-trust states the former owner has no right to redeem the property after a trustee sale; Missouri is the main exception, with a one-year right where the lender bought at the sale.
Washington bars redemption after a trustee's sale "by statute or otherwise" [28], and a Nevada sale vests title in the purchaser without equity or right of redemption [29]. In Missouri, where the holder of the debt buys at the sale, the borrower can redeem within a year [30], but only after giving written notice at the sale or within ten days before it [31].
Short of redemption, the remaining route is a lawsuit to set the sale aside, and the statutes above make that narrow. Conclusive recitals protect a good-faith buyer, and in Arizona objections not raised before the sale are waived. Where a claim does survive, it is usually against the trustee or the lender for damages rather than a return of the property.
Moving out: possession and eviction after a trustee sale
After a trustee sale the buyer is entitled to possession but must remove anyone still living there through the state's eviction process, which in California starts with a three-day notice to quit and in Washington runs from the twentieth day after the sale.
A buyer who owns the house does not yet have it. Changing the locks on an occupied property is not a lawful way to get it; an unlawful detainer or eviction case is.
The former owner. In California, a person who stays after a sale under a deed of trust's power of sale [32] can be removed after a three-day written notice to quit [33], once title under the sale is perfected. In Washington the purchaser is entitled to possession on the twentieth day after the sale as against the borrower [34].
Tenants. A tenant with a genuine lease is in a stronger position than the owner who defaulted. In Washington the buyer must either offer a new rental agreement or give written notice to vacate at least sixty days before the end of a monthly rental period [35]. The federal Protecting Tenants at Foreclosure Act generally gives a bona fide tenant at least 90 days' notice, and a lease can run longer, and several states add protections of their own.
For a buyer, the time and cost of possession are part of the price. For an occupant, a notice from a new owner is the start of a legal process, not the end of one.
A timeline of the weeks after a trustee sale
After a trustee sale, payment is due within a day, the deed is recorded within about two weeks, surplus notices go out within 15 to 30 days, and deficiency claims can follow for months.
| When | What happens | Where it is set |
|---|---|---|
| At the sale | The bid is paid in full in California | Cal. Civ. Code § 2924h [1] |
| Next business day, 5 p.m. | The bid is paid in full in Arizona | A.R.S. § 33-811 [2] |
| Within 15 days | Arizona trustee mails notice of excess proceeds; Arizona and Washington deeds recorded to fix the sale date | A.R.S. §§ 33-812, 33-810; RCW 61.24.050 [20] [3] [4] |
| 15 to 45 days | California one-to-four-unit sales become final | Cal. Civ. Code § 2924m [36] |
| Day 20 | Washington buyer entitled to possession as against the borrower | RCW 61.24.060 [34] |
| Within 30 days of the deed | California trustee mails notice of surplus | Cal. Civ. Code § 2924j [18] |
| Within 6 months | Last day for a Nevada lender to apply for a deficiency judgment | NRS 40.455 [25] |
Before the sale, not after
Almost everything above is decided before the auction: whether a third party bids enough to create a surplus, whether a junior lienholder protects its position, whether an owner raises an objection while it still counts. All of it depends on knowing the sale is coming, and a notice is public for only a few weeks before the auction.
We hold 33,016 notices across 21 deed-of-trust states, of which 9,578 are scheduled in the next 30 days. Trustee sale coverage by state lists them by county, how to read a notice of trustee's sale explains what each one says, and trustee sale laws by state sets out the rules before and after the sale for each state we cover.
This article explains how the process works. It is not legal or tax advice, and the rules above are the ones the statutes state. A local real-estate attorney is how you learn what applies to a particular property.
Sources
36 primary- [1]Cal. Civ. Code § 2924h(b)(3) — California Legislature“the completion of the sale being so announced by the fall of the hammer or in another customary manner”
- [2]A.R.S. § 33-811(A) — Arizona Legislature“shall pay the price bid by no later than 5:00 p.m. mountain standard time of the following day, other than a Saturday or legal holiday”
- [3]A.R.S. § 33-810(A) — Arizona Legislature“within fifteen business days after the date of the sale, the trustee's sale is deemed perfected at the appointed date and time of the trustee's sale”
- [4]RCW 61.24.050(1) — Washington State Legislature“if the trustee accepts a bid, then the trustee's sale is final as of the date and time of such acceptance if the trustee's deed is recorded within fifteen days thereafter”
- [5]Cal. Civ. Code § 2924m(c) — California Legislature“on real property containing one to four residential units pursuant to Section 2924g shall not be deemed final until the earliest of the following”
- [6]N.C. Gen. Stat. § 45-21.27(a) — North Carolina General Assembly“there may be successive upset bids each of which shall be followed by a period of 10 days for a further upset bid”
- [7]RCW 61.24.050(1) — Washington State Legislature“the trustee's deed shall convey all of the right, title, and interest in the real and personal property sold at the trustee's sale which the grantor had or had the power to convey at the time of the execution of the deed of trust, and such as the grantor may have thereafter acquired”
- [8]Cal. Civ. Code § 2924(c) — California Legislature“conclusive evidence thereof in favor of bona fide purchasers and encumbrancers for value and without notice”
- [9]A.R.S. § 33-811(B) — Arizona Legislature“A trustee's deed shall constitute conclusive evidence of the meeting of those requirements in favor of purchasers or encumbrancers for value and without actual notice.”
- [10]A.R.S. § 33-811(C) — Arizona Legislature“shall waive all defenses and objections to the sale not raised in an action that results in the issuance of a court order granting relief pursuant to rule 65, Arizona rules of civil procedure”
- [11]Cal. Civ. Code § 2924k(a) — California Legislature“shall distribute the proceeds, or a portion of the proceeds, as the case may be, of the trustee’s sale conducted pursuant to Section 2924h in the following order of priority”
- [12]Cal. Civ. Code § 2924k(a)(3) — California Legislature“To satisfy the outstanding balance of obligations secured by any junior liens or encumbrances in the order of their priority.”
- [13]Cal. Civ. Code § 2924k(a)(4) — California Legislature“To the trustor or the trustor’s successor in interest.”
- [14]A.R.S. § 33-812(A) — Arizona Legislature“The trustee shall apply the proceeds of the trustee's sale in the following order of priority”
- [15]A.R.S. § 33-812(A)(5) — Arizona Legislature“After payment in full of all sums due to all junior lienholders and encumbrancers as of the date of the sale and excluding any postsale attorney fees, payment shall be made to the trustor”
- [16]RCW 61.24.080(3) — Washington State Legislature“The surplus, if any, less the clerk's filing fee, shall be deposited, together with written notice of the amount of the surplus”
- [17]RCW 61.24.080(3) — Washington State Legislature“Interests in, or liens or claims of liens against the property eliminated by sale under this section shall attach to the surplus in the order of priority that it had attached to the property, as determined by the court.”
- [18]Cal. Civ. Code § 2924j(a) — California Legislature“within 30 days of the execution of the trustee’s deed resulting from a sale in which there are proceeds remaining after payment of the amounts required by paragraphs (1) and (2) of subdivision (a) of Section 2924k, the trustee shall send written notice to all persons with recorded interests in the real property”
- [19]A.R.S. § 33-812(C) — Arizona Legislature“the trustee may elect to deposit the balance of the proceeds with the county treasurer in the county in which the sale took place pending an order of the superior court in the county”
- [20]A.R.S. § 33-812(B) — Arizona Legislature“the trustee, within fifteen days of the completion of the trustee's sale, shall mail by first class mail and by certified or registered mail, postage prepaid, to all known addresses a notice of any excess proceeds to the trustor”
- [21]RCW 61.24.080(3) — Washington State Legislature“The clerk shall not disburse such surplus except upon order of the superior court of such county.”
- [22]Cal. Code Civ. Proc. § 580d(a) — California Legislature“no deficiency shall be owed or collected, and no deficiency judgment shall be rendered”
- [23]A.R.S. § 33-814(G) — Arizona Legislature“no action may be maintained to recover any difference between the amount obtained by sale and the amount of the indebtedness”
- [24]RCW 61.24.100(1) — Washington State Legislature“a deficiency judgment shall not be obtained on the obligations secured by a deed of trust against any borrower, grantor, or guarantor after a trustee’s sale under that deed of trust”
- [25]NRS 40.455(1) — Nevada Legislature“upon application of the judgment creditor or the beneficiary of the deed of trust within 6 months after the date of the foreclosure sale and after the required hearing, the court shall award a deficiency judgment”
- [26]IRS Publication 4681 — Internal Revenue Service“The foreclosure or repossession is treated as a sale from which you may realize gain or loss.”
- [27]IRS Publication 4681 — Internal Revenue Service“If the outstanding loan balance was more than the FMV of the property and the lender cancels all or part of the remaining loan balance, you may also realize ordinary income from the cancellation of debt.”
- [28]RCW 61.24.050(1) — Washington State Legislature“After a trustee's sale, no person shall have any right, by statute or otherwise, to redeem the property sold at the trustee's sale.”
- [29]NRS 107.080(5) — Nevada Legislature“vests in the purchaser the title of the grantor and any successors in interest without equity or right of redemption”
- [30]RSMo § 443.410 — Missouri Revisor of Statutes“shall be brought in by the holder of such debt or obligation or by any other person for such holder shall be subject to redemption by the grantor”
- [31]RSMo § 443.410 — Missouri Revisor of Statutes“shall give written notice at the sale or within ten days before the date advertised for the sale”
- [32]Cal. Code Civ. Proc. § 1161a(b)(3) — California Legislature“Where the property has been sold in accordance with Section 2924 of the Civil Code, under a power of sale contained in a deed of trust executed by such person”
- [33]Cal. Code Civ. Proc. § 1161a(b) — California Legislature“after a three-day written notice to quit the property has been served upon the person”
- [34]RCW 61.24.060(1) — Washington State Legislature“The purchaser at the trustee's sale shall be entitled to possession of the property on the twentieth day following the sale”
- [35]RCW 61.24.060(2) — Washington State Legislature“the purchaser at the trustee's sale may either give you a new rental agreement OR give you a written notice to vacate the property in sixty days or more before the end of the monthly rental period”
- [36]Cal. Civ. Code § 2924m(c)(4) — California Legislature“Forty-five days after the trustee’s sale, except that during the 45-day period, an eligible bidder may submit to the trustee a bid in an amount that exceeds the last and highest bid at the trustee’s sale”
Questions
What happens after a trustee sale?
The winning bidder pays, usually within a day, and the trustee delivers and records a trustee's deed. The trustee then pays the sale price out in order: the costs of the sale, the foreclosed debt, junior liens, and any surplus to the former owner. Occupants who stay are removed through the state's eviction process, and in some states the lender can still pursue the borrower for a shortfall.
How long does the former owner have to move out after a trustee sale?
It depends on the state and on who is living there. In Washington the purchaser is entitled to possession on the twentieth day after the sale as against the borrower, and a tenant must be offered a new rental agreement or at least sixty days' notice. In California a former owner can be removed after a three-day written notice to quit, through an unlawful detainer case. Bona fide tenants generally have 90 days under federal law.
Who gets the money if a house sells for more than is owed at a trustee sale?
After the costs of the sale and the foreclosed debt are paid, the surplus goes first to junior lienholders in order of priority and then to the former owner. California's Civil Code section 2924k and Arizona's section 33-812 both set that order. In Washington the surplus is deposited with the superior court clerk and liens the sale eliminated attach to it.
How do I find out whether there are surplus funds from a trustee sale?
Start with the trustee named in the notice of sale, quoting the trustee sale number. California and Arizona trustees must mail notice of surplus to the former owner, in California within 30 days of the trustee's deed and in Arizona within 15 days of the sale. In Washington the surplus is indexed under the grantor's name by the clerk of the superior court in the county of the sale.
Does the borrower still owe the lender after a trustee sale?
In several deed-of-trust states, no. California bars a deficiency after a sale under the power of sale, Arizona bars one after the sale of a home on two and a half acres or less, and Washington bars one against a borrower or guarantor apart from some commercial loans. Nevada allows a deficiency judgment if the lender applies within 6 months of the sale and the court holds a hearing.
Is a trustee sale taxable for the former owner?
It can be. The IRS treats a foreclosure as a sale by the borrower, which can produce a gain or a loss, and if the lender cancels debt above the property's fair market value the canceled amount may be ordinary income unless an exclusion applies. IRS Publication 4681 explains the rules and the Forms 1099-A and 1099-C that report them.
How to cite this article
Quote freely with a link. Where a claim rests on a statute, the source above is the authority; cite it alongside this page.
TrusteeSaleData. "What happens after a trustee sale." Published September 25, 2026. https://www.trusteesaledata.com/blog/what-happens-after-a-trustee-sale
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