What follows is a checklist of the matters that must or should be addressed in a Deed of Trust to insure that it complies with Arizona law and addresses the larger issues.  The list does not purport to be complete.  Obviously, there is a host of other issues which should be addressed, e.g. maintenance, insurance, condemnation and environmental issues.  Moreover, the Deed of Trust is often not a “stand alone” document but part of a loan transaction the terms of which must be reflected in its content.  In many transactions, the Deed of Trust is treated as just another standard form, but it is not, and before the borrower signs or lender accepts it, the document should be reviewed by qualified legal counsel.

  1. Is the lender subject to statutes regulating mortgage bankers or mortgage brokers
  2. If the trustor or beneficiary acts as an agent or trustee, does the Deed of Trust comply with the Blind Trust Act?
  3. Is a legal description attached to the Deed of Trust?
  4. Is the legal description in proper form for recording?
  5. Does the Deed of Trust comply with the requirements from the recording statutes? (a) Proper form of notary? (b) Proper signature? (c) Instrument properly identified in its title and caption? (if applicable, is it referenced as a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing) (d) Are the form requirements satisfied?
  6. Is the trust property conveyed to a trustee?  
  7. Is there a granting clause in favor of the trustee for the benefit of the beneficiary?
  8. Does the granting clause contain a reference to “power of sale”?
  9. Is the trustee qualified to act in that capacity?
  10. Does the instrument improperly encumber real property located in other states?  
  11. Does the Deed of Trust secure the performance of a contract or contracts? 
  12. Are mailing addresses of the trustor, beneficiary and trustee specified in the Deed of Trust?
  13. Is the nature of the trustor’s real property interest set forth in the Deed of Trust?
  14. Is the trustor also the borrower?  If not, have appropriate pledgor provisions been included in the Deed of Trust?
  15. Is there a recitation of the obligations or obligation secured?
  16. Are the remedial provisions of the Deed of Trust consistent with Arizona law?  Does it recite that it can take possession or obtain a receiver without demonstrating that security is inadequate.  Are the proceeds of sale distributed properly?
  17. Are anti-deficiency provisions applicable?
  18. Is there a prohibition of CFD’s?
  19. Is an absolute assignment of rents contained in the Deed of Trust?
  20. Does the lender intend to obtain, in the Deed of Trust, a security interest in fixtures and personal property?  If so, are UCC Article 9 requirements satisfied?  Is the grant of the security interests in personal property to Beneficiary?  Does it provide that it is effective as a fixture filing?
  21. Is the Deed of Trust a construction mortgage?
  22. Are events of default set forth?
  23. Time of Essence
  24. Are there fraudulent conveyance or preference concerns?
  25. Are the return address instructions provided?
  26. Does the Deed of Trust recite that it is governed by Arizona law?