The Arizona State Legislature, along with Governor Jan Brewer, recently passed a new bill amending the Arizona Deficiency Statute. This law generally served to protect borrowers by prohibiting mortgage lenders from suing a homeowner for the difference between the amount the property sold for at a foreclosure auction and the amount owed to the lender. This statute only protects homeowners in certain circumstances. In general, the lender cannot sue a homeowner if the subject property is located on 2.5 acres or less and is a single-family residence or duplex. However, this statute only applies if the decline in value was not due to the owner’s negligence.
The new law now requires that an owner must have “used” the property for six consecutive months and a certificate of occupancy must have been issued. This new requirement is primarily aimed at non-resident investors; however, it could negatively affect Arizona investors. Arizona residents who live in their home as their primary residence and are facing foreclosure will continue to be protected by the new law.
This new requirement for the anti-deficiency law will go into effect on September 30, 2009, which could have significant ramifications on pending foreclosures and short sales.
Does my property qualify for the anti-deficiency statute?
- Is your home located on 2.5 acres of land or less?
- Is your home a one- or two-family dwelling?
- Is your house completely built andHave you received a certificate of occupancy?
- Do you live at home andHave you done it for 6 consecutive months?
- Was your property’s decline in value the fault of the market (rather than negligence on your part)?
- Were the mortgages used for the original purchase of the home, or at least for improvements made to the property?
If you answered yes to all of the questions above, you can still protect yourself under Arizona’s anti-deficiency statute. If you meet the criteria of the new law, your lender may not be able to pursue you for foreclosure losses. However, each situation is different. Your individual factors may affect the outcome of your foreclosure. To find out if you are protected by Arizona’s anti-deficiency statute, contact an attorney to explore all of your legal options and discuss your pending or potential foreclosure.
(Please note: While informative, these posts are not intended as formal legal advice and are not fully authoritative and should not be relied upon solely as a primary basis for legal action.)