• Home
  • Communities
    • McDowell Mountain Ranch
      • Arizona Highlands
      • Arizona Vintage
      • Armonico
      • Cachet
      • Castle Chase
      • Cimarron Hills
      • Cimarron Ridge
      • Community Center
      • Desert Cliffs
      • Discovery Canyon
      • Discovery Trails
      • Eagle Ridge
      • Mirador
      • Montecito
      • One Hundred Hills
      • Panorama Point
      • Sienna Canyon
      • Sonoran Estates
      • Sonoran Fairways
      • Sunrise Point
      • Sunset Point
      • The Overlook
      • The Ridge
      • The Summit
      • Trovas
      • Vermillion Cliffs
    • Grayhawk
    • Aviano
    • DC Ranch
    • Desert Ridge
    • Windgate Ranch
    • Lone Mountain
    • Desert Mountain
    • Scottsdale Mountain
    • Scottsdale Ranch
    • Luxury Homes
    • Golf Course Homes
  • Buyers
  • Sellers
  • About Us
  • Testimonials
  • Blog
  • Contact

Jeff Cameron

HomeSmart

480-652-2004

Follow Us on FacebookFollow Us on Google+Follow Us on TwitterFollow Us on LinkedInFollow Us on YouTube

BANKS WIN, HUGE CHANGE TO ANTI-DEFICIENCY LAWS IN AZ

July 18, 2009 By Jeff Cameron

Print Friendly, PDF & Email

Wow, this one blind sided me. Here we are working so hard to get through this real estate mess and the legislature smacks us in the teeth. With this new law investors will now seek bankruptcy in lieu of selling an investment property through a short sale. I have 4 or 5 investment properties under contract with short sales currently. We are going to have to push to get them to close escrow prior to September 30, 2009.
When an investor chooses bankruptcy in lieu of a short sale, the property usually sits vacant for months while going through the process. This will lead to more damage and vandalism, which in turn will lead to homes selling at a lower price. What else can the government due to push real estate values lower? I am sure they will find something.
Previous to the new law, an investor could sell a property in a short sale or have a foreclosure and the bank had no recourse. Owner occupants have no recourse. Of course there are a few more rules, it must be a purchase money mortgage on less than 2.5 acres and have a house on the property. Please consult your own attorney and tax advisor to determine if you have deficiency or not!
Please read the memo below from Tom Farley of the Arizona Association of Realtors. Thanks Tom for the information and keeping us up to date on current changes in the world of real estate here in Phoenix and Scottsdale.

SB 1271 – Anti-Deficiency Law

Change
One of over 200 bills pushed through the legislature in less than a month was a big change to an existing law that provided protection to borrowers in some cases against a deficiency judgment when their property went through foreclosure. Below is some background information on the legislation that has the lending and real estate industries a buzz with its intended and unintended consequences.

SB 1271 – Serious Changes to Arizona’s Anti-Deficiency Statute
SB 1271 was sponsored by Senator Sylvia Allen, a REALTOR® from the White Mountains area of our state. The legislation started out in January as a bill dealing with jail districts and property tax limits. In June a strike-everything amendment gutted the original bill and changed its direction entirely. The Arizona Bankers Association argued successfully that the changes provided in the legislation were necessary because abuses in the current law were costing Arizona-based banks millions in losses. There was significant sympathy for the Arizona community banks in making the changes provided by this legislation. In other words, the legislators found it very easy to hold property investors liable for their debts while arguing that homeowners would still retain their deficiency protection if they lived in the home for six consecutive months. The legislation sailed out of the Senate by a unanimous vote but just barely received enough votes to pass the Arizona House of Representatives. The Governor signed the bill on the last day to sign or veto the legislation.

The current law – Arizona Revised Statutes (A.R.S.) § 33-814 currently states that within 90 days after the date of sale of a trust property under a trust deed, a legal action may be brought to recover a deficiency judgment against the borrower (trustor) who has now had their property foreclosed. The deficiency judgment must be for an amount equal to the sum of the total amount owed as of the date of the sale either by the fair market value of the trust property as determined by the court or the sale price at the trustee’s sale, whichever is higher. The current law prohibits a lender from seeking a deficiency judgment against the trustor (foreclosed property owner) if the trust property is 2.5 acres or less and is used as a single one-family or single two-family dwelling.

The law effective September 30, 2009 – SB 1271 amended A.R.S. § 33-814 (G) to require that the trustor must have “utilized” the property for six consecutive months and a certificate of occupancy must have been issued. What does this likely mean? Various attorneys are opining different theories. My interpretation of the statute is that after September 30, 2009, properties sold at trustee’s sale likely will not qualify for the anti-deficiency exemption unless the trustor lived in the single one-family or single two-family dwelling for at least six consecutive months. The legislative Fact Sheet, as transmitted to the Governor, states that SB 1271:

    Prohibits a deficiency judgment against a trustor pursuant to a trustee’s sale of a trust property that is 2.5 acres or less and is used as a single one-family or single two-family dwelling if both of the following apply:

  • The trustor has lived in the trust property for at least six consecutive months.
  • A certificate of occupancy has been issued for the property.
    Places the burden of proof on the trustor to demonstrate that the statutory requirements to prohibit a deficiency judgment are met.

As before this law was passed, REALTORS® should advise their clients to consult legal counsel regarding the application of the anti-deficiency statute.

 

Filed Under: Latest News Tagged With: Anti Deficiency Laws, foreclosure, Investors in Real Estate, real estate in arizona, real estate in Scottsdale, SB 1271, short sales

Categories

  • McDowell Mountain Ranch
  • Scottsdale
  • Grayhawk
  • Desert Ridge
  • Phoenix
  • DC Ranch
  • Fun In Arizona
  • Action Sports
  • Gilbert
  • Local Businesses
  • Peoria
  • Glendale
  • Paradise Valley
  • Mesa
  • Tempe

Calculate Mortgage Payments

www.mlcalc.com

Contact Us

Jeff Cameron

The Cameron Team
8388 E Hartford Ave,
Scottsdale, AZ 85255

Jeff: 480-652-2004

JeffRCameron@gmail.com

Copyright © 2025 Jeff Cameron
8388 E Hartford Ave Scottsdale, AZ 85255 · 480-652-2004 · jeffRcameron@gmail.com
Powered by