Understanding the Arizona Anti-Deficiency Statutes and What they Mean to YOU
We have many questions and conflicting interpretations of the Arizona Anti-Deficiency statutes and what they really mean and do. For clarification I turned to Attorney Neal Bookspan who is a partner at Phoenix law firm Jaburg & Wilk and who handles a variety of business, bankruptcy and litigation issues. A link to Neal’s profile can be found by clicking here: ABOUT ATTORNEY BOOKSPAN and I have included some basic contact info for him below as well.
Neal, thanks for your help on this issue. Here’s what Neal had to share:
Ten Truths Regarding Arizona’s Anti-Deficiency Laws
1. Arizona’s anti-deficiency statutes only provide protection to borrowers on residential property, not commercial property, industrial property or raw land.
2. The Arizona anti-deficiency statutes are A.R.S. §§ 33-729(A) and 33-814(G). Section 33-729(A) applies to purchase money mortgages (when is the last time anyone saw a “mortgage” document used in Arizona??) and purchase money deeds of trust that are foreclosed judicially. Section 33-814(G) applies to deeds of trust foreclosed through a trustee’s sale. Almost all deficiency issues in Arizona arise under § 33-814(G).
3. Under either statute, the threshold question is whether the property at issue is “two and one-half acres or less which is limited to and utilized for either a single one-family or a single two-family dwelling.” Under the existing case law the dwelling must be built and at least occasionally occupied.
4. The property may be “occasionally occupied” by the owners or rented to third parties and qualify for anti-deficiency protection.
5. Arizona’s anti-deficiency statutes apply to second priority mortgages and deeds of trust if they are purchase money obligations. Non-purchase money mortgages and deeds of trust are not protected by Arizona’s anti-deficiency statutes.
6. If a purchase money mortgage or deed of trust subject to Arizona’s anti-deficiency law is extended, renewed, refinanced, or worked out, the loan retains its status as purchase money and the borrower remains protected by Arizona’s anti-deficiency law.
7. To obtain a deficiency judgment after a trustee sale, an action must be brought within 90 days after the sale. If an action is not brought within this time period, the right to a deficiency is lost pursuant to A.R.S. § 33-814(D).
8. The Arizona anti-deficiency statutes are applied both against and to protect guarantors in the same manner they are applied against and protect borrowers.
9. Lenders may continue or postpone trustee’s sales. This may be done an unlimited number of times and the only notice given of the new time and place for the trustee’s sale is by public declaration at the time and place of the scheduled trustee’s sale.
10. Where a deficiency is permitted, the sale of the underlying property results in a credit against the amount of the judgment in an amount equal to the higher of the fair market value of the property or the sales price obtained at a public sale. If a request is made within 30 days of the foreclosure, a judgment debtor may seek to have the court determine the fair market value of the property.