Change in Law Limiting Protection of the Arizona Anti-Deficiency Statute

If you are considering letting your property go to foreclosure, read on to learn about the new law that can affect your pocket book. On July 10, 2009, the Governor of Arizona signed into law (effective September 30, 2009) a significant amendment to Arizona's anti-deficiency statutes. This new law decreases the protection to Arizona homeowners after they lose their home to foreclosure. The anti-deficiency statutes had not been amended since 1990.

The Arizona anti-deficiency statutes (primarily A.R.S. §33-814(G)) generally protect most homeowners from being sued after foreclosure by their lender for any unpaid balance of the loan, i.e., deficiency, if the home was "utilized" as a "dwelling." The Arizona courts have ruled that even vacation homes rented out by investors for only a few weeks of the year were being "utilized" as a "dwelling."

The new law states that homes must be utilized as a dwelling "by the trustor [borrower] under the deed of trust for at least six consecutive months...." (Emphasis added.) Therefore, occupancy of the home for at least six consecutive months prior to the foreclosure is now required.

You may want to consider other alternatives than foreclosure, such as short sale or loan modification.

For more information about Tucson's Foreclosures contact Julie Nellis, Long Realty, 520-990-8477, email nellisja@aol.com website www.tucsonhouses4you.com