Arizona's Anti-Deficiency Statutes Defined
The Arizona legislature has enacted two statutes that work together as the codification of what is commonly referred to as Arizona's anti-deficiency law. These statutes, found at A.R.S. § 33-729(a) and A.R.S. § 33-814(G), protect many Arizona homeowners from owing monies to their lenders after a foreclosure or trustee's sale. These protections are limited by the language of the statutes, however, and are typically limited to property used as a single or two family home and, depending on whether the lender was the foreclosing lender, whether the money borrowed was "purchase money."
Recent Anti-Deficiency Law Court Decisions
Although these statutes have been in place for many years there has been little interpretation of the statutes in the Arizona court system. This is likely a product of years of rising real estate values that have resulted in few situations where a deficiency would need to be pursued. Since the collapse of the real estate market a few years ago the court system has been clogged with cases related to foreclosure and, in many cases, the application of these anti-deficiency statutes.
Unfortunately, it takes time for these cases to work their way through the trial court and then the appellate court system so that decisions are published to shed light on certain interpretations of the statutes. Recently, several appellate decisions addressing the anti-deficiency laws have been published that, in many cases, appear to extend protections not clearly apparent in the language of the statutes.
Because of the law pertaining to anti-deficiency protection is constantly evolving if you have any concerns about potential liability to a lender following a foreclosure or trustee's sale you should consult with an attorney as soon as possible. To ensure that changing precedent does not affect your rights and obligations, it may be wise to keep that attorney on retainer until your situation is fully resolved.