Since the downturn in the Arizona real estate market and increase in the number of loan defaults and foreclosures, lenders and borrowers have fought over the interpretation of Arizona’s so-called anti-deficiency statutes.

Disputes between lenders and borrowers have involved, for example, (1) what is a dwelling? (2) does a dwelling have to be someone’s primary residence? (3) what is a purchase money loan? (4) does a construction loan qualify as a purchase money loan? and (5) can an incomplete dwelling still be considered “limited to and utilized for either a single one-family or single two-family dwelling?”  This post focuses on the last issue, recently addressed by the Arizona Supreme Court.

But, before addressing that, I will cover the basic requirements to qualify for protection.

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The Arizona Court of Appeals has decided several recent cases interpeting and applying Arizona’s anti-deficiency statutes.  Watch this short video power point presentation to learn about Arizona’s Anti-Deficiency Statutes:

• What constitutes qualifying property?
• The two different types of foreclosures in Arizona.
• The type of loan that qualifies for protection in judicial foreclosure.
• How Arizona’s anti-deficiency statutes apply and protect certain property and certain loans. [Read more…]

In 2005, Trevis and Lisa Mueller purchased raw land.  In 2006, they borrowed $444,000 from M&I Bank to construct a single family home for their own use.  In 2007, they began construction.  Unfortunately, construction fell behind schedule and was mostly defective.  The Muellers requested that M&I advance them loan disbursements to remedy the defects.  When the Bank refused, the Muellers abandoned the property and defaulted on their loan.  In 2009, M&I foreclosed upon the property at a trustee sale.  M&I then filed suit against the Muellers for some $68,000, the deficiency balance on their loan. [Read more…]

Interested in learning more about Arizona’s Anti-Deficiency Statutes?  Watch our video presentation.  The video covers basic terminology, concepts and the application of Arizona’s Anti-Deficiency Statutes to trustee’s sales (non-judicial foreclosures) and judicial foreclosures.