Many Arizona property owners will be happy to learn that yesterday Arizona Governor Jan Brewer signed House Bill 2008, repealing Senate Bill 1271 that significantly changed Arizona’s anti-deficiency law, particularly in how it applies to investors. Specifically, SB 1271, which was to take effect September 20, 2009, amended Arizona Revised Statues Section 33-814(G) to permit mortgage lenders to obtain deficiency judgments against certain borrowers after a foreclosure.
The law before SB 1271, and as it will remain unless and until the legislature institutes another change, prevents lenders from suing for a deficiency after a foreclosure provided that the land that secured the loan was 2.5 acres or less and was utilized as a one or two unit dwelling. SB 1271 could have allowed lenders to sue unless the borrower could prove he or she lived in the property for at least six months and could produce a certificate of occupancy. The law was flawed in many respects, including being substantially ambiguous so as to invite a flurry of litigation over its meaning.
