Foreclosure

questions & answers

Question: What are home owners liabilities during foreclosure

Answer:

It's beyond the scope of AZLawHelp to determine what liabilities a home owner may have in a particular case.  Generally, some of the most common issues that homeowners face is whether there will be a deficiency owed on a loan or loans.  Arizona two anti-deficiency statutes that aim to protect home owners from paying a deficiency. 

Where a lender forecloses on a property by a judicial foreclosure, there will be no deficiency on a loan if the property is 2 1/2 acres or less, the home was utilized as single or two family dwelling, and the loan was secured to pay all or part of the purchase price of the home.  A.R.S. 33-729(A).  Where the lender forecloses by way of trustee sale, there will be no deficiency if the property is 2 1/2 acres or less and utilized as a single or two family dwelling.  A.R.S. 33-814(A).  The key difference between the statutes other than applying to different foreclosure procedures, is whether the loan was "purchase money" i.e. used to pay part or all of the purchase price of the property.  Trustee sales do not have this requirement however it is still possible for a borrower to face a deficiency on a second home loan or home equity line of credit even after a trustee sale is completed as the lender on those loans may have no elect to sue on the mortgage or promissory note if the trustee sale is not an option.  In that case the borrower may still be protected if the loan qualifies as a purchase-money loan.  Borrowers would be wise to consult an attorney if facing foreclosure, but even more so in a situation where there are multiple loans secured by the same property.

Other common liability issues include waste committed to the property and HOA (Home Owners Association) fees.  A home owner may be liable for waste or intentional damage to the property - essentially failing to maintain the property.  A.R.S. 33-806(B); A.R.S. 33-729(B).  HOA fees, if the property is a part of an HOA, will continue to be the responsibility of the home owner until the title of the property is transferred at the end of the foreclosure process. 

These are some of the most common liability issues a home owner might face, for specific advice consult an attorney.  A home owner in danger of default or foreclosure may utilized the online intake system to apply for legal services.

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