Arizona Anti-Deficiency Laws Only Cover Foreclosure, Not Short Sales
While this article comes to us from Arizona, the message needs to be heeded everywhere! Foreclosure laws are constantly changing from state to state. What that means to you is that unless you are a real estate attorney you shouldn’t be in the business of interpreting law. The article is actually more of a message. The message is, “Consulting an attorney sounds like sound advice- no matter what state you live in.”
Arizona Anti-Deficiency Laws Only Cover Foreclosure, Not Short Sales
By twist
Considering a short sale in Arizona? It pays to be careful. M forwarded me the following information that he received, which came from a discussion with Tom Farley, CEO of the Arizona Association of Realtors. It stated:
One issue that Tim made perfectly clear, and we all felt was important to get out to those of you who may not have attended, is this. In Arizona, there is anti-deficiency protection for a large number of property owners who go through foreclosure, however, there is no statute that proves anti-deficiency protection to any property owner in the case of a short sale. Our anti-deficiency laws only cover foreclosure.
Tom Farley stressed that it is important that we not make incorrect representations to the sellers in this regard. The deficiency protection they may be able to receive is only found in the terms of the short sale approval letter provided by the lender. If the lender does not fully release them from the lien, but only releases the property to close and transfer, there is not any guarantee that the lender will not pursue the seller for the remainder of the unpaid balance on the note.
One popular myth that was dispelled at yesterday’s meeting is that there was protection if it was purchase money. This is not true. While some lenders are providing the release in these cases they are not obligated to do so. Tom stressed the importance of legal counsel for sellers facing short sale with regards to this issue once again.
I’m not familiar with the law in this case, but consulting an attorney sounds like sound advice- no matter what state you live in.