In Arizona, absent some agreement, rule or statute on the contrary, a lender will generally look for a deficiency judgment when foreclosing on a property securing a loan, if the property will not sell for enough money to satisfy the debt in full. Fortunately for commonest Arizona householders, the Arizona legislature has adopted anti-deficiency statutes that preclude such recourse in several typical truth scenarios. Additionally, the parties to a real estate contract may expressly agree that the lender's only recourse is foreclosure on the property itself.
In the event of non-recourse loans, the non-recourse provision should be included in the mortgage or deed of trust. In most cases, the lender agreeing to a non-recourse loan will conjointly want assurances within the loan documents that the borrower will not commit acts of waste.
In the absence of categorical agreement, Arizona law provides protection for borrowers against potential liability stemming from the sale of a property at but market worth in an exceedingly foreclosure sale. The borrower, but, must act quickly to shield their rights. If the property sells for less than the amount owed to the lender, the borrower is entitled to ask a court to determine the property's truthful market value. In the event the court agrees that the far market price is beyond the sales price the buyer gets credit for the upper amount. This not solely protects the borrower from an unfairly low worth, however encourages lenders to form a credit bid for an amount near truthful market value.
There is a fair a lot of favorable statute protecting borrowers against deficiency judgments involving single or twin-family dwellings on a pair of 1/two acres or less where the loan is "purchase cash," that means it absolutely was used to pay the purchase value of the property. Sometimes, loans used to refinance purchase money loans are considered purchase cash loans, though the utilization of some of the proceeds to pay different debts, acquire money out, or for alternative uses may expose the borrower to recourse liability.
Significantly, whether or not the loan isn't a procurement cash loan, the lender's election to utilize non-judicial foreclosure on the deed of trust renders it non-recourse by operation of law. The lender may, but, instead obtain judicial foreclosure, that is a lot of expensive and time-consuming, however preserves the ability of the lender to obtain a deficiency judgment. This anti-deficiency statute additionally allows a lender to hunt a deficiency judgment against the borrower in the event of waste.
As a result of interpretation of the Arizona anti-deficiency statutes and connected assets laws can be terribly difficult, borrowers and lenders are suggested to seek the help of an experienced assets attorney with any questions or issues they may have.
Author Resource:
Adam has been writing articles online for nearly 2 years now. Not only does this author specialize in Arizona Real Estate Law - Understanding Arizona's Anti-Deficiency Statutes
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