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ARS Section 33-814(G) New & DevelopmentsARS Section 33-814(G) - News & Developments
The Fight to Fix Arizona's Broken Anti-Deficiency Law
by Richard Keyt & Jeana Morrissey, Arizona Real Estate Lawyers
Good News! On September 4, 2009, Arizona Governor Jan Brewer signed House Bill 2008 , which repeals the awful Senate Bill 1271 that changed Arizona’s anti-deficiency law. As a result, the law referred to in the following story never took affect and the problem described in the following story has been resolved in favor of borrowers.
The Problems Caused by Now Repealed SB 1271
On July 10, 2009, Arizona Governor Brewer signed into law SB 1271 that is a major change to Arizona Revised Statutes Section 33-814(G) effective September 30, 2009. The law apparently is intended to protect only borrowers who "utilize" and "use" a home for at least six consecutive months from deficiency judgments, but only if they get a certificate of occupancy for the home.
This new law will cause lenders to file thousands of lawsuits to collect deficiencies from borrowers who will then be forced into bankruptcies.
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Cause lenders to file tens of thousands of lawsuits to obtain deficiency judgments.
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Create a burden on Arizona courts that are already facing large caseloads during a time when court operating funds are decreasing.
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Cause tens of thousands of Arizonans who incur deficiency judgments to file for personal bankruptcy.
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Make it less likely that investors will invest money in Arizona residential real estate, which means less demand for housing and lower home values.
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Have a substantial adverse affect on Arizona’s economy.
News & Developments
August 18, 2009
Rallinnow.com reports that House Bill 2008 is a new budget bill that contains a provision that repeals SB 1271. The bill was passed by the Arizona Senate and is waiting to be sent to the Governor. There is a rumor that the Governor may veto the budget bill because it does not contain a sales tax increase or referral of the sales tax increase for public vote.
August 12, 2009
We believe, but have not confirmed, that there is a provision in the budget bill pending in the special session of the Arizona legislature that will repeal SB 1271 if the budget bill becomes law. Unfortunately, the Arizona legislature is not making progress on passing the budget bill. See the following stories on the status of the legislation.
Phoenix New Times story "No Budget, No Sales Tax on the Ballot in November, and Pam Gorman is Missing in Action; Should We Have Expected Anything Less?
Forbes.com reports Arizona Senate defeats bill with sales tax hike.
August 1, 2009
See Arizona real estate attorney Marc McCain's latest story. "Bank lobbyists told Arizona’s legislators that our anti-deficiency statutes needed to be revised because spec builders were “gaming the system” by claiming they lived in their spec homes to get anti-deficiency treatment. The Senate’s internal memo on the bill stated that investment properties were “NOT” protected by existing anti-deficiency laws. No one paid attention to the arguments or the law. The bill sailed through both chambers without a fight and was signed into law."
July 31, 2009
Kvoa.com news in Tucson story "Ariz. budget bill would repeal controversial law."
July 30, 2009
Arizona Republic story "State senator seeks repeal of his own foreclosure bill Measure aimed at protecting small banks could hurt some homeowners."
Arizona Capital Times story "Bankers won’t oppose repeal of foreclosure bill." Registration required to view the article.
July 29, 2009
Arizona State Senator Steve Pierce's July 29, 2009, press release calling for the repeal of SB 1271. Senator Pierce was one of the sponsors of the bill.
KSAZ Fox Channel 10 story and video: Sen. Wants Repeal of Anti-Deficiency Law Bill's own supporter says it has serious flaws. Video includes comments from Senator Pierce, who sponsored SB 1271 and Arizona real estate attorney Marc McCain.
East Valley Tribune story July 29, 2009, "Lawmaker fights foreclosure bill he crafted. A freshman state senator said Wednesday he will lead the fight to repeal a bill on home foreclosures he crafted and pushed into law less than two months ago."
Arizona Republic story "Realtors target foreclosure law."
July 28, 2009
After reviewing new Section 33-814(G), David Knapper, an Arizona litigator who represents a lot of lenders who foreclose on Arizona real property, had this to say about the new law, "Upon default, lenders in Arizona may now be motivated to pull the loan applications of their borrowers, and those who did not qualify for their mortgage as an owner-occupant, may find themselves embroiled in litigation following foreclosure. Conversely, those who qualified for their mortgage as an owner-occupant, even if this newly revised statute exposes them to a liability for a deficiency, may just whistle past the graveyard."
Please send a letter and/or an email message to your Senators and House members asking them to repeal or fix SB 1271 / ARS Section 33-814(G).
How to Contact Arizona State Senators: For general information, email addresses and phone numbers of all Arizona Senators see the Arizona Senate Roster.
How to Contact Arizona State House members: For general information, email addresses and phone numbers of all Arizona House members see the Arizona House Roster.
July 27, 2009
On July 27, 2009, Arizona real estate attorney Marc McCain submitted an excellent memorandum to Arizona State Senators Sylvia Allen and Steve Pierce and Representatives Jack Brown, Bill Konopnicki and Barbara McGuire. The memo summarizes Arizona foreclosure law pre SB 1271, lists the incorrect assumptions on which SB 1271 was based and discusses the unintended consequences of the new law.
Foreclosure Industry's article of July 27, 2009, entitled "Governor Brewer Signs Legislation Gutting Anti-Deficiency Statutes in Arizona."
On the topic of Certificates of Occupancy: Richard Keyt spoke to the City of Phoenix department that issues Certificates of Occupancy and was told that Phoenix did not issue Certificates of Occupancy before 2000. Richard Keyt also spoke to Trevor Howell, Permits Supervisor for the City of Mesa. The following is Mr. Howell's email message to Richard send July 27, 2009:
"As I stated in our phone conversation . . . the City of Mesa does not currently issue Certificates of Occupancy to residential properties. The exception to that is if a lender is requiring one before they will provide financing on a new house then we will issue a C of O for that house. However, to provide a C of O for an existing home can be difficult. A lot of the homes in Mesa were built before the city Had C of O's and some of the homes were built before the City of Mesa required permits. For the homes that were built that long ago, we do not have any construction plans for the house and no inspection were done making it almost impossible to issue a C of O."
Alan Langston's email of July 27, 2009, to the members of the Arizona Real Estate Investors Association about the need to fix. Alan, Executive Director of AZREIA, says, "There is no question this is bad legislation."
July 26, 2009
The Arizona Republic finally woke up and took notice of the new law on July 26, 2009, after being scooped by the New York Times and the Phoenix New Times. Better late than never. Catherine Reagor is the Arizona Republic reporter who wrote "New law triggers fear for housing. It holds some owners liable for debt, even in foreclosure."
July 24, 2009
The new Arizona law has gotten national attention. The New York Times in a story entitled "New Ariz. Law Would Allow Post-Foreclosure Suits" stated "Arizona's changes appears to be a departure from most other states' consideration of legislation on foreclosure issues." The story quotes Charles Delbaum, a lawyer for National Consumer Law Center in Boston, as saying ''Times are hard enough as is. It may help your friendly banker but it's not in the interest of your state's economy ... to go ahead.''
July 23, 2009
Arizona real estate attorney Marc McCain's letter to Arizona legislators re Senate Bill 1271. Marc asks legislators to "repeal this law and bring the lenders and their lobby back to the table during the next normal legislative session to have a well rounded and accurate discussion of the issues at play."
July 22, 2009
Letter from Arizona Association of Realtors CEO Tom Farley to Governor Jan Brewer requesting that she amend her call for a special session of the legislature to address issues resulting from SB 1271. The Arizona Association of Realtors has taken a proactive position to try to change this awful new Section 33-814(G).
Arizona attorney Marc McCain says "Arizona's new anti-deficiency law raises many questions."
July 21, 2009
The Phoenix New Times has an excellent article on the new law called "Housing Crisis: Governor Brewer Signed a Bill that Has the Potential to Bankrupt Homeowners Facing Foreclosure."
July 19, 2009
Jeana Morrissey and Richard Keyt publish their article called "New Arizona Law Limits Borrowers' Protection from Deficiency Judgment After Foreclosure of a Home: Arizona Courts Could Be Flooded with Deficiency Lawsuits." This detailed article explains what a deficiency is, the problems caused by the new law, the erroneous legislative history of SB 1271, and why the law needs to be fixed.
Problems with AZ's New Anti-Deficiency Laws by Arizona real estate attorney Marc McCain.
July 15, 2009
"Arizona's New Anti-Deficiency Rules." Arizona real estate attorney Marc McCain points out that the new law requires trustors to produce a "Certificate of Occupancy" for the home lost in a foreclosure to avoid liability for a deficiency judgment and that some Arizona jurisdictions (Mesa for example) do not issue COs. People who live in these jurisdictions and suffer a foreclosure are out of luck under the new law.
July 10, 2009
"New Law Limiting the Protection of Arizona Anti-Deficiency Statutes" by Aaron M. Green and Christopher A. Combs. These experience Arizona real estate lawyers state, "investment homes will continue to have the same protection as owner-occupied homes under the anti-deficiency statutes." They also believe the new law is retroactive, i.e., it applies to all foreclosures of a deed of trust beginning September 30, 2009.
Senate Bill 1271 / Section 33-814(G)
A. The text of new ARS Section 33-814(G).
B. The legislative history of SB 1271.
C. The Arizona Senate research staff memo dated June 8, 2009.
D. Misstatements of Arizona law contained in the June 8, 2009, staff memo.
Join KEYTLaw's Campaign Calling for the Current Special Session of the Arizona Legislature to Fix the Broken Law
KEYTLaw real estate attorneys Richard Keyt and Jeana Morrissey have written a letter to Arizona Governor Jan Brewer asking her to amend her call a special session of the legislature to include fixing Arizona Revised Statutes Section 33-814(G). We request that readers of this article also write a letter to Governor Brewer requesting that she ask the current special session of the legislature to consider fixing Section 33-814(G). We've made it very easy for you to send the message to the Governor. Just print our pre-addressed request letter, sign it and mail it to Governor Brewer. We hope that the governor gets a large number of letters.
Please print our letter to Governor Brewer, sign it and mail it to the Governor at the address at the top of the letter. Our letters are here:
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Letter to Governor Brewer - Word 2003 format (editable)
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Letter to Governor Brewer - Adobe pdf format (not editable)
Schedule an Arizona Foreclosure Law Consultation
If you have questions about Arizona foreclosure law and the legal consequences of defaulting on a loan secured by a lien on an Arizona home, hire Arizona real estate attorney Jeana Morrissey to review your loan situation and answer your questions. Jeana offers a one hour in office or over the phone consultation for $349. Contact Jeana at 602-906-4953 ext. 4 or jrm@keytlaw.com. To hire Jeana, complete our online consultation agreement. To schedule a consultation, call Jeana's legal assistant Milena at 602-424-4159.
About KEYTLaw, LLC, and Jeana Morrissey
Information on www.keytlaw.com about Arizona foreclosure law and real estate matters is provided as a public service by KEYTLaw, LLC, and Jeana Morrissey, a residential and commercial real estate attorney licensed to practice law in Arizona. Jeana's telephone numbers are 602-906-4953, ext. 4 (voice) & 602-798-7682 (fax), and her email address is jrm@keytlaw.com. Communicating with Jeana Morrissey or KEYTLaw, LLC, personnel via email or otherwise does not cause you to become a client or cause your communications to be confidential or subject to the attorney client privilege.
Schedule an Arizona Foreclosure Law Consultation
If you have questions about Arizona foreclosure law and the legal consequences of defaulting on a loan secured by a lien on an Arizona home, hire Arizona real estate attorney Jeana Morrissey to review your loan situation and answer your questions. Jeana offers a one hour in office or over the phone consultation for $349. Contact Jeana at 602-906-4953 ext. 4 or jrm@keytlaw.com. To hire Jeana, complete our online consultation agreement. To schedule a consultation, call Jeana's legal assistant Milena at 602-424-4159.
This page was last modified on October 10, 2011.
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