House Bill 2584, just introduced, would prevent both first and junior lenders from suing a borrower for the remaining debt on their loan if the lenders agree to a short sale. The new law would be added to Arizona's anti-deficiency laws, A.R.S. 33-729 (as 33-729.01) and A.R.S. 33-814 (as 33-814.01).
The Arizona Bankers Association is pushing again to change Arizona's anti-deficiency laws. According to Paul Hickman, president and CEO of the Arizona Bankers Association, “One of our main goals is to reform this statute and bring it in line with the rest of the country . . . This law makes Arizona compare worse to other similarly positioned states.”
If you are thinking about trying to short sell your home, first be sure you can answer the following questions: 1. Have you evaluated your specific situation to determine whether you believe your lender will approve a short sale, based on your personal circumstances? 2. Do you know what important protections to look for in an offer submitted by a potential short sale buyer before accepting the offer? 3. Do you understand why certain contingencies contained in a purchase offer are critical for your legal protection as a seller? 4. Do you understand that a lender’s approval of your short sale does not automatically release you from further liability for the debt? 5. If your lender approves a short sale offer, are you at risk of your lender requiring a cash contribution from you in order to obtain the lender’s approval? 6. Do you understand the three most common terms and conditions in lenders’ short sale approval letters and what they mean to you? 7. If you are not happy with the bank’s terms and conditions, what are your options? 8. Do you have a second loan on the property and do you understand the potential obstacles that can be caused by a second lender? 9. If your lender does not approve your short sale, do you fully understand other options that are available to you and the ramifications of those options? 10. Are you aware of the tax consequences arising from canceled debt after a short sale and the exemptions or ways to mitigate tax liability that may be available to you? Many people experience frustration and are sometimes faced with unexpected legal liability because they didn’t understand the risks, rights and options related [...]