Arizona Legislature Repeals SB 1271 Again – Law Would Have Changed AZ’s Anti-Deficiency Law

Good news for Arizona borrowers and real estate investors who have liens on their property secured by a Deed of Trust.  The Arizona legislature repealed SB 1271 for the second time.  Last year the Arizona Bankers Association tried to pull a fast one on borrowers whose loans were secured by Deeds of Trust on Arizona real property of 2.5 acres  or less utilized as one or two dwelling units.  The ABA got the unsuspecting Arizona legislature to pass a law called SB 1271 that was signed by Governor Brewer.  SB 1271 retroactively changed Arizona law to make thousands of borrowers liable as of September 30, 2009, for amounts they were not liable for on September 29, 2009.  The law was so bad that the State Senator who sponsored SB 1271 lead a campaign to repeal the law.

The Arizona legislature repealed SB 1271 during a special legislative session last year and Governor Brewer signed that repeal into law.  The Arizona Bankers Association filed a special action with the Arizona Supreme Court asking the court to throw out the repeal on the basis it was not constitutionally legal because it was an add on bill to a special session of the legislature called by the Governor for a different purpose.  This second repeal of SB 1271 is intended to make the first repeal moot and finally kill the ABA’s attempt to retroactively rewrite the law of Arizona to the great harm of thousands of borrowers and the economy.

For more history on this subject, see my article called “New Arizona Law Limits Borrowers’ Protection from Deficiency Judgment After Foreclosure of a Home,”  in which I said:

On July 10, 2009, Arizona Governor Brewer signed into law a change to Arizona Revised Statutes Section 33-814(G) that will be effective on September 30, 2009. The change apparently is intended to protect only borrowers who live in a home from deficiency judgments. This law is a huge change in Arizona real estate lending law that may affect hundreds of thousands of borrowers who secured their loans with Arizona residential real estate.

This article has an in depth explanation of SB 1271 and why is was a terrible law that cried out for repeal.  See also “ARS Section 33-814(G) – News & Developments:  The Fight to Fix Arizona’s Broken Anti-Deficiency Law.”

Related posts:

1. Arizona Bankers Association Sues to Stick It to Home Borrowers
2. SB 1271 Repealed
3. Arizona Legislature Considering 2nd Repeal of SB 1271, the Banker’s Dream Law
4. ARS Section 33-814(G) – News & Developments: The Fight to Fix Arizona’s Broken Anti-Deficiency Law
5. Arizona Bankers Sue to Challenge Repeal of Change in Arizona Foreclosure Law
6. Arizona Foreclosure Law aka Arizona Anti-Deficiency Law
7. Confusion about Short Sales and Arizona’s Anti-Deficiency Law
8. Budget Cuts Significantly Impact Arizona Corporation Commission’s Ability to Process New Companies & Prevent Civil Securities Fraud
9. Four Lawyers Nominated for Arizona Court of Appeals
10. Arizona Law Allows Lenders to Issue Borrowers a 1099 for Discharge of Indebtedness & Sue Later for a Deficiency