Real Estate Legislation Updates

Protect yourself: consult attorney, CPA before a foreclosure or short sale

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Five months ago, we published an article on Arizona’s anti-deficiency statute to explain our state’s law on the potential liability a homeowner may face if their home is sold for less than they owe.

The current statutes (33-729 and 33-814) were revised Sept. 1. Senator Steve Pierce introduced and subsequently got passage and the governor’s signature on Senate Bill 1271.

This bill had unintended, and potentially devastating consequences.

As quickly as it passed, Senator Pierce asked that his own bill be repealed. Did anyone read the bill?

There is another bill at the governor’s office (HB 2008) awaiting signature to repeal the original bill and add some protection for people who are renting homes that go into foreclosure.

Before Sept. 1, a homeowner of a property on less than 2.5 acres, under certain conditions, could not be held responsible for a mortgage deficiency if the property went into foreclosure.

In other words, if the property brought less at foreclosure than was owed, the owner would not be liable to make up the difference.

The new law now states that the homeowner must have a six-month residency in the home to obtain protection under the new anti-deficiency law.

The law also states that the lender may require proof of continuous overnight living.

As you can imagine, this new statute can have a significant impact on second homeowners and investors who find themselves in a challenging financial situation.

Of concern to many is that the government can change the rules of the game at their whim.

Investors and second homeowners who bought under the protection of the law will have no protection.

Also of note, the sales tax on services popped up again. Representative Matt Heinz submitted a bill that was defeated.

If passed, this tax may have increased the charges to buy or sell a home. For example, the fees charged by appraisers, title companies, agents and home inspectors could have been subjected to a sales tax.

The proposed services tax did not apply to just real estate transactions but may have been imposed on any service rendered such as those by a physician, attorney or plumber, for example.

As we suggested in the previous article — and you may be tired of being reminded of this — it is imperative that you contact an attorney and a CPA before making any decisions regarding a foreclosure or a short sale.

Professional consultations are especially important today as rules and laws are being proposed, written, rewritten and unwritten in almost less time than it takes to read this article.

Ray Pugel is a designated broker for the firm Coldwell Banker Bishop Realty. Contact him at (928) 474-2216.

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