Arizona Deficiency Judgment Law

Foreclosures in Arizona can be conducted both judicially and non-judicially.  Non-judicial foreclosure is becoming more commonplace in Arizona as mortgages are being created more often by deed of trusts than they used to be.  A deficiency is created when a lender forecloses on a property and receives less than what was owed on the property.  A deficiency judgment is created when a lender sues and gets a judgment on the amount still owed on the loan after the foreclosure.  Arizona does not allow for a deficiency judgment in the following circumstances:

  • If the property is either a single one-family or a single two-family (duplex) dwelling on 2 1/2 acres of land or less and sold pursuant to a power of sale (deed of trust);
  • after a judicial foreclosure on a property if the property is either a single one-family or a single two-family (duplex) dwelling on 2 1/2 acres of land or less AND the mortgage was a purchase money mortgage (the original loan used to initially purchase the property).

(Arizona Revised Statutes Annotated Sections 33-814G and 33-729A).

The above provisions covers a large percentage of typical single family homeowners.  If you live in Arizona and have questions about whether your particular situation might give rise to a deficiency judgment, speak to an attorney in your area for specific guidance.  Or continue searching this site for more foreclosure alternatives.

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