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In Arizona, there are some agreement, regulation or statute to the contrary, a lender can usually lack a verdict after foreclosure on a property securing a loan if the property does not sell for enough money to debt in full. Fortunately for most typical Arizona homeowners, the Arizona legislature has anti-deficiency in the statute the use, in fact, many typical scenarios. In addition, the parties to a real estate contract may expressly agree that the lender is the only one foreclosure on the property itself.

In case of non-recourse loans, the non-use should be included in the mortgage or deed of trust. In most cases, the lender approving a non-recourse loan is also assured in the documents, loans that the borrower will not be acts of waste.

In the absence of an express agreement, Arizona law provides protection for borrowers against potential liability from the sale of a property at less than market value in a foreclosure sale. The borrower, however, must act quickly to protect their rights. If the property is sold for less than the amount owed to the lender, the borrower is entitled to ask a court to determine the market value of the property. In the event the court agrees that the market value is much higher than the selling price the buyer will be for the higher amount. This not only protects the borrower from an unfairly low price, but encourages lenders to offer a loan for an amount in the vicinity of commercial value.

There is a more favorable law protecting borrowers against deficiency judgments with single-or dual-family homes on 2 1 / 2 acres or less, if the loan is "purchase money", "meaning it was for the payment of the purchase price of the property. Normally, loans to refinance purchase money loans are also known as purchase-money loans, although the use of a portion of the proceeds to pay other debts, get money from, or for other purposes, the borrower having recourse to the liability.

Significantly, even if the loan is not a purchase money loan, the lender of choice to use non-judicial foreclosure on the deed of trust makes it non-recourse by operation of law. The lender may, however, instead of in court foreclosure, which is more expensive and time-consuming, but preserves the ability of lenders to a lack verdict. The anti-deficiency statute also allows a lender to a lack verdict against the borrower in case of waste.

Because the interpretation of the Arizona anti-deficiency statutes and related real estate laws can be very complicated, the borrower and lender is recommended that the assistance of an experienced real estate lawyer with questions or concerns they have.

Kevin R. Harper is an Arizona real estate and business services, litigation attorney, to individuals and small businesses throughout the state of Arizona from Phoenix to its central headquarters on 1 N. Central Ave., Suite 1130, in downtown Phoenix. His company also has an office in Chandler, Arizona and represents individuals and businesses throughout the state of Arizona.

For more information on Arizona Real Estate Law, feel free to contact Harper Law PLC at 602-256-6400, or visit the company online at http://www.HarperLawArizona.com

Copyright 2008 Harper Law PLC, all rights reserved.

The above article is for informational purposes only and, because each situation is different, is not as definitive legal advice. You should not act on this information without independent legal advice regarding your individual situation.