Arizona Anti Deficiency Law & How It Affects a Short Sale

With the threat of SB 1271 the Arizona Anti Deficiency Law looming what does this mean to you if this law does not see a repeal?

If you are a primary resident of the property then probably not much.  6 months of residency and a certificate of occupancy should clear you from any anti deficiency issues.

If you are an investor, out of state owner, or own multiple properties in Arizona then here are some scenarios:

If you live out-of-state and own a rental property in Arizona, bought and own a 2nd home or a home for your kids or parents, or you own multiple properties around Az  and can’t pay the mortgage, you have 2 main options to get out of the home  – Short Sale or Foreclosure.

If you foreclose, the banks will probably definitely come after you as they will assume you have money to pay them. They will seek a judgement probably equal to the amount between the selling price of the property and what you owed them PLUS attorney & court costs and late fees.  Probably a very ugly scenario.

If you short sell the home, there is a good possibility that your Az short sale agent can negotiate the deficiency amount down to zero or .10 – .20 on the dollar, thereby eliminating a judgement, lowering the total amount owed, and saving a judgement from haunting your credit.  Also, a short sale should bring a higher sales price thereby reducing the total outstanding dollar amount, not to mention no court costs or attorney fees.

About the only downside I see is that it will probably be more difficult to get a short sale approved if you show the bank that you have assets.  If you look like a good target then the lenders may not want to approve the short sale as it will be easier to seek a deficiency judgement against the borrower.

Remember, you can’t get blood from a turnip.  If the bank thinks you have very little assets and there is a good possibility that you will foreclose then it makes more sense for them to approve the short sale as it will not only net them more money but will also preserve the home & their interest in it.

It seems that attempting a negotiation with the bank via short sale should be the best bet in most cases even if you have a lot of assets.  You may have to pay a promissory note but it’s better than a judgement and you can get most promissory notes drawn for quite a lot less than the entire mortgage balance.

To speak to one of our Az short sale realtors who specialize in helping homeowners & investors avoid foreclosure please visit our website at http://www.AzHomeHelp.com or call us from 8am to 8pm 7 days a week at (480) 241-4406.

Related posts:

1. Arizonas Anti-Deficiency Law – SB 1271 – Law as it’s written
2. Arizona Anti Deficiency Law – SB 1271 – Explained
3. SB 1271 Arizona Anti Deficiency Law Repealed!!!
4. Arizona Anti-Deficiency Law Exceptions
5. Arizona Anti-Deficiency Law may be repealed!