Arizona Reverses Change to Anti-Deficiency Statute
and Adds Additional Mailing Requirement

Arizona Governor Jan Brewer signed into law on Friday, September 4, 2009 House Bill 2008, which among many other things made two significant changes to the Arizona foreclosure laws.

First, the change made in July of this year by Senate Bill 1271 to the anti-deficiency statute was repealed.  That recent change added the following requirements to the type of property protected: (1) The trustor under the deed of trust must have used the property as a dwelling for six consecutive months, and (2) A certificate of occupancy must have been issued for the property.  The statute also made it clear that the trustor has the burden to prove these two additional requirements in order to be protected by this anti-deficiency statute.  This recent change was reversed and the change made retroactive so there is no period of time during which the new language would apply.  On the issue of how to apply the Arizona anti-deficiency statute, the correct answer is:  the same as it always did. 

Second, on “Single Family Residential Properties”, there is an additional mailing requirement.  The trustee must now mail a copy of the Notice of Sale to the Property Address, and this mailing may be by first class mail.  This mailing is to be sent within 30 days of the recording of the Notice of Sale.

The stated intent of this second change is to notify tenants at the property address, who may not know the property owner has allowed the underlying home loan to fall in default.  There is no guidance about how to address a mailing to a “Property Address”, although the obvious addressee of “Occupant” may become widely used.  Nor is there any guidance on how the Trustee is to determine whether a specific property qualifies as a “Single Family Residential Property”, although since this is a mandatory mailing most Trustees will send out this additional mailing whenever there is a hint that the property could be a single family residence.

Update written by Rex C. Anderson, Esq., Law Office of Rex C. Anderson. P.C.  He can be reached via email at rca@rcalaw-az.com or via telephone at 888-675-7809.