SHORT SALE Q&A

In some states lenders are given the ability to sue the homeowner for these losses or “deficiencies.”  Arizona’s anti-deficiency statutes actually prevent lenders from suing a homeowner for losses on a home after foreclosure.  As outlined in Arizona Revised Statutes, Title 33, Chapter 6.1, a person may not be sued by their lender if the property is located on 2.5 acres or less and is a single family residence or duplex (this only applies if the decrease in value is not due to negligence on the homeowner’s part).  Notably, if a lender seeks a deficiency judgment in Arizona, they have 90 days after the sale of the property to begin judicial proceedings to recover any losses.  If they fail to do so, they may forfeit their right to recover the deficiency.  The only exception to Arizona’s anti-deficiency statutes are VA loans. VA is allowed to obtain a deficiency judgment despite current state laws that prohibit such actions.

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