Home Builder be Aware!

On April 22nd, 2014, HB 2018 was signed into law by Arizona Governor, Jan Brewer. The bill will amend two key anti-deficiency statutes, A.R.S. §§ 33-729 and 33-814, the former relating to judicial foreclosures and the latter to non-judicial foreclosures. Borrowers have relied upon both of these statutes in order to avoid liability on mortgages or deeds of trust after foreclosure. On top of amending the statutes, HB 2018 also includes additional provisions to both of the statutes; the provisions serve to elucidate and limit anti-deficiency protections for borrowers on all mortgages and deeds of trust executed after December 31, 2014.
Deficiency protections for commercial homebuilders, who receive loans for the purpose of constructing new homes to sell but the homes are not completed or occupied at the time of foreclosure, will be eliminated by the amendments to A.R.S. §§ 33-729 and 33-814. Should the property under consideration never be completed or actually made use of by the borrower, the amendments also clarify that the borrower is not entitled to anti-deficiency protection.
The amendments will give more guarantees to lenders for loans to commercial and residential homebuilders, even though there has been a downward trend in underwater mortgages over the past couple years.
We have represented many home builders over the years, if you have questions about this new law give Bill Miller a call at 602-31-6899 or stop by the office at 8170 North 86th Place, Suite 208 Scottsdale, AZ 85253.

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