October 1st, 2009

The Real Deal: Your Legal Update for Real Estate
Volume 2, Number 3, October 2009

Gov. Brewer Repeals Bill; Great News for Homeowners and Investors

ARS § 33-814 is the Arizona Anti-Deficiency Statute governing deeds of trust. Recently, a law was to be passed which would have effected the protections provided by the Statute to homeowners and investors. On Friday, Sept. 4, 2009, Governor Jan Brewer signed House Bill 2008, which repealed Senate Bill 1271 and its changes to the Anti-Deficiency Statute, which were to take place on Sept. 30, 2009. This is great news for homeowners and investors.

For now, a homeowner or investor can still enjoy the Statute’s protection, which is, when a homeowner loses their home to a private trustee’s sale, the selling lender cannot later sue the homeowner for losses suffered by the lender, so long as certain criteria are met.

Again, the criteria are:

1. The home is located on 2.5 acres of land or less;
2. The home is used only as a dwelling for one or two families;
3. Any refinancing or equity borrowed against the home was used for the home’s original purchase or to improve the property; and
4. The home was occupied by either the homeowner or a tenant.

Tired Of Harassing Debt Collectors?
By John N. Skiba, Esq.
jskiba@jacksonwhitelaw.com

Unfortunately, because of the economy, many Arizona homeowners are dealing with debt collectors.  Sometimes lenders recruit third-party debt collectors to handle collection on their unpaid debts. Did you know there are rules on how these third-party debt collectors are supposed to treat you?

Congress passed legislation requiring all debt collectors to treat consumers with dignity and respect.  This legislation, known as the Fair Debt Collection Practices Act (the “Act”), provides a great tool to homeowners in jeopardy of foreclosure or who are struggling to pay other debts.  In addition to providing general safeguards against mistreatment, the Act contains specific provisions prohibiting a wide array of abusive conduct.  The Act provides rules of conduct delineating how collectors can communicate with consumers, when they can contact consumers, and what they can and cannot communicate to consumers.  Familiarizing yourself with the Act will be of great value to you if you are facing foreclosure and debt collectors.

If you believe creditors have violated the Act while trying to collect mortgage or other payments, you have one year from the perceived violation to bring action in the Federal Court.  Collectors who violate the Act may be penalized with civil fines, such that consumers may be recompensed with up to $1,000, plus actual damages and attorney fees.  In this manner, the Act is designed to fulfill dual purposes of compensating consumers and discouraging collectors from engaging in unfair or abusive practices.

Homeowners do not surrender their right to be treated with fairness and respect.  Creditors who neglect these standards of common decency in the interest of collecting a debt can be held liable for their actions under the Act.  The responsibility lies on consumers, however, to recognize the violation and hold collectors accountable.  JacksonWhite is available to help anyone who feels like they were mistreated by debt collectors.

New Legislation Protects Renters

Of the 50 states in the Union, Arizona currently ranks second only to Nevada in the number of home foreclosures.  This is troubling for Arizona renters who rely on landlords to make timely mortgage payments.  Until recently, foreclosure on rental properties left tenants unprotected because trustee’s sales effectively terminated the lease and the tenant’s right to possess the property.  Lenders or the new owners could evict tenants following the trustee’s sale, forcing renters to vacate the property much sooner than agreed upon in the lease.

This problem has become so commonplace in Arizona that it is referenced in the standard form Arizona Association of REALTORS© Residential Lease Agreement, which provides in relevant part:

Trustee’s Sales Notice: Landlord shall not allow the Premises to become the subject of a trustee’s sale.  Tenant shall notify Landlord immediately upon receipt of any notice of trustee’s sale.  Tenant acknowledges that pursuant to law, Tenant’s rights under this Agreement may be terminated in the event of a trustee’s sale. (See lines 206-208).

The Obama administration has taken steps to address this problem by passing The Protecting Tenants at Foreclosure Act of 2009 (the “Act”).  Under this piece of legislation, tenants are afforded certain protections when their residence is foreclosed, chiefly ensuring that they are given time to make new living arrangements.

The Act only applies to bona fide tenants who pay fair market rent.  Additionally, if the lease is for a fixed term it must have been established before the Notice of Trustee’s sale was recorded.  Depending on the particular circumstances, the Act provides the following safeguards to renters:

• If the lender takes possession of the property following the trustee’s sale the tenant can continue making monthly rent payments and remain in the property through the end of the lease.
• If the property is sold to a third party at the trustee’s sale that will use the property as their primary residence the tenant can be given a 90-day notice to vacate.
• If the lease is month-to-month the lender or new owner can provide the tenant with a 90-day notice to vacate.

The Act assures tenants that they will not be forced out of their rental property without adequate notice.  These changes in the law provide renters with increased security despite the prevalence of foreclosures.

Related posts:

1. My Landlord is in Foreclosure. What Can I do?
2. The Wings of the Arizona Anti-Deficiency Statute Have Been Clipped – A Bit
3. Anti-Deficiency Statutes in Arizona / What Happens to the Tenant’s Rights After Foreclosure?
4. Homeowners Need Approval from the HOA to Build Structures on Their Property
5. State Puts Some Reins On Association Power