Arizona Protects Homeowners From the Shortfall
In most of the country, a lender who forecloses and recovers less than the debt can pursue you personally for the difference. Arizona restricts that.
Under A.R.S. section 33-814(G), where trust property of two and one-half acres or less, limited to and utilized for either a single one-family or a single two-family dwelling, is sold under the trustee's power of sale, no action may be maintained to recover the difference between what the sale produced and the amount of the debt, interest, costs and expenses.
Why Does That Matter After a Fire Specifically?
The full position is on our page covering anti-deficiency protection and the word utilized.
And the Word Is Utilized
Read the statute again. It protects property "limited to and utilized for" a dwelling. In BMO Harris Bank, N.A. v. Wildwood Creek Ranch, LLC, decided by the Arizona Supreme Court on 23 January 2015, the court held that a dwelling must be completed to be capable of being utilized, and that utilized means presently used rather than planned for future use.
The court also described the principal element of a dwelling as the purpose or use of a building for human abode, meaning a structure wholly or partially occupied by persons lodging in it at night or intended for such use, and added that the structure must be suitable for residential use.
So Does a Burned House Still Count?
The Limits That May Exclude You Anyway
Two and one-half acres. Larger parcels fall outside, which is live on Tucson's rural fringe and on some Foothills lots.
One or two family dwellings only. A triplex or larger is outside it.
Purchase money, for judicial foreclosure. Section 33-729(A) protection applies where the mortgage secures a purchase-money loan.
Post-2014 deeds of trust. Section 33-814(H) applies to deeds of trust originating on or after 1 January 2015 and excludes property developed for commercial resale, never substantially completed, or never used as a dwelling.
What a Fire-Damaged Tucson Property Is Actually Worth
The Terms That Move the Number Here
Whether there is still a loan. The first question, ahead of the damage.
Whether you are behind on it. Because that sets the clock.
The lot size and the number of units. Two and a half acres, one or two families.
When the deed of trust was signed. Before or after 1 January 2015.
What the frame will still do. The ordinary question, once the rest is answered.
Anyone quoting without asking about the loan has priced a building and ignored the liability attached to it.
The Advice That Costs Us the Most
If there is a loan on your burned house, do not stop paying it and do not walk away from the property until an Arizona lawyer has told you where you stand.
Selling to somebody like us is one route. Letting it go to a trustee's sale is another, and it is the one where a statutory question decides whether you are clear afterwards or carrying a judgment. Those are not interchangeable and the difference is not something to discover later.
Would a Sale to You Avoid All of This?
Adobe, Block and Frame Behave Differently
Tucson's stock ranges from adobe and masonry in the older neighbourhoods to timber-framed construction and engineered assemblies further out. Masonry walls frequently survive a fire that destroys everything inside them, which changes the repair route substantially.
An engineer settles what you have and what survived, and on a file where the loan question is live that report also tells you what the property would fetch at a trustee's sale.
How the Timeline Runs
An open claim does not prevent a sale. What runs against you in Arizona is the trustee's sale timetable once a default is under way, and that is a schedule rather than a negotiation.
If you are weighing several offers, how to tell local cash buyers apart covers the checks that separate them.
Questions Owners Ask
I Have Already Stopped Paying.
Then speak to an Arizona lawyer this week rather than next month. Where you are in the trustee's sale timetable changes what options remain.
My Lot Is Bigger Than Two and a Half Acres.
Then the protection may not reach it, which makes advice more important rather than less. Confirm the parcel size from the assessor's record.
Can I Sell With an Open Claim?
Yes. Who keeps the proceeds is a contract term rather than a legal barrier.
The Insurer Denied It.
Common, and it is the usual reason these files reach the loan question at all. Take the denial to somebody qualified before accepting it.
Statutory References for This Page
The governing provisions are sections 33-814 and 33-729 of the Arizona Revised Statutes. Section 33-814(G) blocks a deficiency action after a trustee's sale; section 33-729(A) covers judicial foreclosure of a purchase money mortgage.
Section 33-814(H) was added by a 2014 amendment applying to deeds of trust originating on or after 1 January 2015, and not to those originating on or before 31 December 2014. BMO Harris Bank, N.A. v. Wildwood Creek Ranch, LLC, 236 Ariz. 363, was decided on 23 January 2015.
Sources
- A.R.S. section 33-814(G) and (H) — deficiency after a trustee's sale
- A.R.S. section 33-729(A) — deficiency after judicial foreclosure of a purchase money mortgage
- BMO Harris Bank, N.A. v. Wildwood Creek Ranch, LLC, 236 Ariz. 363 (2015), decided 23 January 2015
- M&I Marshall & Ilsley Bank v. Mueller, Arizona Court of Appeals, and the Wildwood court's treatment of it
- 2014 amendment to section 33-814, applying to deeds of trust originating on or after 1 January 2015