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The OP stated that the home was a condo; doubt if it sits on 2.5 acres. AZ deficiency laws would cover that piece of upside down property. There is no lender recourse, and the IRS won't come after them.
Along with FallingWater, I'm constantly telling folks here about the misleading info about foreclosures staying on your CR for 10 years.
Simply FALSE.
Doesn't the deficiency law only cover the primary residence? The condo would be a second home which, in the eyes of the banks I've dealt with, is considered an investment property. The lender can come back for the deficiency and either way, the IRS can come back on them. The lender can waive the deficiency but that would all be part of the negotiations during the short sale.
Doesn't the deficiency law only cover the primary residence? ...
No, the law is not limited to a primary residence. Here are the applicable statutes:
ARS § 33-729.A states, ". . . if a mortgage is given to secure the payment of the balance of the purchase price, or to secure a loan to pay all or part of the purchase price, of a parcel of real property of two and one-half acres or less which is limited to and utilized for either a single one-family or single two-family dwelling, the lien of judgment in an action to foreclose such mortgage shall not extend to any other property of the judgment debtor, nor may general execution be issued against the judgment debtor to enforce such judgment, and if the proceeds of the mortgaged real property sold under special execution are insufficient to satisfy the judgment, the judgment may not otherwise be satisfied out of other property of the judgment debtor, notwithstanding any agreement to the contrary. ARS § 33-814.G states, "If trust property of two and one-half acres or less which is limited to and utilized for either a single one-family or a single two-family dwelling is sold pursuant to the trustee's power of sale, no action may be maintained to recover any difference between the amount obtained by sale and the amount of the indebtedness and any interest, costs and expenses."
Doesn't the deficiency law only cover the primary residence? The condo would be a second home which, in the eyes of the banks I've dealt with, is considered an investment property. The lender can come back for the deficiency and either way, the IRS can come back on them. The lender can waive the deficiency but that would all be part of the negotiations during the short sale.
So... it really doesn't matter what the banks consider. It's what the law states. The IRS won't come after you if you lived in the property for 2 of the last 5 years.
A special 'lil thing they threw in there recently.
Most accurate post on here. Are you people really going to gloss over it?
Ignore the man behind the curtain.
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