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Arizona real estate attorney Steve Vondran discusses the Arizona appellate court case of M&I Bank v. Mueller which took issue with Arizona's ant-deficiency law (A.R.S. 33-814).
In particular, the case dealt with an Arizona construction loan wherein the owner of the land started to build and construct their property which the court found was intended to be used as a single family dwelling.
Under A.R.S. 33-84 there can be no deficiency judgement where the property is 2.5 acres or less and iis utilized as a signle family or two family dwelling.
The bank sought to recoup their alleged losses following the Arizona non-judicial foreclosure sale. This court, on appeal, ruled that the borrower was protected by the Arizona anti-deficiency statute and thus, the bank could not recover its alleged losses.
As a footnote to the case pointed out, the lender should assuming the risk of falling real estate prices.
If you are facing foreclosure in Arizona, this general legal overview of the Arizona anti-deficieny statute may help you avoid liability, including a "shake-down" letter from the bank!
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