Archive for October, 2011

Can Seller Rent Home Back After Short Sale?

October 18, 2011

An investment group is purchasing a short sales home in Surprise, AZ. The group’s intention is to rent the home after the short sale closes.  The seller of the property would like to rent the home back from the investment group.  The group’s understanding is that a sale of the home back to the seller after a short sale is illegal, but is it possible to rent a short sale home back to the seller?

While there is no law or court decision that prohibits a buyer from selling or renting the home back to the seller after a short sale, many lenders that approve short sales will require the seller and the buyer at closing to sign “arms-length” affidavits or similar documents that generally would prohibit a buyer from selling or renting the home back to the seller after the closing of a short sale.


Even in Market Today Arizona Real Estate is Still a Good Investment

October 17, 2011

A soon to be Arizona State University graduate recently told his family that he has borrowed $40,000 in student loans for down payments to purchase three homes in a Queen Creek subdivision, in the past year.  The student says that in the next three to five years home values will appreciate rapidly, and he should then be able to make over $100,000 on the sale of these three homes.  Student loans are not dischargeable in bankruptcy, and his parents are concerned that he is in a messy financial situation.  Is it realistic to expect that the values of Arizona real estate and these three homes will appreciate rapidly in the next three to five years?

According to a Case-Shiller study the value of homes in the 100 years from 1900 to 2000 increased by 3.35% per year, just a little better than the rate of inflation.  In other words,based on the historical 3.35% annual increase in home values, if a $100,000 home were purchased today, the home would be worth $110,000 to $120,000after three to five years. In light of a seller’s normal payment of 8 to 10% for closing costs such as broker’s commissions and title insurance, the profits would be minimal, if any.

However, home ownership today is a better investment than home ownership has been historically.  Homeowners today who live in their home have tax deductions for mortgage interest and real property taxes, and since a 1997 federal tax law generally pay no tax on any gain on the sale of their home. In light of these tax advantages, and current low interest rates, values of homes, including these investment homes should increase in the next three to five years greater than the historical 3.35% annual rate.

Anti-Deficiency Statutes Protection Available for Real Property “Utilized” as Home

October 14, 2011

Five years ago a small home was purchased Bethany Home Road in Phoenixwith a mortgage loan.  After the closing, they were able to change the zoning of the home to permit the husband, to convert the home into a small office building for his chiropractic practice. However, due to the poor economy the chiropractic practice has suffered, and their income is down considerably. Additionally, they are now “underwater” at least $120,000 on the mortgage loan because of the declining property values in the area. They know that most homeowners are protected from any liability if the mortgage lender on home foreclosures. If the bank forecloses on the office building, will they have any liability for the $120,000 deficiency after the foreclosure?

They probably would in this case. The Arizona anti-deficiency statutes generally protect homeowners from any deficiency after a foreclosure only if the secured real property is “utilized” as a home.  A.R.S. §33-814(G).  Therefore, inasmuch as the mortgage loan is no longer secured by real property that is “utilized” as a home, they probably will have liability for the $120,000deficiency after the foreclosure.

After Domestic ViolenceIncident What is Tenant Lease Liability

October 12, 2011

A couple signed a one-year lease to rent a Scottsdale condominium. They moved in together about 3 months ago. Recently the boyfriend beat up the woman quite badly, and the police had to be called. The woman obviously no longer wants to live with him. However, they have nine months remaining on the lease, and the woman does not want to have to make lease payments on the Scottsdale condominium plus payments on a new apartment. According to Arizona landlord tenant law, will the former girlfriend be required to pay the remaining nine months of the lease on the Scottsdale condominium? Also, she paid $500 of the $1,000 security deposit. Will she be entitled to the return of her $500 portion of the $1,000 security deposit?

If the woman who was assaulted furnishes the landlord a copy of the police report, plus a notice requesting termination of the lease within thirty days, she should be able to avoid paying any rent after this time period. A.R.S. §33-1318. In addition, if the Scottsdale condominium is in good condition at the time your she terminates the lease, she should be able to get a refund of her $500 portion of the $1,000 security deposit.