Archive for February, 2012

2012 Legislative Bills Regarding Short Sale and Foreclosures

February 3, 2012

Three bills have already been introduced in the 2012 Arizona legislative session regarding short sales and foreclosures. All three bills are pro-borrower, and attempt to reduce or eliminate a borrower’s liability for a deficiency after a short sale or foreclosure.

The first two bills attempt to change the deficiency calculation as it relates to foreclosures of a mortgage loan by a lender that purchased the mortgage loan from the original lender. These two bills require that the starting point for calculating a deficiency is the amount paid to the original lender for the mortgage loan. For example, if a $100,000 mortgage loan on a vacant lot was purchased from the original lender for $40,000, and the vacant lot is now worth only $30,000, the deficiency after foreclosure under these two bills would only be $10,000, not $70,000.

Finally, following in the footsteps of a 2011 California law, the last bill attempts to eliminate any liability of the seller to the lender for a deficiency after a short sale.

Combs Law Group will continue to keep your advised of any new legislation in the areas of short sales, foreclosures and Arizona real estate laws.

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Inheritance Issues Can Play Role in Real Estate Title

February 3, 2012

A couple both have children from previous marriages. When they signed a contract to purchase a Tempe home, their real estate agent said that most spouses at the closing will take title to a home as “community property with right of survivorship.”

Do they need to take title in that manner if they want their children from prior marriages to get the home after they both die?

No. The term “with right of survivorship” used in community property with right of survivorship is a term of art meaning that the surviving spouse acquires the deceased spouse’s one-half interest in the property.Upon the subsequent death of the surviving spouse, only the children of the surviving spouse would have an interest in the home.

In this situation they would not want to hold title to the Tempe home as community property with right of survivorship. An Arizona real estate lawyer would suggest that the couple hold title to their home simply as “community property.” In that event, after the death of the first spouse, the children of the first spouse would own 50 percent of the home, and the surviving spouse would own the other 50 percent.

Furthermore, if they both want the surviving spouse to be able to live in the home during their lifetime after the first spouse’s death, they both should provide that in a revocable living trust or other estate plan that the surviving spouse would have a life-estate interest in the home.

After the surviving spouse dies, the proceeds from the sale of the home can be divided 50/50 among the children of the prior marriages.

Neighbors Must Keep Common Fence

February 3, 2012

There is a chain-link fence on the property line between two backyards in rural west Phoenix. The neighbor built block walls on the sides of their home and now wants to enclose the backyard with a block wall replacing the chain-link fence between the backyards.

The other neighbor is opposed to the block wall because the chain-link fence is in good condition, and the block walls give the feeling of being in a prison. The neighbor said that he would pay for the cost of tearing down the chain-link fence and building the block wall. Not being familiar with Arizona real estate laws, can the neighbors object to the building of this block wall?

The chain-link fence on the property line is a common wall. Both of people are responsible for the maintenance and repair of the chain-link fence. If the chain-link fence is in good condition, neither has the right to tear down the chain-link fence. Therefore, if the neighbor wants to build a block wall to enclose their back yard, they will have to build the block wall inside their property line.

New HOA Fees Law Effective December 31, 2011

February 3, 2012

Under this new Arizona real estate law HOAs may charge a homeowner no more than $400.00 as a fee for preparing documents related to the disclosures an HOA must deliver during the sale of a home. Additionally, the HOA may not collect this fee earlier than the close of escrow and may only charge the fee once to a homeowner for a transaction. A.R.S.§ 33-1260 (C, D); A.R.S.§ 33-1806 (C, D); SB1149.

There has been some confusion regarding whether this new law applies to transfer fees charged by an HOA on the sale of a home. Transfer fees can be thousands of dollars, and are frequently a percentage of the sales price of the home. Transfer fees are authorized by A.R.S.§ 33-442, which does not impose a limit on transfer fees.

The new law only specifically limits fees for HOA disclosure documents. Therefore, there is still no limitation on the amount of transfer fees.