Posts Tagged ‘Arizona real estate law’

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.


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.

Arizona Landlords Must Set Reasonable Security Deposit Amount for Tenants

June 6, 2011

Four Arizona State University college students will be attending summer school. Their current lease expires in May, and they made an offer to lease a small home in Chandler for the three summer months. The monthly rent is $1,500. The landlord is demanding a security deposit of $2,000, which they may have a problem paying. Additionally, the landlord is also demanding a $1,500 non-refundable cleaning deposit, which is outrageous and they will be unable to pay. Does Arizona Landlord Tenant law allow the landlord charge a $2,000 security deposit? Can the landlord charge a $1,500 non-refundable cleaning deposit?

A landlord cannot demand a security deposit, including pre-paid rent, in excess of one and one-half months’ rent. A.R.S. §33-1321(A). One and one-half times the monthly rent of $1,500 is $2,250. Therefore, the $2,000 security deposit is lawful. The $1,500 non-refundable cleaning deposit, however, is not lawful. Although a landlord can charge a “reasonable” non-refundable cleaning deposit, a $1,500 non-refundable cleaning deposit is not “reasonable” for a small home being leased for the three summer months. A.R.S. §13-1310(G)(14).

Loan Settlements for Credit Cards, Non-Purchase Money HELOCs and Vacant Lot Loans

June 4, 2011

Arizona real estate law protects most people from being sued on mortgages. However, certain loans carry personal liability and these borrowers are being threatened or sued on the loans. Of course, if the borrower has little or no money, bankruptcy is an obvious solution. But not all people are good candidates for bankruptcy. For people with substantial income or assets, reaching a settlement of the account is the best option available. This article is the first of three to address what type of settlement a borrower can expect to reach with their creditor.

Vacant lot loans are the most troubling for borrowers. Lenders have all but stopped making loans on vacant land causing the market to plummet. Furthermore, lenders have just 90 days to sue the borrower after a foreclosure. The result is numerous foreclosures and lawsuits being filed against people with lot loans.

The sheer volume of lawsuits may also provide the best motivation for lenders to settle. Surprisingly, lenders will typically accept a settlement between 15-35% of the debt owed depending on the income/assets of the borrower, e.g. Bill Gates versus homeless person; lender would obviously settle for different amounts. Furthermore, most lenders will accept this reduced amount over time with little or no interest. The end result is settlement payments less than the original loan payment. Best of all, the obligation is paid off in 5 years or less compared to a lifetime of payments.

Example, $150,000 lot loan at 6.0% interest-only payments of $750 per month. Lot is worth $40,000. If the borrower continues to make payments for 5 years, they will have made $45,000 in payments and still owe $150,000. If the borrower lets the lot foreclose and then settles for 35%, the settlement payments at 0.0% interest would be just $641.67 per month. After 5 years, the borrower would have paid $38,500 and owe nothing.

AZ Title Company Should Record Quit Claim Deed To Transfer Home Interest

June 3, 2011

An unmarried couple purchased a home in Scottsdale five years ago. They had each been paying one-half of the monthly mortgage payment. They had been arguing constantly mostly because of financial difficulties relating to the mortgage payments on the house. Although there may be some equity in the home, they are probably “upside-down” on the home. His parents don’t like the girlfriend, and would help him make the mortgage payments if he was the only person on the home’s title. The girlfriend is willing to quit claim her interest in the home. She bought a quit claim deed form at a stationery store. If she signs this quit claim deed before a notary public, and he records the quit claim deed, will he be the sole owner of the home or will they need to consult a real estate law attorney?

If this quit claim deed is recorded, they should be the sole owner of the home. In general, however, no one should ever transfer any interest in a home or other real property without procuring title insurance. Before a title company will furnish title insurance, they will furnish a commitment for a title insurance policy. This commitment will show any liens that have to be paid before a “clear” title insurance policy can be issued. For example, if the girlfriend has a $20,000 credit card judgment, and the quit claim deed to him from her is recorded, this $20,000 judgment would be a lien against the entire home, not just the girlfriend’s one-half interest in the home. In addition to “clear” title, a title company will require the proper form of the quit claim deed and would require the recording of an affidavit of property value and any other necessary documentation.

Note: If they do not use a title company, and there is a mistake in the form or recording of the quit claim deed, this mistake will have to be corrected when you want to sell the home in a few years. At that time, however, he may not be able to locate her or she may not be willing to cooperate in signing any documentation. You would then have to contact an Arizona real estate law attorney to file a quiet title lawsuit.

Arizona Real Estate Law Says Neighbor Can Trim Trees But Also Pay

March 29, 2011
Question: Our backyard backs up to a bridle trail in Tempe. Although our homeowners association owns the bridle trail, our neighboring homeowner is required to maintain this bridle trail. Our neighboring homeowner has contacted us about the branches of several of our twenty-year-old pine trees hanging over our back wall and impeding horseback riding on the bridle trail. One young lady was apparently almost knocked off her horse. Therefore, unless there is damage to our pine trees, we would have no objection to these branches being trimmed. Under Arizona real estate law, however, who has the obligation to pay for the cost of trimming these overhanging branches?

Answer: The general rule is that a neighboring homeowner is entitled to trim the branches of a neighbor’s tree that hang over onto the neighboring homeowner’s property, provided that this trimming will not kill the neighbor’s tree. Therefore, prior to trimming the branches of your pine trees, your neighboring homeowner should get an opinion from an arborist that such trimming will not kill your pine trees. Under Arizona law, unlike California law, the neighbor owning the trees is generally not required to reimburse the neighboring homeowner for the cost of trimming the overhanging branches. 145 Ariz. 115. Therefore, your neighboring homeowner should have to pay for the cost to trim your pine trees.

Hold Seller to “As Is” Condition with Arizona Real Estate Contracts

January 4, 2011

Recently, a contract was signed to purchase a real estate-owned (“REO”) by the bank Scottsdale home. Also signed with the standard contract was a standard “as is” addendum. Although the air conditioning unit in the home was old, the air conditioning unit was in working condition at the time that the contract was signed the contract and when the home inspection was done. However, at the final walkthrough two days before closing, the air conditioning unit was not working. The bank’s listing broker said that the air conditioning unit had been repaired just before the contract was signed, however the air conditioning repairman had said that the air conditioning unit would break down again in a few days. The listing broker furnished that information to the bank, but the bank refused to authorize the money to make the proper repairs. According to Arizona real estate law, is the bank required to repair the air conditioning unit before closing?

Although the bank sold the home “as is,” the standard “as is” addendum requires that the air conditioning unit be in substantially the same condition at the time of closing as the air conditioning unit was in at the time of contract. If the air conditioning unit was not in working condition at the time of the signing of the contract, however, the “as is” addendum would protect the bank from fixing the air conditioning unit at closing. Inasmuch as the air conditioning unit was in working condition at the time of the signing of the contract, the air conditioning unit must be in substantially the same condition, i.e., working condition, at the time of closing.

Furthermore, an “as is” addendum in a contract does not protect the seller from fraudulent non-disclosure. For example, if the car dealer Tex Earnhardt sells a car “as is,” but Tex knows that the car has a defective carburetor, Tex has the duty to disclose that the carburetor is defective. Otherwise the buyer of the car would have a claim against Tex for damages for fraudulent non-disclosure if the carburetor fails. Therefore, after the listing broker told the bank that proper repairs needed to be done, the bank (and the listing broker) had the obligation to disclose to you that the repairs to the air conditioning unit were not effective.

Note: Many REO bank sellers have their own form of addendum used in their REO sales which may have terms different from the standard sales documents and should be reviewed carefully.

Read Your Real Estate Contract Carefully

October 28, 2010

When a couple purchased a new Queen Creek home they received a color brochure from the builder showing the features of the builder’s homes. However, after moving into the home, two of the features, a dishwasher and sunscreens, were not in the home. They contacted the builder and the builder said the contract did not provide for a dishwasher and sunscreens and the sales price would have been higher if they were in the home. Under Arizona real estate law, does the builder have to put in a dishwasher and sunscreens?

In general, a brochure is only a marketing tool, and the contract will control the type of extras in the home that the builder is required to construct for a buyer. The homeowners should have confirmed in the contract that a dishwasher and sunscreens were included.

Note: If a marketing brochure makes a statement, however, such as “solid wood doors” but non-solid wood doors are installed, a buyer may have a claim against the builder if there is nothing in the contract to describe the type of door to be installed. A court would probably rule that a reasonable buyer had the right to rely on the builder’s representation that solid wood doors would be installed.