Posts Tagged ‘Arizona real estate laws’

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.

CC&Rs Govern Unless Amended by HomeownersIn Arizona

December 2, 2011

A family’s back yard in a beautiful Ahwatukee subdivision is adjacent to the community park owned by the subdivisions homeowners’ association (“HOA”). Recently, the HOA planted three large ficus trees in the community park without any notice to them. The large ficus trees now obstruct their view of the community park. According to Arizona real estate law, does the HOA have the right to plant these large ficus trees in the community park without any notice to the neighboring homeowners?

The answer is probably. First off, there is no statute or court decision which grants a homeowner a view easement. A view easement, like any other easement, needs to be in writing and recorded. In other words, if the HOA wanted to grant this family a view of the community park, a view easement in writing and recorded would be required. Second, the Covenants, Conditions, and Restrictions (“CC&Rs”) of the community probably authorized the HOA to plant the three large ficus trees. Therefore, this family should review the CC&Rs carefully. If they were to determine that the CC&Rs authorized the planting of the three large ficus trees, CC&Rs generally can be amended by the written agreement of a percentage of the homeowners, e.g., sixty per cent of the homeowners.

Prepaying a Year of Rent to Landlord?Use Caution

December 2, 2011

Due to of the collapse of the Arizona real estate market an Arizona couple has some bad credit problems. Unfortunately, they are losing their Scottsdale home to foreclosure before long, but they want to rent a home in the same neighborhood for one year. But, because of their bad credit, they are having issues renting any homes in their same neighborhood. They have the funds to pay all of the rent for one year in advance. Is it possible to pay rent in advance for one year? If so, will they forfeit any of this prepaid rent if the landlord loses the home to foreclosure in the next year?

The first thing you should know is, the Residential Arizona Landlord-Tenant Act generally prohibits a landlord from charging a security deposit, including any prepaid rent, of more than one and-a-half month’s rent. A.R.S. §33-1321. If the tenant, however, “voluntarily” pays more than one and-a-half month’s rent (usually for winter rentals when the tenant pays the entire three or four month’s winter rent in advance), the landlord can accept this additional security deposit. Therefore, if the couple is “voluntarily” prepaying one year’s rent due to credit problems, the landlord can accept this one year of prepaid rent.

Secondly, if the couple does pre-pay rent for one year, and the landlord loses the home to foreclosure, under a 2009 federal law the renters are generally entitled to stay in the home for the remainder of the lease term. If the new landlord after the foreclosure never receives any of the prepaid rent, however, the protection under the 2009 federal law is unclear. Therefore, as an Arizona real estate attorney, it is recommended that the tenants and the landlord deposit the one year of prepaid rent into an escrow account, to be distributed monthly to the landlord, or to any subsequent landlord after any foreclosure.

What Are a Commercial Property Tenants Rights After Foreclosure?

December 1, 2011

A small pet grooming business leased some space in a small shopping center. They wanted to make approximately $25,000 in tenant improvements in the back area of the leased space. Before making the improvements, they learned that the shopping center was in foreclosure. They contacted the lender (a national bank) and explained to them that they wanted to make the tenant improvements, but were not going to if we were going to be evicted after foreclosure. The lender’s representative said that the lease would be honored after the foreclosure, and that a longer lease could even be negotiated. However, an investor purchased the shopping center at the foreclosure and delivered a notice of eviction to us. Does the pet grooming business have any commercial property tenant rights to stay in their leased space? If they are evicted, does the investor have to pay them the $25,000 for the tenant improvements?

Under a 2009 federal law, a residential tenant generally has the right to stay in the home after foreclosure until the end of the lease term. A tenant in a shopping center or other commercial property, however, has no such right, and is subject to eviction after the foreclosure unless there is non-disturbance or similar language in the lease. The purchaser at a foreclosure sale, such as the investor who purchased the shopping center, has the right to evict the tenant, and has no obligation to reimburse a tenant for any tenant improvements. However, if the tenant can prove that they relied on the statement by the lender’s representative that they would be allowed to remain in the leased space after the foreclosure, they should have a claim against the lender for at least the $25,000 in tenant improvements.

Note: The pet grooming shop should immediately contact an Arizona commercial property attorney to review their lease to see if there is non-disturbance or similar language that will allow them to stay in the shopping center after the foreclosure.

Serious Penaltiesfor Filing False Liens

December 1, 2011

A gentleman was awarded hisGlendale family home in his divorce buthis ex-wife had the right to live in the home until it was sold. A buyer for the home was found and the closing sale of the home was scheduled. However, just prior to thehome’s closing, the ex-wife recorded a document saying that she was owed $50,000 from the sale of the home. Because of the document, the title company refused to close the sale of the home. Understandably, the buyer was upset and purchased a different home. The woman is emotionally unstable and just does not want to move out of the home. She has apologized but the homeowner is concerned that when another buyer is found she will record some “bogus” claim against the home again. Is there anything the homeowner can do to prevent her from recording a wrongful lien against the home?

According to Arizona real estate law, if a lien is wrongfully recorded against a home or other real property there are sanctions, namely, $5,000 or treble actual damages, whichever is greater, plus attorneys fees and court costs. A.R.S.’ 33-420(A). If these monetary sanctions do not deter you’re the ex-wife from recording a wrongful lien, a court can order her not to record any wrongful liens against the home. If your she were to violate this court order, she could be held in contempt of court with serious penalties, including jail time.

Note: If a wrongful lien is recorded in the name of an unidentifiable person or entity, e.g., invalid address or a non-existent limited liability company, a title company will generally require a quiet title lawsuit to determine that the lien is invalid. This quiet title lawsuit could be expensive, primarily due to the requirement of service of process by publication because the individual or entity is unidentifiable.

Even As-is Properties Require a Disclosure of Any Defects

September 19, 2011

A couple purchased an “as-is” a home in Show Low last summer. They had a home inspection which was satisfactory to them at the time. However, in the fall when they turned on the furnace they discovered that there was no ductwork leading from the furnace to the vents. They contacted the seller to complain and he said that he never used the furnace because he knew that the home had no ductwork. He said that he relied on the fireplace and space heaters during the winter months. They told the seller that they wanted to use the furnace and that expected him to pay for the ductwork, the seller said that they purchased the home “as-is.” The cost to install the ductwork will be approximately $1,500. Are there any Arizona real estate laws regarding this? Does the seller have any liability to us for the $1,500?

They seller in fact does have liability for the costs. Even though a home is being sold “as-is”, a seller is still required to disclose any known latent defects in the home. The lack of ductwork from the furnace to the vents was a known latent defect. They buyers should file a complaint against the seller in the Small Claims division of Justice Court. The Small Claims division has jurisdiction of disputes up to $2,500, and is similar to Judge Judy‘s television courtroom with no Arizona real estate attorneys and no appeals.

Does Arizona Real Estate Seller Need To Certify Septic Tank?

April 27, 2011

Question: We are purchasing an expensive home in Paradise Valley from a bank that has a septic tank. Under the bank’s “as-is” addendum, we agreed to pay for all inspections and investigations relating to this home. But doesn’t the bank, have to certify that the septic tank is in working order? If so, even though we agreed to pay for all inspections and investigations, doesn’t the bank have to pay for this certification?

Answer: According to Arizona and real estate laws the bank or other seller of a home cannot sell the home without an inspection of the septic tank. There is no requirement by the Arizona Department of Environmental Quality for a certification, just an inspection. A.A.C. R18-9-A316. In other words, even if this inspection shows that the septic tank is not working, there is no requirement for the bank or other seller of a home to certify that the septic tank is in working condition or to make any repairs. Although there can be no transfer of a septic tank without an inspection, the seller and the buyer can agree in the purchase contract that the buyer will pay for the cost of this inspection. Therefore, if the “as-is” addendum requires you to pay for the cost of this septic tank inspection, you will have to pay this cost.