Published On: May 19, 2014

Arizona anti-Deficiency Law: Since 1971 Arizona law has normally protected the borrower who defaults on a home loan.

A lender could foreclose, but could not sue the borrower if the loan was on property 2 1/2 acres or less, utilized and occupied as a one or two family dwelling (Arizona Revised Statutes 33-814)

Anti-deficiency for most Arizona residential property.


In a rare situation the lender may choose a judicial foreclosure (Arizona Revised Statutes 33-927) rather than the typical trustee’s sale.  If so, there is an additional requirement that the borrowed funds were used to purchase the house.

Note: in Arizona most residential lenders elect to use a non-judicial process referred to as a trustee’s sale.Bottom line – warn your investor friends about this important change in Arizona law.

The protection they have long enjoyed is gone for deeds signed after 2014.

What is the change (HB 2018): after December 31, 2014 all deeds of trust will not have the same protection if :

1) the borrower is engaged in the business of selling dwellings to the third party;

2) the property contains a dwelling that was never substantially completed, or

3) the property contains a dwelling that is never actually utilized as a dwelling.

Whether or not you agree with this change investors of Arizona and Texas property need to be warned – the protection they have long enjoyed is gone for deeds signed after 2014.  I am also concerned for homeowners who borrow money to buy or remodel a home and a lender forecloses before it is becomes a “dwelling”  under the new law.   I see the option for the lender to refuse to issue additional draws in order to complete a home.  That home is not designated substantially completed and therefore the lender can sue the homeowner.  This is not going to affect the typical first time home buyer because they can rarely afford to build a custom home, but it will affect more affluent borrowers.

Of course, the law changes over time.  Make sure to talk to an experienced real estate/foreclosure attorney if you have any questions.

Link to Arizona Anti-Deficiency Flow Chart (14512 downloads)



This bill did not follow the normal legislative process because it was a “striker”.   For those of you familiar with how bills become law you know how dangerous strikers are.  For the rest of you – here is an article about this process and its insidious nature.

We have several videos on this site.  This is one “Should I keep my home or let it go into foreclosure?”


By |Published On: May 19th, 2014|Last Updated: May 29th, 2022|

Share this article

About the Author: Diane Drain

Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.

*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*

Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Google Reviews
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Yelp Reviews
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Avvo Reviews
Avvo - Rate your Lawyer. Get Free Legal Advice.
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Alignable Reviews
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Better Business Bureau
5 / 5

“You folks are the BEST OF THE BEST in Arizona.” M.H.

You and Jay are the best attorneys I have ever had or needed and thank God for the Honorable Robert Gottsfield in recommending you folks – I would have never made it through the entire process without you and Jay and God Bless you both always and stay in touch as well. You folks are the BEST OF THE BEST in Arizona.

5 / 5

“My only regret is that I didn’t find Diane sooner.” K.H.

I can’t say enough good things about Diane. The way she handled my not typical circumstances was amazing. I was very nervous to start the bankruptcy process but Diane just has a very comforting way of explaining the whole process. My only regret is that I didn’t find Diane sooner. If you find yourself in a financial situation that you can’t correct on your own, please Call Diane Drain as soon as possible.

5 / 5

“Filing for bankruptcy can be a stressful life event” R.A.

Filing for bankruptcy can be a stressful life event, and selecting the right attorney can add to this stress. Diane and Jay were a pleasure to work with, and it is obvious that they are passionate about helping people get their life back on track. I would highly recommend them if you need a bankruptcy attorney.

Related Posts

  • Published On: July 24, 2022

    Want to avoid dishonest debt collectors?  Watch this video from FTC’s Consumer Advice By Joseph Ferrari,July 22, 2022 (reprint from FTC, Consumer Alerts) During Military Consumer Month 2022, the FTC [...]

  • Published On: July 20, 2022

    BEWARE OF THE SECRET COSTS OF USING ‘BUY NOW PAY LATER’!! What You May Not Know About These Services Services like “buy now pay later” now account for $100 [...]

  • Published On: June 13, 2022

    Diane Drain received the 2022 Preeminent Award and Gold Client Champion Award from Martindale-Hubbell. The 2022 AV Preeminent award is given to an "elite group of attorneys who have been rated highly by their peers [...]

  • Published On: April 16, 2022

    ARIZONA IS ONE OF 2 STATES THAT WILL TAKE YOUR TAX REFUND IF THIS HAPPENS.  SHOULD THE LAW CHANGE? By RUSS WILES, Arizona Republic (reprinted for educational purposes only) Tens of millions of Americans [...]

My intention is to put you back in control of your life
Start with $0 down*. We provide affordable payment plans.