Using a Power of Attorney For Real Estate Contracts

August 27th, 2008

The use of a Power of Attorney in connection with real estate contracts and be a powerful tool, but care should be taken to avoid potential pitfalls. Here are a few common questions that Arizona real estate lawyers commonly face with regard to the use of the Power of Attorney in the real estate context.

Read more

Posted in Real Estate Law Title | No Comments »

Are You Or Your Neighbor a Nuisance?

August 26th, 2008

Is your neighbor a nuisance? Are you a nuisance? In Arizona, you can sue your neighbor if he or she causes a nuisance and, if the judge or jury agrees with your position, the Court can order the neighbor to stop whatever actions constitute the nuisance and/or award damages.

Unfortunately, despite decades of debate and numerous court decisions addressing what does, and does not, constitute a nuisance, it’s still not entirely clear what exactly a nuisance is. What is evident is that the question of whether something is a nuisance or not turns on the unique facts and circumstances of each case. Based on those facts and circumstances, the judge or jury will decide whether the complained-of activity unreasonably disturbs the free use, possession, or enjoyment of the property.

Over the years Arizona lawyers have successfully argued that excessively bright lights, loud noises, and bad smells constitute a nuisance. Other examples might include intrusive air pollution or otherwise normal sounds at unusual hours.

One complaint Arizona real estate lawyers frequently hear has to do with intrusive vegetation. Perhaps surprisingly, most Courts have held that encroaching branches and dropping leaves do not constitute a nuisance unless the intrusion is causing substantial damage. Instead, the Courts suggest that the remedy is to simply deal with the intrusion yourself by trimming the branches or other vegetation that find themselves across your property line. This is permitted even if the offending neighbor does not approve or if the corrective action kills the plants.

If you have a neighbor who is being a nuisance you should consult with an experienced Arizona real estate lawyer to see if legal action is needed or to confirm that your intended course of action does not expose you to liability yourself. Although a resolution frequently can be worked out after a well-reasoned demand letter from an Arizona real estate attorney, sometimes legal action will be needed.

Kevin R. Harper is an Arizona real estate and business litigation attorney, representing individuals and small businesses throughout the state of Arizona from his Central Phoenix office located at 1 N. Central Ave., Suite 1130, in downtown Phoenix. His firm also has an office in Chandler, Arizona and represents individuals and businesses all over the state of Arizona.

For more information about Arizona real estate law, feel free to contact Harper Law PLC at 602-889-2616, or visit the firm online at http://www.HarperLawArizona.com

Copyright 2008 Harper Law PLC, all rights reserved.

The above article is designed for informational purposes only and, because every situation is different, is not intended as definitive legal advice. You should not act upon this information without seeking independent legal advice about your individual situation.

Read more

Posted in Real Estate Law Title | No Comments »

Divorce & Home Foreclosure in Arizona

August 25th, 2008

With Arizona’s (and the rest of the country’s) current depressed real estate market, many people are facing foreclosures. A few things to keep in mind:

1. The foreclosure is going to continue on in most divorce circumstances unless the home’s mortgage is brought current, along with the reasonable costs associated with the foreclosure, including attorney fees.

2. Arizona has an anti-deficiency statute that is going to apply in the majority of cases involving standard mortgages. Thus, Arizona law offers protection to homeowners whose home has been foreclosed. This statute, A.R.S. §33-729, states as follows:

33-729. Purchase money mortgage; limitation on liability

A. Except as provided in subsection B, if a mortgage is given to secure the payment of the balance of the purchase price, or to secure a loan to pay all or part of the purchase price, of a parcel of real property of two and one-half acres or less which is limited to and utilized for either a single one-family or single two-family dwelling, the lien of judgment in an action to foreclose such mortgage shall not extend to any other property of the judgment debtor, nor may general execution be issued against the judgment debtor to enforce such judgment, and if the proceeds of the mortgaged real property sold under special execution are insufficient to satisfy the judgment, the judgment may not otherwise be satisfied out of other property of the judgment debtor, notwithstanding any agreement to the contrary.

B. The balance due on a mortgage foreclosure judgment after sale of the mortgaged property shall constitute a lien against other property of the judgment debtor, general execution may be issued thereon, and the judgment may be otherwise satisfied out of other property of the judgment debtor, if the court determines, after sale upon special execution and upon written application and such notice to the judgment debtor as the court may require, that the sale price was less than the amount of the judgment because of diminution in the value of such real property while such property was in the ownership, possession, or control of the judgment debtor because of voluntary waste committed or permitted by the judgment debtor, not to exceed the amount of diminution in value as determined by such court.

Interpreted, this statute means that for the average homeowner, a lender cannot seek to recover from the homeowner any shortages when the foreclosing bank sells the house for less than the outstanding mortgage amount. The second part of the statute is interesting, but reasonable, in that it references voluntary waste -if, for example, a homeowner angry at the foreclosing bank wrecks his/her home intentionally, the homeowner may be responsible for the effect the damage has on the home’s value.

So what options does a homeowner have in a divorce situation or otherwise? Here are a few:

1. Let the bank foreclose on the property. The foreclosure in most circumstances will absolve the homeowner from most or all further financial responsibilities but will not reflect well on the home owner’s credit report. Consult an attorney regarding your specific situation prior to assuming that there will be minor or no financial repercussions as there are exceptions to the anti-deficiency provisions of A.R.S. § 33-729. If there are negative financial repercussions, community property principles apply and if a divorce situation exists, then the parties or court will decide the parties responsibility for the financial obligations. Of course, any divorce rulings define the rights and obligations as between the parties only and are not binding on third party creditors, such as mortgage holders, meaning that banks are free to go after both parties if community property/obligations are involved.

2. Bring the mortgage current and retain the property. The homeowner will have to pay additional fees/costs to do so but then will continue to own the property.

3. Consider a “short sale” which is an effort to sell the property at a reduced price so that the bank will not have to bother with the time and expense of foreclosure. The bank then accepts the buy-out, basically, with less negative effects on the homeowner. It’s more complex than that but that’s the gist. I recommend that a lawyer guide both the seller and buyer of anyone participating in a short sale situation; as well, a good real estate agent familiar with short sales is recommended. Of course, when the real estate market is better than it is at the time of this writing, selling a house and paying off the mortgage in full is easier than it is now. In addition, some lenders will not agree to short sales because they believe it sets a bad precedent that too many other borrowers will attempt to use. Another piece of the short sale puzzle is the possibility the IRS will consider any amounts forgiven as income (consult an attorney regarding the Mortgage Forgiveness Debt Relief Act of 2007 for specifics on that new law and related consequences).

Real estate issues are complex and real property is often the largest asset involved in a divorce. It’s a good idea to consult with a competent attorney prior to making decisions about real estate!

Read more

Posted in Real Estate Law Title | No Comments »

An Overview of Tenant Eviction

August 24th, 2008

Sometimes, tenants cause problems. While every landlord hopes that each of her tenants will comply with the rules, pay their rent in a timely manner and not bother others, problem tenants can make their life a nightmare. When this happens, a landlord has a few different options. Most landlords usually speak to the tenant in question in the hopes of encouraging a change in the unacceptable behavior. But, when that’s no longer a viable solution, more drastic measures may be required. Evicting tenants is never pleasant, but it may be necessary. Below, you’ll learn about a few circumstances in which tenant eviction may be the only way to resolve the problem.

Read more

Posted in Real Estate Law Title | No Comments »

Roles of Real Estate Attorneys

August 23rd, 2008

Do you know that real estate attorneys are the most wanted personals in the real estate world?

Food, dress and shelter are three essential requirements of any human being. Hence there will be real estate transactions each and every day.

Everyone has a dream of owning a home. As far as property sellers and buyers are there, real estate attorneys are in great demand. In fact these people are inevitable in selling and buying of properties. Both parties in the property transactions make use of these attorneys in variety of ways.

What are the roles of real estate attorneys?

Let me detail out here about eight important roles of real estate attorneys in the selling and buying process of properties.

• Tenant’s dispute is the first area in which they can play a major role. They will help in negotiating between the tenant and Landlord and make a settlement, which offers a win-win situation.

• Property dispute between two parties is the major area in which these attorneys often involve. They can negotiate between the parties and find an amicable solution for the dispute. Apart from this, they can help in the selling of the property so that the amount can be used for the settlement of the dispute.

• Some are available for arranging buyers for those sellers who do not feel comfortable with agents/brokers.

• Mostly there will be dispute about properties after divorce. These attorneys handle divorce property disputes excellently.

• In case of dispute regarding jointly owned properties, the real estate attorneys could settle the dispute with negotiations or any other proper actions.

• An attorney can handle disputes among the heirs of a deceased. He can help in selling the property and make settlements between the heirs.

• Real estate attorney can act as a consultant or an advisor for you. Real estate investors like to use the great service of attorney to do the business efficiently and fast. He can make the transaction very smooth and hassle free. You can make use of the tremendous experience he has to save your precious time. He will do it perfectly without any issues, which can arise later.

• In fact they are knowledge banks regarding real estate investments. Mostly the properties with disputes will be much beneficial to the investors. These legal people can provide you the best information on the disputes and settlements.

Real estate attorneys have always plenty of jobs in their hand, whether the real estate field is on a roll or not.

Prue and her 1-of-a-kind site at http://www.realestatebloom.com (where else?) helps you to make money renting in ways you’ve never known. Discover how to be a millionaire making money renting within days, even in a down market!

Read more

Posted in Real Estate Law Title | No Comments »

Evicting Squatters - Knowing Your Rights

August 22nd, 2008

It’s surprising when it happens. An absent property owner may be completely unaware that someone is living on his property. When a person lives on the property without having permission by the property owner, it’s known as “squatting.” In some cases, squatters have been known to live in unoccupied houses and buildings for years before being discovered by the owner. In doing so, they establish a form of ownership over the property. While the true property owner can kick the person out, evicting squatters requires him to go through a legal process. In this article, we’ll explore squatters, trespassers and the art of evicting them.

Read more

Posted in Real Estate Law Title | No Comments »

What is a Real Estate Indemnity Agreement and How Does it Work?

August 21st, 2008

While a real estate indemnity agreement may have a scary or intimidating sounding name, it is a very common and very simple type of legal agreement. With a real estate indemnity agreement, one party is pledging to protect another from any kind of financial loss or from a lawsuit of some kind. We often hear about an indemnity agreement when we are filling out our car insurance forms, but this type of agreement is commonplace in most other forms of law. Lets take a look at how a real estate indemnity agreement can be used to protect a vulnerable party.

Read more

Posted in Real Estate Law Title | No Comments »

Women’s Right to Property in India

August 20th, 2008

Several legal reforms have taken place since independence in India, including on equal share of daughters to property. Yet equal status remains illusive .Establishment of laws and bringing practices in conformity thereto is necessarily a long drawn out process. The government, the legislature, the judiciary, the media and civil society has to perform their roles, each in their own areas of competence and in a concerted manner for the process to be speedy and effective.
To quote Justice Sujata V. Manohar of Supreme Court of India

“…It is not easy to eradicate deep seated cultural values or to alter traditions that perpetuate discrimination. It is fashionable to denigrate the role of law reform in bringing about social change. Obviously law, by itself, may not be enough. Law is only an instrument. It must be effectively used. And this effective use depends as much on a supportive judiciary as on the social will to change. An active social reform movement, if accompanied by legal reform, properly enforced, can transform society.”

Historical perspective
An effective social reform movement does need the help of law and a sympathetic judiciary to achieve its objectives. Women empowerment, equal rights to both men and women, equal share of property, etc., are some of the issues which we discuss everyday, in life, newspaper and on television. But the reality which bites is that these issues are still “unresolved”. Not much has actually been done to create equality between the male and female gender. The male still dominates society.

If it’s a matter of property, then legally male dominate the society. There are numerous laws that say that there should be no discrimination between the sexes, but in reality none are effective enough to actually bring about a revolution; a change in society.

According to the Indian Succession Act, 1925, everyone is entitled to equal inheritance, except Hindus, Sikhs, Jains, Buddhists and Muslims. Under this act, the daughter of a person dying intestate would be entitled only to one-fourth of the son’s share, or Rs. 5,000/- (Sthree Dhan), whichever is lesser. The Travancore High Court, however, held that the Indian Succession Act would have no application to the Christian women of the Travancore State in view of the Travancore Christian Succession Act, 1916. Under the State Act, the daughter of a person dying intestate would be entitled only to one-fourth of the son’s share or Rs. 5,000/- (Sthree Dhana) whichever is lesser. The application of the State Act was challenged in the Supreme Court in the famous Mary Roy’s Case (Mary Roy Vs. State of Kerala, AIR 1986 SC 1011; 1986(2) SCC 209). The Court ruled that the Cochin and Travancore Christian Succession Acts had ceased to be operative on the Reorganization of States and that automatically made the Indian Succession Act applicable to all Kerala Christians bestowing on them equal inheritance rights.

The Hindu Enactment Act, 1956, established that women have equal inheritance rights, as men; and it abolished life estate of female heirs. However, this law could not do the needful as there was another law, the Mitakshara coparcenaries (Hindu Law) that overruled the previous law.
According to Mitakshara coparcenaries, in a joint family, a daughter gets a much smaller share of property compared to the son. While the father’s property is shared equally between brother and sister; the brother, in addition, is entitled to a share in the coparcenaries from which the sister is excluded .For example, if the family owns a dwelling house, then the daughter’s right is confined only to the right of residence and not possession or ownership.

Recommendations of Women Committees/Commissions on Status of Women in India

In 1975 a committee on the status of women was constituted by the Government of India, to evaluate the current legal provisions in regards to women , so that that a women is not left completely destitute.

Some important recommendations which were made by this committee were that legislative measures should be taken to bring Christian women of Kerala under the Indian Succession Act. The Indian Succession Act should be extended to Goa and Pondicherry respectively to undo the relegation of widows to fourth position in matters of succession and to undo the inferior position to which Christian women are relegated by not being considered as full owners of property. In regards to succession to property among Hindus, the right by birth should be abolished and the Mitakshara co-parcenary should be converted into Dayabhaga (the retention of Mitakshara co-parcenary perpetuates inequality between sons and daughters as only males can be co-parceners, and inheritance is only through the male line). The exception provided in Section 4 (2) of the Hindu Succession Act relating to devolution of tenancies should be abolished (this provision, as it stands now excludes devolution of tenancy rights under various State Laws from the scope of the Act).

The discrimination between married and unmarried daughters regarding right of inheritance of dwelling houses caused under Section 23 of the Hindu Succession Act should be removed.
The right of testation should be limited under the Hindu Succession Act, such that female heirs are not deprived of their inheritance rights. There is need for legislation in Muslim Law to give equal share of property to the widow and daughter along with sons as done in Turkey.

In Matrimonial property, legal recognition should be given to the economic value of the contribution made by the wife through household work for purposes of determining ownership of matrimonial property, instead of continuing the archaic test of actual financial contribution; On divorce or separation, the wife should be entitled to at least one-third of the assets acquired at the time of and during the marriage.

The National Commission for Women had also recommended certain amendments in laws related to women and property. Under Indian Succession Act, 1925 it suggested that Sections 15 and 16 of the Act, should be amended, removing mandatory linkage of wife’s domicile with that of the husband. Further, it recommended that appointment of testamentary guardian may be the right of both the parents acting concurrently. Widows should be granted letter of administration to deal with the Estate of the deceased husband unless excluded by the Court for sufficient reasons (Section 219 (a)).and application made by the widow to be disposed of within a year (Section 218 (2).In Hindu Succession Act, 1956 It suggested that equal distribution should be made of not only separate or self acquired properties of the diseased male, but also of undivided interests in co-parcenary property. Daughter of a co-parcener in a Hindu joint family governed by Mitakshara Law to be co-parcener by birth in her own right in the same manner as her son; she should have right of claim by survivorship and to have same liabilities and disabilities as a son ;further co-parcenary property to be divided and allotted in equal share.

The right of any heir to claim partition of a dwelling house to arise only after settlement of widowed mother’s rights is disposed with in case the deceased male is intestate.
A remarkable dent in this situation was made by the Hindu Succession [Andhra Pradesh] Amendment Act, 1985, which initiated a remarkable development. This law stated that, in any circumstances, the rights of the daughter are equal to that of the son. This new law found the Mitakshara system in violation of the fundamental right of equality bestowed upon women in Indian Constitution. Following Andhra Pradesh, the States of Tamil Nadu, Maharashtra and Kerala subsequently also amended their laws by including women as members of the coparcenaries.
The Rajya Sabha on August 16, 2005, passed the Hindu Succession (Amendment) Bill, 2004, (Hindu Succession (Amendment) Act, 2005,) which is now a law, giving daughters and sons equal rights to property. According to this law, any woman, irrespective of the marital status, has full right to inherit ancestral property just like a son of the family. This law has completely abolished the Hindu Succession Act 1956 by giving equal rights to daughters in the ‘Hindu Mitakshara Coparcenary property’, as sons have. If however, any of the parents have built some property and have made a will of their own, this law would be ineffective.

Myth

Earlier, the law use to put the male heirs on a higher footing by providing that they shall inherit an additional independent share in co-parcenary property over and above what they inherit equally with female heirs; the very concept of co-parcenary was that of “an exclusive male membership club” .Now this concept has` been abolished . But surprisingly, even today, even after the new law, co-parcenary remains a primary entitlement of males; no doubt law provides for equal division of share between all heirs, male and female on the death of a male co-parcener, but in practice the scene is totally different .Legally, Intestate self acquired property devolves equally between male and female heirs; but , even toady female heirs are asked to relinquish their share by making relinquishment deeds on their signature and are commonly submitted in courts. If the intestate property includes a dwelling house, the female heirs have no right to partition until the male heirs choose to divide their respective shares. If a Hindu female dies intestate, her property devolves first to husband’s heirs, then to husband’s father’s heirs and finally only to mother’s heirs; thus the intestate Hindu female property is kept within the husband’s lien.

Conclusion

To actually achieve equal inheritance for all, the laws have been amended. In regard to succession to property among Hindus, the right by birth has been abolished and the Mitakshara School co-parcenary of Hindu Law has been converted into Dayabhaga School that means equal distribution of not only separate or self acquired properties of the diseased male, but also of undivided interests in coparcenary property. Daughter of a coparcener in a Hindu joint family governed by Mitakshara Law now is coparcener by birth in her own right in the same manner as a son; she has right of claim by survivorship and has same liabilities and disabilities as a son; now co-parcenary property to be divided and allotted in equal share. The theoretical reforms so far have not been adequate to give all Indian women a right to property on the same footing and terms as men. It varies with region and religion. Even where law has given a right, conventions and practices do not recognize them. Women themselves relinquish their rights. Women, as daughters, wives, daughters-in-law, mothers or sisters tend to lose out and often suffer deprivation. This further gets accentuated when they lose the security of the family, as single women, divorced/separated or widowed. Social awareness of the rights under law, attitudes to adhere to it and a mindset to change law and practice to ensure social justice is therefore urgent.
Therefore a social reform movement is necessary for such awareness and change of mindset. Since ‘marriage’ is the most traditional institution of initiating a family and preserving it, let registration of marriages be made compulsory It is suggested that to achieve more power for women we must Increase awareness of laws through education institutions, general awareness and legal awareness programmes; sensitize Judiciary, administrators and legislators about implementation of laws in letter and spirit; consider long pending recommendations for amendments of legal provisions on inheritance and strengthen the administrative machinery for the purpose.

Rakesh J Saxena
Hindu Personal Laws of India

Read more

Posted in Real Estate Law Title | No Comments »

Divorce & Home Foreclosure in Arizona

August 19th, 2008

With Arizona’s (and the rest of the country’s) current depressed real estate market, many people are facing foreclosures. A few things to keep in mind:

1. The foreclosure is going to continue on in most divorce circumstances unless the home’s mortgage is brought current, along with the reasonable costs associated with the foreclosure, including attorney fees.

2. Arizona has an anti-deficiency statute that is going to apply in the majority of cases involving standard mortgages. Thus, Arizona law offers protection to homeowners whose home has been foreclosed. This statute, A.R.S. §33-729, states as follows:

33-729. Purchase money mortgage; limitation on liability

A. Except as provided in subsection B, if a mortgage is given to secure the payment of the balance of the purchase price, or to secure a loan to pay all or part of the purchase price, of a parcel of real property of two and one-half acres or less which is limited to and utilized for either a single one-family or single two-family dwelling, the lien of judgment in an action to foreclose such mortgage shall not extend to any other property of the judgment debtor, nor may general execution be issued against the judgment debtor to enforce such judgment, and if the proceeds of the mortgaged real property sold under special execution are insufficient to satisfy the judgment, the judgment may not otherwise be satisfied out of other property of the judgment debtor, notwithstanding any agreement to the contrary.

B. The balance due on a mortgage foreclosure judgment after sale of the mortgaged property shall constitute a lien against other property of the judgment debtor, general execution may be issued thereon, and the judgment may be otherwise satisfied out of other property of the judgment debtor, if the court determines, after sale upon special execution and upon written application and such notice to the judgment debtor as the court may require, that the sale price was less than the amount of the judgment because of diminution in the value of such real property while such property was in the ownership, possession, or control of the judgment debtor because of voluntary waste committed or permitted by the judgment debtor, not to exceed the amount of diminution in value as determined by such court.

Interpreted, this statute means that for the average homeowner, a lender cannot seek to recover from the homeowner any shortages when the foreclosing bank sells the house for less than the outstanding mortgage amount. The second part of the statute is interesting, but reasonable, in that it references voluntary waste -if, for example, a homeowner angry at the foreclosing bank wrecks his/her home intentionally, the homeowner may be responsible for the effect the damage has on the home’s value.

So what options does a homeowner have in a divorce situation or otherwise? Here are a few:

1. Let the bank foreclose on the property. The foreclosure in most circumstances will absolve the homeowner from most or all further financial responsibilities but will not reflect well on the home owner’s credit report. Consult an attorney regarding your specific situation prior to assuming that there will be minor or no financial repercussions as there are exceptions to the anti-deficiency provisions of A.R.S. § 33-729. If there are negative financial repercussions, community property principles apply and if a divorce situation exists, then the parties or court will decide the parties responsibility for the financial obligations. Of course, any divorce rulings define the rights and obligations as between the parties only and are not binding on third party creditors, such as mortgage holders, meaning that banks are free to go after both parties if community property/obligations are involved.

2. Bring the mortgage current and retain the property. The homeowner will have to pay additional fees/costs to do so but then will continue to own the property.

3. Consider a “short sale” which is an effort to sell the property at a reduced price so that the bank will not have to bother with the time and expense of foreclosure. The bank then accepts the buy-out, basically, with less negative effects on the homeowner. It’s more complex than that but that’s the gist. I recommend that a lawyer guide both the seller and buyer of anyone participating in a short sale situation; as well, a good real estate agent familiar with short sales is recommended. Of course, when the real estate market is better than it is at the time of this writing, selling a house and paying off the mortgage in full is easier than it is now. In addition, some lenders will not agree to short sales because they believe it sets a bad precedent that too many other borrowers will attempt to use. Another piece of the short sale puzzle is the possibility the IRS will consider any amounts forgiven as income (consult an attorney regarding the Mortgage Forgiveness Debt Relief Act of 2007 for specifics on that new law and related consequences).

Real estate issues are complex and real property is often the largest asset involved in a divorce. It’s a good idea to consult with a competent attorney prior to making decisions about real estate!

Read more

Posted in Real Estate Law Title | No Comments »

Divorce & Home Foreclosure in Arizona

August 18th, 2008

With Arizona’s (and the rest of the country’s) current depressed real estate market, many people are facing foreclosures. A few things to keep in mind:

1. The foreclosure is going to continue on in most divorce circumstances unless the home’s mortgage is brought current, along with the reasonable costs associated with the foreclosure, including attorney fees.

2. Arizona has an anti-deficiency statute that is going to apply in the majority of cases involving standard mortgages. Thus, Arizona law offers protection to homeowners whose home has been foreclosed. This statute, A.R.S. §33-729, states as follows:

33-729. Purchase money mortgage; limitation on liability

A. Except as provided in subsection B, if a mortgage is given to secure the payment of the balance of the purchase price, or to secure a loan to pay all or part of the purchase price, of a parcel of real property of two and one-half acres or less which is limited to and utilized for either a single one-family or single two-family dwelling, the lien of judgment in an action to foreclose such mortgage shall not extend to any other property of the judgment debtor, nor may general execution be issued against the judgment debtor to enforce such judgment, and if the proceeds of the mortgaged real property sold under special execution are insufficient to satisfy the judgment, the judgment may not otherwise be satisfied out of other property of the judgment debtor, notwithstanding any agreement to the contrary.

B. The balance due on a mortgage foreclosure judgment after sale of the mortgaged property shall constitute a lien against other property of the judgment debtor, general execution may be issued thereon, and the judgment may be otherwise satisfied out of other property of the judgment debtor, if the court determines, after sale upon special execution and upon written application and such notice to the judgment debtor as the court may require, that the sale price was less than the amount of the judgment because of diminution in the value of such real property while such property was in the ownership, possession, or control of the judgment debtor because of voluntary waste committed or permitted by the judgment debtor, not to exceed the amount of diminution in value as determined by such court.

Interpreted, this statute means that for the average homeowner, a lender cannot seek to recover from the homeowner any shortages when the foreclosing bank sells the house for less than the outstanding mortgage amount. The second part of the statute is interesting, but reasonable, in that it references voluntary waste -if, for example, a homeowner angry at the foreclosing bank wrecks his/her home intentionally, the homeowner may be responsible for the effect the damage has on the home’s value.

So what options does a homeowner have in a divorce situation or otherwise? Here are a few:

1. Let the bank foreclose on the property. The foreclosure in most circumstances will absolve the homeowner from most or all further financial responsibilities but will not reflect well on the home owner’s credit report. Consult an attorney regarding your specific situation prior to assuming that there will be minor or no financial repercussions as there are exceptions to the anti-deficiency provisions of A.R.S. § 33-729. If there are negative financial repercussions, community property principles apply and if a divorce situation exists, then the parties or court will decide the parties responsibility for the financial obligations. Of course, any divorce rulings define the rights and obligations as between the parties only and are not binding on third party creditors, such as mortgage holders, meaning that banks are free to go after both parties if community property/obligations are involved.

2. Bring the mortgage current and retain the property. The homeowner will have to pay additional fees/costs to do so but then will continue to own the property.

3. Consider a “short sale” which is an effort to sell the property at a reduced price so that the bank will not have to bother with the time and expense of foreclosure. The bank then accepts the buy-out, basically, with less negative effects on the homeowner. It’s more complex than that but that’s the gist. I recommend that a lawyer guide both the seller and buyer of anyone participating in a short sale situation; as well, a good real estate agent familiar with short sales is recommended. Of course, when the real estate market is better than it is at the time of this writing, selling a house and paying off the mortgage in full is easier than it is now. In addition, some lenders will not agree to short sales because they believe it sets a bad precedent that too many other borrowers will attempt to use. Another piece of the short sale puzzle is the possibility the IRS will consider any amounts forgiven as income (consult an attorney regarding the Mortgage Forgiveness Debt Relief Act of 2007 for specifics on that new law and related consequences).

Real estate issues are complex and real property is often the largest asset involved in a divorce. It’s a good idea to consult with a competent attorney prior to making decisions about real estate!

Read more

Posted in Real Estate Law Title | No Comments »

« Previous Entries