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About This Blog
Welcome to the Snell & Wilmer real estate litigation blog. Check back here often for useful news and information about current topics involving real estate litigation. We hope that you will find the blog both timely and helpful, and we invite you to join the discussion by posting comments about the articles and contacting the authors with your thoughts about the posts.
Real Estate Litigation Group Members and Blog Contributors
- Bob Henry
- Kevin Parker
- Matt Fischer
- Adam Lang
- Cory Braddock
- Benjamin Reeves
- Erica Stutman
- Patrick Paul
- Rick Erickson
- Ginny Olmstead
- Neal McConomy
- Michael E. Lindsay
- Bob L. Olson
- Nathan G. Kanute
- Sean M. Sherlock
- Lyndsey Torp
- Anthony Carucci
- Luke Mecklenburg
- Jon Frank
- Kevin Walton
- Lauren Munsell
- Lauren Podgorski
- Addy Colton
- John Sarager
- Ian Douglas
- David Rao
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Recent Posts
- Tort Claims Against an Alter Ego May Be Considered an Action “On a Contract” for the Purposes of an Attorneys’ Fees Award under California Civil Code section 1717
- The Show Must Go On: Shuttered Venues Operators Grant Provides Lifeline for Live Music and Theater Venues
- More Help For Arizona’s Restaurant & Hospitality Industry On the Way
- Married Couple’s Acquisition of Title as Joint Tenants Does Not Rebut the Presumption of Community Property
- Woodbridge II and the Nuanced Meaning of “Adverse Use” in Hostile Property Rights Cases in Colorado
Topics
- Anti-deficiency Statute
- Bankruptcy
- Commercial Real Estate Industry
- Construction and Development
- Environmental
- Evictions
- Foreclosures
- Guaranty Contracts
- Judgment Liens
- Medical Marijuana
- Real Estate and Bankruptcy
- Real Estate Appraiser Litigation
- Real Estate Broker Litigation
- Real Estate Purchase/Sale Transaction Litigation
- Real Estate Receivers
- Statutes Affecting Real Estate
- Title Insurance
- Uncategorized
- Zoning
Foreclosure Deficiency: Construction Loan vs. Home Improvement Loan
By: Kevin J. Parker
In a recent Arizona Court of Appeals case, Helvetica Servicing, Inc., v. Pasquan, 2019 WL 3820015, (8/15/19), the Court of Appeals addressed the distinction between (1) a construction loan (or refinance of same) and (2) a home improvement loan (or refinance of same), as it relates to Arizona’s anti-deficiency statute, A.R.S. §33-729(A).
In general, an anti-deficiency statute provides that although a purchase-money lender or a construction lender can – in appropriate circumstances – foreclose on their loan and cause a sale of the property to pay the loan, the lender cannot (if the statutory criteria are met) force the homeowner/borrower to pay the remaining balance still owed on the loan following the foreclosure (known as the deficiency).… Read More »
Author:
Kevin Parker
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Tagged anti-deficiency, Deficiency judgment, foreclosure, real estate litigation
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Nevada Supreme Court Clarifies the Litigation Waiver of the One-Action Rule
By Bob L. Olson
Nevada has a one-action rule which, with limited exceptions, requires a creditor seeking to recover a debt secured by real property to proceed against the security first prior to seeking recovery from the debtor personally. In the event that a law suit is filed in violation of the one-action rule, final judgment may be entered in favor of the creditor but that judgment “releases and discharges the mortgage or other lien.” NRS 40.455(3). Nevada law further provides that, with the exception of certain guaranties, any provision in an agreement relating to the sale of real property which contains a waiver of Nevada’s anti-deficiency laws may not be enforced by a court because doing so violates Nevada’s public policy. … Read More »
Author:
Bob L. Olson
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Tagged affirmative defense, anti-deficiency, deficiency, Hefetz, Hefetz v. Beavor, NRS 40.430, NRS 40.435, NRS 40.453, NRS 40.455, one form of action rule, one-action rule, Rule 8
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California’s One-Action Rule May Apply to Federal Lenders
California’s one-action rule provides that “[t]here can be but one form of action for the recovery of any debt or the enforcement of any right secured by mortgage upon real property or an estate for years therein . . . .” Cal. Code Civ. Proc. § 726(a). In other words, the one-action rule prescribes that the only process for recovery of a debt secured by a mortgage or deed of trust is to foreclose on the lien. The rule aims to prevent a multiplicity of actions and vexatious litigation, and to force a beneficiary to look to all of the security as the primary fund for payment of a debt before looking to the trustor’s other assets.… Read More »
Author:
acarucci
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Tagged anti-deficiency, commercial real estate, deficiency, foreclosure, foreclosures, Guarantor, guaranty, one-action rule, real estate, real estate litigation, real property
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If Receiver’s Sales Aren’t Foreclosures, What Are They?
By: Ben Reeves & Bob Olson
When no statute specifically authorizes a court-appointed receiver to sell real property, what type of sale is it? The Supreme Court of Nevada recently addressed this question, holding that “a receiver sale of real property that secures a loan is a form of judicial foreclosure.” U.S. Bank v. Palmilla Dev. Co., 131 Nev. Adv. Op. 9 (2015).
Facts
In U.S. Bank v. Palmilla, U.S. Bank made a $20.15 million loan to Palmilla Development Company secured by a development of townhomes. Palmilla defaulted, and U.S. Bank applied for, and obtained, the appointment of a receiver over its real property collateral.… Read More »
Author:
Ben Reeves
1 Comment
Tagged anti-deficiency, NRS 40.455, real estate litigation, receiver sales, U.S. Bank v. Palmilla
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Are Vacant Lots Protected Under Arizona’s Anti-deficiency Statutes?
By: Ben Reeves
No, of course not. Arizona’s anti-deficiency statutes only prohibit deficiency judgments after a trustee’s sale of a “dwelling”.[1] Under no definition can a vacant lot constitute a “dwelling”. This was the Arizona Supreme Court’s holding in BMO v. Wildwood Creek Ranch, LLC.
In BMO, Shawn and Kristina Rudgear (through their company Wildwood Creek Ranch, LLC) borrowed $260,000 to fund construction of a home on a vacant 2.26-acre lot. This loan was secured by a deed of trust against the lot.
Construction of the home never began, the Rudgears defaulted, and BMO Harris Bank foreclosed via trustee’s sale.
… Read More »
Author:
Ben Reeves
2 Comments
Tagged A.R.S. 33-814, anti-deficiency, BMO v. Wildwood Creek, M&I v. Meuller, MidKansas v. Dynamic
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Update – Prospective Waivers of “Fair Market Value” Hearings are Definitely Void.
By: Ben Reeves
In 2013, we blogged about the Arizona Court of Appeals’ determination that prospective contractual waivers of “fair market value” hearings are unenforceable as a matter of public policy. The link to our prior blog post is here. Although we noted some deficiencies in the Court of Appeals’ reasoning, we recognized that the holding reached a defensible legal result. On review, the Arizona Supreme Court reached the same outcome…but with a more robust legal analysis. See CSA 13-101 Loop, LLC v. Loop 101, LLC, et al., No. CV-14-0029 (Ariz. Dec. 31, 2014).[1]
The Arizona Supreme Court held that although Arizona’s anti-deficiency statutory scheme did not expressly prohibit contractual waivers of “fair market value” hearings, Arizona’s overall public policy behind the trustee’s sale process entitled borrowers and guarantors to the protection afforded by a “fair market value” hearing.… Read More »
Author:
Ben Reeves
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Tagged A.R.S. 33-814, anti-deficiency, CAS 13-101 v. Loop 101, fair market value hearing, waiver
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Nevada Supreme Court and District Court Issue Decisions Regarding Nevada’s Limitations on Deficiency Judgments.
By: Bob Olson and Nathan Kanute
In 2011 the Nevada Legislature enacted Assembly Bill 273 (“AB 273”) which amended NRS 40.459 by limiting deficiency judgments to the difference between the amount the lender paid to acquire the loan or obligation and the larger of the market value of the property or the amount paid for the property at a foreclosure sale. As one can imagine, a large number of borrowers and guarantors have tried to take advantage of this recent law to limit or in some cases eliminate their liability for deficiencies. Creditors, on the other hand, have cried foul by arguing that, among other things, the law cannot be applied retroactively, it impairs the value of their pre-enactment paper and violates the Contracts Clauses of both the United States and Nevada Constitutions. … Read More »
Author:
Bob L. Olson
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Tagged AB 273, anti-deficiency, deficiency, Eagle SPE, foreclosure, Sandpointe
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Borrowers Can Avoid Liability Even After a Trustee’s Sale
By: Ben Reeves
Since a lender must have a valid debt and valid lien to conduct a trustee’s sale, a borrower that allows the foreclosure sale to occur impliedly agrees that the debt and lien are valid. In Madison v. Groseth and BT Capital, LLC v. TD Serv. Co. of Arizona, 229 Ariz. 299, 301, 275 P.3d 598, 600 (2012), Arizona appellate courts reached that exact conclusion, holding that under A.R.S. § 33-811(C), a borrower that does not obtain an injunction stopping a trustee’s sale waives all defenses to the validity of the sale and all defenses related to the sale. … Read More »
Author:
Ben Reeves
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Tagged A.R.S. 33-811(C), anti-deficiency, BT Capital, Moran AZ Financial v. Gotses
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Amendments to Arizona’s Anti-deficiency Statute Exclude Homebuilders from Anti-Deficiency Protection
By: Ben Reeves
Last Tuesday, April 20, 2014, Arizona’s Governor, Jan Brewer, signed HB 2018 into law. This bill closes a long-standing loophole that allowed commercial homebuilders to take advantage of Arizona’s anti-deficiency statute, even though the statute was originally enacted to protect only homeowners. In sum, for loans secured by residences that are originated after December 31, 2014, commercial homebuilders will no longer be able to avoid liability based on Arizona’s anti-deficiency statute, A.R.S. § 33-814(G).
A.R.S. § 33-814(G) provides that after a trustee’s sale, a lender cannot sue to recover the difference between the value of a “dwelling” and the amount owed on the loan (i.e., the “deficiency”). … Read More »
Author:
Ben Reeves
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Tagged A.R.S. 33-814, anti-deficiency, HB 2018, MidKansas v. Dynamic
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California Amends its Anti-Deficiency Statute
By: Ben Reeves
As of January 1, 2014, California amended its anti-deficiency statute to stop mortgage lenders from “collecting” from homeowners on post-foreclosure debts. Although the amendments were designed to tackle a purely consumer / residential real estate issue, only time will tell if the changes have unintended consequences beyond the consumer / residential realm.
Prior to the amendment, California’s anti-deficiency statute, Cal. Civ. Proc. Code § 580d, only barred lenders from obtaining a judgment against homeowners to recover the difference between the value of the home after foreclosure and the amount of the debt owed on the mortgage (i.e.… Read More »
Arizona Court of Appeals Holds That Certain Residential Developers Are Not Protected By The Anti-Deficiency Statute After Foreclosure Of A Deed Of Trust On Vacant Land
By Eric Spencer and Adam Lang
Nearly three years ago, in M&I Marshall & Isley Bank v. Mueller, the Arizona Court of Appeals held that the Arizona anti-deficiency statute protects a borrower who started, but never completed, construction of a single-family dwelling before defaulting on its loan. This week, the same appellate court limited those anti-deficiency protections by holding in BMO Harris Bank v. Wildwood that a developer of vacant land – land on which no construction has begun – cannot invoke the anti-deficiency statute as a matter of law, regardless of whether the borrower intends to eventually reside on that land.… Read More »
Author:
Adam Lang
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Tagged 33-814, anti-deficiency, borrower, deficiency, dwelling, homebuilders, Lang, lenders, Mueller, Spencer, vacant lot, Wildwood
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Guarantors Beware! A.R.S. § 33-814 May Not Save You from a Deficiency Judgment
By: Ben Reeves
In First Credit Union v. Courtney, 309 P.3d 929, 669 Ariz. Adv. Rep. 18 (Ct. App. 2013), the Arizona Court of Appeals rejected three creative arguments that A.R.S. § 33-814 protected the guarantors from paying on their guaranty. The opinion provides a stark reminder that Arizona courts will usually enforce a guarantor’s contractual obligation to repay a debt.
In 2006, First Credit made a $3.56 million construction loan to Orange Grove I, L.L.C. (the “Borrower”). First Credit secured the loan with a lien against commercial real property called the Appian Estates. The Courtneys guaranteed repayment of the loan. … Read More »
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Ben Reeves
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Tagged anti-deficiency, ARS 33-814, First Credit Union v. Courtney, Guarantor
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Arizona’s Anti-deficiency Statute, A.R.S. 33-814(G), Cannot be Prospectively Waived Says the Court of Appeals
By: Ben Reeves
In Parkway Bank & Trust Co. v. Zivkovic, 662 Ariz. Adv. Rep. 26 (Ct. App. 2013), the Arizona Court of Appeals held that provisions in loan documents purporting to waive the applicability of A.R.S. § 33-814(G) violate Arizona public policy and, therefore, are not enforceable under Arizona law.
A.R.S. § 33-814(G) provides that if a lender has a trustee’s sale foreclose of a “property of two and one-half acres or less which is limited to and utilized for either a single one-family or a single two-family dwelling . . . [then] no action may be maintained to recover any difference between the amount obtained by sale and the amount of the indebtedness and any interest, costs and expenses.” This statute is generally referred to as the “anti-deficiency” statute as it generally prevents lenders from suing homeowners for the difference between the amount owed on their mortgage and the value of their home.… Read More »
Author:
Ben Reeves
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Tagged A.R.S. § 33-814, anti-deficiency, Parkway Bank v. Zivkovic, real estate litigation, waiver
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A Person Owning a Fractional Interest in a Vacation Home is Protected by Arizona’s Anti-deficiency Statute
By: Ben Reeves
In Independent Mortgage v. Alaburda, the Arizona Court of Appeals held that Arizona’s anti-deficiency statute, A.R.S. § 33-814(G), precluded a lender from suing its borrowers for a deficiency after foreclosing on the borrowers’ fractional interest in a vacation home. 230 Ariz. 181, 281 P.3d 1049 (Ct. App. 2012).
If a lender conducts a trustee’s sale of “trust property of two and one-half acres or less which is limited to and utilized for either a single one-family or a single two-family dwelling,” then A.R.S. § 33-814(G) bars a lender from suing a borrower to recover any difference between the value of the property and the amount of debt owed (i.e.… Read More »
Author:
Ben Reeves
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Tagged A.R.S. 33-814, anti-deficiency, dwelling, Independent Mortgage v. Alaburda
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