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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CC&Rs Remain Subject to Statutory Modification

By:  Andy Stone

Future legislation may impact current CC&R obligations.  In an important decision for all communities, homeowner associations, builders, and developers, the Arizona Court of Appeals recently held that new laws may apply retroactively to modify or eliminate CC&R provisions.

In Hawk v. PC Village Ass’n, Inc., No. 1CA-CV-12-0362 (Ariz. Ct. App. September 3, 2013), the Arizona Court of Appeals held that a 2009 law, which renders unenforceable any covenant, restriction or condition prohibiting the posting of “for sale” signs, invalidated a restriction recorded before 2009.

In 2009, the Hawks purchased a lot in a master-planned community managed by PC Village Association, Inc. … Read More »

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A Non-Purchase Money Second Deed of Trust is Not Protected by Arizona’s Anti-deficiency Statute

By:  Ben Reeves & Julie Maurer

Arizona anti-deficiency laws do not prohibit a non-purchase money lender from suing on its note after foreclosure by a senior lender.  In Wells Fargo Bank, N.A. v. Brewer, No. 1CA-CV 12-0383 (Ariz. Ct. App. May 21, 2013 unpublished), the Arizona Court of Appeals held that Arizona’s anti-deficiency statute, A.R.S. § 33-814, did not prevent Wells Fargo from suing on its note after a senior lender foreclosed on the borrowers’ multi-million dollar home.

In 2007, Wells Fargo agreed to lend the Brewers up to $1,000,000 and secured the loan with a second position deed of trust recorded against the Brewers’ home. … Read More »

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