Question: We lost our Mesa home to foreclosure a year ago. We were almost immediately able to buy from an investor a smaller home in Queen Creek using carryback financing from the investor.

  The home prices in our Queen Creek subdivision have increased significantly in the past year, and we have approximately $20,000 equity in our home. The problem is that the homeowners association for our former home in Mesa now has a judgment for $8,000 in delinquent HOA fees that we did not pay for several months before the foreclosure. This $8,000 judgment has been recorded and is a lien on our Queen Creek home.

  Does our homestead exemption protect us from a foreclosure sale of our Queen Creek home? If so, what do we have to do?

  Answer: In Arizona the homestead exemption currently protects up to $150,000 in equity in a home used as a principal residence from most judgments — that includes judgments for failure to pay a credit card or a medical bill. If you consent to a lien on your home such as a second mortgage for a home-equity line of credit or a swimming-pool loan, however, the homestead exemption does not apply and there can be a foreclosure sale.

  You never consented to a lien on your Queen Creek home for delinquent HOA fees owed on your home. Therefore, the homestead exemption for your Queen Creek home should protect you now from the collection by foreclosure sale of the $8,000 judgment of the Mesa homeowners association.

  In addition, when you sell your Queen Creek home you will have up to 18 months to invest up to $150,000 of your equity in another home. Finally, the homestead exemption automatically applies and you do not need to file any paperwork now.

  If you would like assistance regarding commercial or residential transactions, potential litigation, HOA issues, estate planning or other legal matters, please call our office at 602.957.9810 and arrange for an initial consultation with one of our real estate attorneys.

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