On June 13, 2013, the Arizona Court of Appeals ruled that the Arizona anti-deficiency statute cannot be waived in advance by a homeowner. Parkway Bank and Trust Company v. Joseph Zivkovic, 1 CA-CV 12-0612.
Zivkovic personally guaranteed a loan for his business, listing himself as the borrower and incorporating a previous loan secured by a Deed of Trust on a home in Mesa, Arizona. The loan documents contained a provision choosing the law of Illinois as governing law, as both Parkway and Zivkovic’s businesses were located in Illinois.
When Zivkovic defaulted on the loan, Parkway sold the home at a trustee’s sale in Arizona. Parkway then filed a complaint against Zivkovic seeking a deficiency judgment as authorized under Illinois law after the foreclosure of a home. For reasons of public policy the Arizona Court of Appeals ruled against Parkway, and said that the Arizona anti-deficiency statute could not be waived.