Harper Law recently represented a homeowner who lost her home to foreclosure in late 2008. The lender on the homeowner's second mortgage filed a lawsuit to recover over $40,000 it alleged was owed on the second mortgage, which was a purchase money mortgage used to buy the house in 2006.
Our Arizona real estate lawyers filed a Motion to Dismiss the lender's lawsuit pursuant to A.R.S. § 33-729(A), which states:
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…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.
The legal effect of this statute is that a lender is barred from pursuing any action against a borrower if the mortgage secured by a deed of trust was obtained to purchase the home. After receiving Harper Law's Motion to Dismiss in this case, the lender realized the futility of its action and immediately offered to dismiss the case and pay the client's attorneys' fees.
If you've been sued by a lender, please schedule a consultation with an Arizona real estate attorney to determine whether you might be protected by this or another applicable law.
(CB09)
