Arizona Homestead Rules

By Michael Remmert
The Arizona desert near Phoenix

arizona desert image by John Keith from Fotolia.com

In Arizona, homeowners with equity in their properties enjoy generous protection from creditors´ claims, thanks to state homestead laws. Although it is possible to foreclose on delinquent mortgage owners in Arizona, the owner´s equity in the property cannot be seized by the creditor. The equity protection limit is $150,000. The homesteader must be at least 18 years old to be eligible for this exemption. Married couples and single residents may claim only one homestead exemption, even if they own several properties.

Calculation Example

To find out whether creditors can seize your property, determine your homestead´s market value. If, for example, your property is worth $400,000 and your mortgage balance is $250,000, your equity interest in the property is $150,000. As a result, the property cannot be seized or sold by a creditor because there would be no additional value left that could be subject to a creditor´s claim. Only the mortgage holder or other consensual lien holders are allowed to sell the property.

However, if the property´s market value is $450,000 and the mortgage is $250,000, your maximum equity exemption remains at $150,000, as mandated by state law. The additional $50,000 above the exemption is subject to creditor claims. Homes with a value above the exemption limit and the mortgage, as in this latter example, can be seized by a creditor. However, the full amount of the homeowner´s equity, up to $150,000, must remain with the owner of the property. In reality, creditors generally do not seize homes in Arizona if they cannot collect at least $100,000 above the exemption limit and the mortgage. It is not worth the effort and the legal quarreling over amounts less than that.

Definition of Homestead

A homestead in Arizona must match the following criteria:

You must occupy a dwelling and its land as your home.

Dwellings can include mobile homes, condominiums, detached buildings and the land upon which these structures are located.

Proof of Residency

Creditors have the right to inspect properties that have been declared as homesteads. To protect your equity and prevent your homestead from being seized, you must prove that you live there. Set up utility accounts in your name and under your homestead´s address and pay the bills in a timely manner. Keep mail that you receive on a regular basis that shows the address, particularly official correspondence such as voter registration forms, VA checks, Social Security statements, insurance notifications and Department of Motor Vehicle forms. Register your vehicle under the address of your homestead. Make the place look "occupied" by keeping food products with short expiration dates in your refrigerator. If you cannot establish proof of residency on a property you claim as a homestead, creditors may be able to seize the place and you may lose equity protection.

About the Author

Michael Remmert started writing professionally in 1986, having worked for tabloids like "Bild" and "Berliner Zeitung," broadsheets like "Welt," and broadcasters like Associated Press Television News, European Broadcast Union, and Columbia Broadcasting System. He earned a Master of Arts in liberal studies and journalism from New York University in 1986.

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