What is a Homestead?

Generally, a homestead is a dwelling including the land and buildings on the land that is occupied by the owner.

What is a Homestead Exemption?

A homestead exemption is a law that states that a person’s homestead is exempted from seizure or sale for a debt in certain situations. This means that if all the criteria under the homestead exemption are met, a creditor cannot force a person to sell their home to satisfy a debt.

What is Arizona’s Homestead Exemption?

Arizona’s homestead exemption protects up to $150,000 in equity in a person’s dwelling from attachment, execution or a forced sale. This means that if a person’s home was worth $250,000 but they owed $150,000 on the home, the homestead exemption would apply since the person’s equity is $150,000 or less.

A person or married couple can only claim one homestead exemption. The person or couple must live in the dwelling for which they claim exemption. A person may live somewhere else for up to two years without causing an automatic waiver of the homestead exemption. The homestead exemption applies to a person’s house and land, condominium or cooperative, mobile home and land and the identifiable cash proceeds from either a voluntary or involuntary sale of the property up to 18 months after the sale.

If a person’s equity in their home exceeds $150,000, a creditor may force the sale of the property since the homestead exemption only protects a maximum of $150,000 in equity. So, if a person had $250,000 of equity in their home, a creditor could force them to sell the house to pay the debt. However, the homestead exemption prevents a creditor from forcing the sale of the property unless the proceeds from the sale would cover the homestead exemption and all liens and encumbrances that have priority over the creditor and the costs of the sale. Thus, there are many cases where a person has more than $150,000 in equity in their home and a creditor cannot force the sale of the property.

Are There Exceptions to Arizona’s Homestead Exemption?

Yes. The homestead exemption does not protect a person’s equity in their home from debts having a special relationship with the property. These types of debts include mortgages, deeds of trust, labor or material liens, government tax liens or consensual liens on the property. This means that a person cannot claim the homestead exemption against their mortgage holder if they stop making the mortgage payments on the house.

The homestead exemption also does not protect against liens resulting from child support or spousal maintenance (alimony) obligations. If a person has past due child support or spousal maintenance and an action is filed to collect on the debt, the creditor may consider the person’s homestead equity as a financial resource from which to collect the debt. Also, courts may consider the homestead exemption when dividing a couple’s community property.

The homestead exemption also does not apply to amounts due a homeowner’s association (HOA). Arizona law permits an HOA to put a lien on the home for regular HOA assessments and dues charged to the home owner for HOA expenses and for late fees for those assessments and from the time the assessment becomes due and also authorizes the foreclosure of the liens if the home owner has been delinquent for one year or if the homeowner owes $1,200 or more (excluding late fees), whichever comes first. Liens for other HOA penalties and fees cannot be foreclosed upon. Any proceeding to enforce an HOA lien must start within three years after the full amount of the HOA assessment becomes due.

How Do I Claim a Homestead Exemption?

The Arizona homestead exemption is automatic, which means there is no requirement for a written claim. If a person wants to waive his or her homestead exemption, he or she must record the waiver in the county recorder’s office in the county where the property is located. In addition, if a person has more than one property interest which could reasonably be considered a homestead for purposes of the exemption, a creditor may send a certified letter requiring that the person designate which property is protected. To do this, the person may either respond to the creditor with a certified letter within 30 days of receiving the creditor’s letter or record the homestead exemption in the county recorder’s office at any time.

If a person does not claim a homestead exemption for any reason, the person may instead claim an exemption for prepaid rent, including security deposits, for the person’s home. This exemption cannot exceed $1,000 or 1 1/2 months rent, whichever is less.

Arizona’s homestead exemption can be found in Arizona Revised Statutes, Title 33, Chapter 8, Article 1.