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2 years ago
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Homestead Exemption Does it Apply to Short Sales?

After the seller s lender approves the short sale, the title commitment shows a recorded $50,000 credit card judgment against the seller. The title company will not issue a title insurance policy to the buyer without the payment of this judgment. Will the seller s homestead exemption allow the short sale transaction to close despite the $50,000 judgment?
Greg Sidoff
Real Estate Professional
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2 years ago
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No. Under A.R.S. 33-1101(C), the homestead exemption generally protects a seller from collection of judgments against any identifiable cash proceeds received by a seller at closing up to $150,000. There are no identifiable cash proceeds to the seller in a short sale transaction. Therefore, the homestead exemption does not apply, and the $50,000 judgment will have to be paid at closing in order for the buyer to receive a title insurance policy.
Greg Sidoff
Real Estate Professional
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