Homestead: Arizona Allows Creditors to Access Equity

A new Arizona-only law, HB2617, passed in May of 2021, signed by Governor Doug Ducey, and which will go into effect on January 1, 2022, allows debt collectors to place liens on homes to recoup what a homeowner owes them.

This is for outstanding debt that is in arrears and past due. The new law reverses previous of-record decisions which had been on the books for many years. This could affect a refinance loan — or a buyer’s ability to purchase a home — if there are any outstanding, unsatisfied debts.

Under HB2617, the Homestead Declaration and protection that a homeowner can file has been raised from $150,000 to $250,000. The Arizona Homestead Protection is a set of state laws designed to protect the value of the home from the attachment of judgments, execution, and forced sales. 

On paper, this increase sounds like a good deal for homeowners. Previously, only consensual deeds or voluntary contracts allowed liens and judgments to be tied to the home. The new law has taken away the Homestead’s protections: Now, all past-due debt, judgments, and liens — even those for credit card debt — can be attached without consent.