Arizona’s homestead exemption allows a person to protect from certain creditors up to $150,000 of their equity in their residence (dwelling house, condominium, or mobile home). A.R.S. § 33-1101 et seq. This homestead equity is exempt from non-consensual liens, for example recorded judgments against the owner. The homestead exemption does not apply as against consensual liens such as a mortgage or deed of trust.
In a recent opinion, the Arizona Court of Appeals addressed the question of whether a property owner could be precluded on equitable grounds from asserting the homestead exemption. Rogone v. Correia (Opinion filed September 25, 2014). In Rogone, the trial court invalidated certain transfers of real property, finding that the transfers were done with actual intent to delay, hinder or defraud a creditor. Soon after the Court entered judgment invalidating the property transfers, one of the defendants moved into one of the properties in question and claimed it as exempt from collection as her homestead. The trial court denied the defendant’s assertion of the homestead exemption, finding that equitable considerations precluded assertion of the homestead exemption as to that property. Applying principles of statutory construction, the Court of Appeals reversed, holding that there is no equitable exception to the Arizona homestead statute. In reaching this conclusion, the Court of Appeals noted that (1) the homestead statute should be liberally construed to effectuate the purpose of protecting the homeowner from the forced sale of their home, (2) the statute is not ambiguous, (3) the statute does not require a person to satisfy notions of equity to qualify for the exemption, and (4) per the statute a homestead is exempt from sale under a judgment except in certain expressly enumerated circumstances, none of which include discretionary equitable considerations.
This decision is still open to review by the Arizona Supreme Court, so stay tuned.