BLOG SIX

HB 2617: JUDGMENTS; LIENS; HOMESTEAD

The new law takes effect on January 1, 2022.

Increases the homestead exemption to $250,000, from $150,000.

Any civil judgment becomes a lien on the real property of the judgment debtor, including the judgment debtor's homestead property, that is located in the county in which the judgment is recorded, whether the property is then owned by the judgment debtor or is later acquired, from the time of recording until satisfied or lifted. Applies retroactively to all valid judgments, without regard to when the judgment was recorded. Civil judgments that are recorded on or after September 13, 2013, or that were recorded before September 13, 2013 and that were current and collectible under the laws applicable on that date are exempt from statute allowing a writ of execution or other process to be issued to enforce a judgment. Judgments creditors have a priority claim over the homeowner on any cash proceeds from refinancing the homestead property. Previously, all civil judgments obtained by the state attached to homestead property and were exempt.

·         ARS Titles Affected: 12, 33

The Homestead Exemption has been increased to $250,000, but judgment creditors will be able to get to the equity in the Homestead Exemption prior to the owner of the house/judgment debtor. The net effect is that the Homestead Exemption will be rendered void (or significantly limited) in the event there are properly recorded judgments against an individual(s). The Homestead Exemption used to (and prior to this law takes effect) trumped judgment creditors. Now? Past and future recorded judgments will attach to the equity in a person's residence and will be ahead of the exemption.