Arizona Appellate Court Addresses Refinance Loans that Are Part Purchase Money and Part Equity

Refinancing did not destroy the purchase money status of a homeowner’s obligation for purposes of anti-deficiency protection under Ariz. Rev. Stat. § 33-729(A) with regard to proceeds used to satisfy the purchase money loan. As to non-purchase money sums included in the proceeds, however, a deficiency judgment was permissible. Amounts used for construction of a new residence on the property could qualify as a purchase money obligation if (1) the deed of trust covered both the land and the residence, and (2) the residence met the size and use requirements of § 33-729(A).

Helvetica Servicing v. Pasquan 227 P.3d 198 (App. 2012).