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Arizona - Looking for Advice on Voluntary Foreclosure Situation
Posted by Peter K on May 05, 2008 at 9:14 PM
Hi All, I'll try to keep this as short as possible and any help is much appreciated. Situation:
As an investor I built a spec home (not my primary residence) with a builder in the Phoenix-area. All financing was taken out in the investor's name and profits/costs were split 50/50 between investor and builder. After 1 year of sitting on the market the builder went MIA and I was stuck with the entire mortgage. A short sale has proven unsuccessful and the likelihood of moving the house at discount anytime soon seems low. The monthly payment at 100% and stress associated with the situation is a huge drain and I want to exit the deal asap. Credit score hit is not a concern; builder is now a former friend so I do not want to pursue legal action; I have personal assets that I want to ensure are protected. Questions:
- In my limited understanding of AZ foreclosure laws I believe my personal assets are safe from deficiency judgment as the home sits on less than 2.5 acres and is a single family home - can anyone confirm my understanding?
- I am lost on tax consequences? Assuming debt is forgiven is this taxable (this is not my primary residence)? Is the amount forgiven by the bank "negotiable"? Are options such as deed-in-lieu of foreclosure / voluntary foreclosure "better" than forcing the bank to go through the courts?
- I live in Illinois and am having a terrible time finding legal advice on this situation from an attorney in AZ - I've been turned down dozens of times by various real estate attorneys over the phone - most seem uninterested in dispersing minimal advice as I am not looking for a long-term client relationship (understandable, but frustrating). I have an accountant that prepares my taxes, but I'd like legal consul from someone more familiar with the legal and financial aspects of this situation - any advice for seeking a competent attorney or CPA? Again I appreciate any information as all the stress (both financial and mental) of this situation is really starting to get to me and research on Google is only providing so much info. Thanks!
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