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Helvetica Servicing, Inc. v. Giraudo - 2/9/2017

Arizona Court of Appeals Division One holds that the redemption price for a junior lienholder is the sale price of the secured property plus the outstanding value of the senior lienholder’s allowable deficiency judgment.


A married couple took out a $3.4 million senior loan and a $200,000 junior loan secured by deeds of trust on their home.  The couple then defaulted on the $3.4 million loan.  The senior lienholder initiated foreclosure proceedings without joining the junior lienholder.  At the foreclosure sale, the senior lienholder was the sole bidder, and it purchased the home for $400,000.

After the couple filed for divorce, the superior court determined that the fair market value of the home was about $2.2 million.  The junior lienholder then sought to redeem the property for $432,000.  The senior lienholder moved to quash the redemption, arguing that the junior lienholder had to pay the full value of the original senior lien, not merely the foreclosure sale price.  The superior court quashed the redemption filing.  The junior lienholder appealed. 

The Court of Appeals held that, under A.R.S. § 12-1285(B), the junior lienholder’s redemption price is the sale price plus the outstanding value of the senior lienholder’s allowable deficiency judgment.  The redeeming junior lienholder is not required to pay any portion of the senior lien that is unenforceable against the judgment debtor under the anti-deficiency statutes. 

The court was unable to determine from the record what portion of the senior lien was subject to anti-deficiency protection or how much of the deficiency remained unpaid.  It therefore remanded for further proceedings to determine the redemption price.

Judge Eckerstrom authored the opinion of the court, in which Judges Orozco and Brown joined.

Posted By: Josh Bendor

Posted On: 2/16/2017