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P. Simmons
P. Simmons, Lawyer
Category: Real Estate Law
Satisfied Customers: 33799
Experience:  12+ yrs. of experience including real estate law.
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I was just about to close the sale of my wife and I's

Customer Question

I was just about to close the sale of my wife and I's personal residence here in Arizona when the escrow agent notified me that they found a credit card renewed judgement lien during a search. What options do I have at this point? Can I call the creditor and negotiate a settlement? Do they know I am selling my residence and therefore won't negotiate? I also heard that since it is my personal residence that a certain amount of equity in the home is protected under homestead exception.
Submitted: 9 months ago.
Category: Real Estate Law
Expert:  P. Simmons replied 9 months ago.

Hello! My name is ***** ***** I am a licensed attorney with more than 18 years of experience. I am here to assist you with your questions. Please understand that if I ask you for additional information, you are NOT charged again and our communications are NOT timed. So please see this as a relaxed conversation between friends. I am here to help

Also, if you would like to chat on the phone, let me know and I can make that happen.

You can certainly try and negotiate a settlement.

And there is a homestead exemption...but that will not apply in your case (since you are selling the home you can not claim the exemption for the sale)

Please let me know if you have more questions. I am happy to help if I can. Otherwise, please rate the answer so I may get credit for my work.

Customer: replied 9 months ago.
just to be clear....I found this statement under NOLO website under Arizona Homestead Exepmtion - "The homestead exemption also applies to cash proceeds from the sale of a homestead property. These proceeds remain exempt for 18 months from the sale of the property, or until the proceeds are used to purchase a new homestead, whichever time is shorter." does this statement only apply in bankruptcy or in general ( which was the topic I found it under).
Expert:  P. Simmons replied 9 months ago.

That applies ONLY if you are selling to repurchase. If you are not selling to repurchase? It will not apply

Customer: replied 9 months ago.
I planned on buying a another residence because it is our personal residence we are selling. So as long as I repurchase within 18 months I am protected?
Expert:  P. Simmons replied 9 months ago.

Correct, if the purpose of the sale is to repurchase, you can do so.

HOWEVER, you have to clear title first...and for that? You need to either pay off or negotiate a settlement with that creditor.

Please let me know if you have more questions. I am happy to help if I can. Otherwise, please rate the answer so I may get credit for my work.

Customer: replied 9 months ago.
now I'm confused. I don't understand. Why would I be responsible to pay the creditor during closing if I plan on using the $150,000 worth of homestead protected proceeds (equity) to repurchase another house?
Expert:  P. Simmons replied 9 months ago.

Sorry for the confusion.

IF the goal is to sell the home, you need to clear title (you need to have that lien removed)

There is no way to sell unless or until you do that.

It is true that you can "carry over" your homestead exemption in Arizona to a new home.. However, that will not apply in your case since you have a lien on the home. So the lien holder can require you pay them before they remove the lien.

Again, sorry for the confusion

Customer: replied 9 months ago.
Still confused. When I asked if this applies "The homestead exemption also applies to cash proceeds from the sale of a homestead property." You said that was correct so long as I repurchase another home. So why would the cash proceeds form my sale not be protected from an outstanding judgment lien? After all, is that not what a Homestead Exemption does - protect equity (whether in a home or proceeds from the sale of home) form creditors?
Expert:  P. Simmons replied 9 months ago.

thank you

The homestead exemption is designed to protect your home from forced sale by creditors.

That is true.

So one option you have now is to not sell (to force the creditor to bring this to court and ask the court to order sale).

In such a case, you are protected by the homestead exemption.

But that is not what you are describing...if your goal is to sell the home and purchase another? YOu need to sell it...and no one is going to purchase with that lien in place.

Again, sorry for the confusion...it is possible to carry forward the exemption in some cases...but if your goal is to sell the home, you have to remove that lien...and to do that you will need to work with the creditor...there is no process that would allow you to get around this.

This is the part of my job I don't like...when the law is not in favor of my customer. I wish I could tell you that you can avoid paying this creditor and sell your home but I can only provide you information based on the law so that you can act on the best available information to you...I wish I had better news, but can only hope you recognize and understand my predicament and don't shoot the messenger. I'm sorry!

Customer: replied 9 months ago.
No worries, I am not looking for good or bad but rather the correct news. I understand your last reply, but it still contradicts this statement - "The homestead exemption also applies to cash proceeds from the sale of a homestead property." I am ok with the contradiction if are advising me that it is incorrect. But you did not answer me in that manner and that is what is confusing. Your answer when I brought it up was " That applies ONLY if you are selling to repurchase. If you are not selling to repurchase? It will not apply". Maybe I don't understand what you mean by "repurchase". Can you please clarify my perception of the contradiction?
Expert:  P. Simmons replied 9 months ago.

The issue is the lien. Any prospective buyer will require that the lien be removed before they pay money for the home.

That is the issue here...there is no way for you to sell the property without removing the lien. It simply is not possible.

Now...say there was no lien...and say you sold and the next day a creditor tried to attach the proceeds from the sale? You could defend claiming they are exempt (under the homestead exemption)

Again, that will not help your case (since you have a lien on the home)

Customer: replied 9 months ago.
the short answer is that the homestead exemption does not apply to judgment liens already in existence? But it would apply in a Chapter 7 bankruptcy proceeding, correct?
Expert:  P. Simmons replied 9 months ago.

It WOULD apply in a court ordered sale (like bankruptcy)...you could ask the court to exempt the exemption amount as part of the bankruptcy process

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