Homestead laws allow homeowners to declare a limited portion of their property as a "homestead," thus sparing it from creditors in the event of a bankrputcy or other financial hardship. These laws originally were intended to protect families from losing their farms. Arizona's homestead law calls for an automatic exemption that protects equity in a home up to $150,000.
Learn more about Arizona homestead laws in the table and summary below. See FindLaw's Bankruptcy and Land Use Laws sections for related articles and resources.
| Code Section | 33-1101 |
| Max. Property Value That May Be Designated 'Homestead' | $150,000 |
| Maximum Acreage (Urban) | - |
| Maximum Acreage (Rural) | - |
Bankruptcy Basics
Bankruptcy is a court process that gives a debtor the opportunity to start a new financial history free from heavy debts. Depending on the type of bankruptcy proceeding, the debtor may have to sell off all of his or her assets to pay for any outstanding debts. Once the debtors assets have been liquidated, the debts are erased as well. However, certain debts are not dischargeable by bankruptcy (like student loans) and certain property is exempt from the liquidation requirement (like homestead).
Homestead Domicile Requirements
Every state has different homestead exemptions. This means that the homestead amount may be $50,000 in one state, and $200,000 in another. In order to prevent creditors from moving to a state with a higher homestead exemption and purchasing a home there in order to preserve as much money as possible before declaring bankruptcy, the federal government requires that debtors buy and own a home for more than forty months before that home is eligible for the homestead exemption.
Arizona Homestead Requirements
As previously noted, Arizona allows for $150,000 of equity in a home to be exempt from attachment or forced sale. However, the exemption only covers equity put into the home. This means that if you have only paid $100,000 on your mortgage in Arizona, only $100,000 is covered.
Covered Homesteads
Normally, when people think of a homestead they think of a house sitting on a piece of land. Other homes are covered as well. Arizona's homestead law also covers a person's interest in a condo or cooperative where the person lives, a mobile home, and a mobile home and the land the mobile home is on top of, if the person owns that land as well. However, it is important to note that the homestead exemption only covers the land where the debtor lives. If you own land that does not have a home on it, that land is not covered by the homestead exemption.
If you would like help with homestead issues in Arizona, there are many attorneys in your area who may be able to help.
