Independent Mortgage Co. v. Alaburda
281 P.3d 1049
Ariz. Ct. App.2012Background
- In 2006, the Alaburdas purchased a 1/10th fractional interest in a Sedona condo, financed by Independent Mortgage, secured by a deed of trust on that 1/10th interest.
- The ownership was governed by a Declaration restricting use to a vacation accommodation, with prohibitions on altering appearance or furnishings.
- The Alaburdas could vacation at the property up to 28 days per year.
- In December 2008, the Alaburdas defaulted on the promissory note, and Independent Mortgage acquired the property at trustee's sale for $285,000 (less than the debt).
- Independent Mortgage sued for a deficiency of $57,884; the Alaburdas moved for summary judgment arguing § 33-814(G) precluded deficiency; Independent Mortgage cross-moved arguing fractional ownership cannot be a dwelling.
- The trial court granted summary judgment in favor of the Alaburdas; Independent Mortgage timely appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does §33-814(G) protect a fractional vacation interest from deficiency? | Independent Mortgage contends the 1/10th interest is not a dwelling. | Alaburdas maintain the fractional interest is trust property used as a dwelling and protected. | Yes; the interest is protected under §33-814(G). |
| Is the property within §33-814(G) limited to a dwelling even when used fractionally as a vacation accommodation? | Independent Mortgage argues the definitions of dwelling do not include fractional vacation properties. | Alaburdas argue the use as a dwelling is satisfied by vacation use, not permanent residence. | The property satisfies dwelling use for purposes of protection. |
Key Cases Cited
- Northern Arizona Properties v. Pinetop Properties Group, 151 Ariz. 9, 725 P.2d 501 (App. 1986) (defines dwelling broadly as a shelter where people live; supports use as a dwelling even if not permanent)
- Mid Kansas Federal Savings and Loan Ass'n v. Dynamic Development Corp., 167 Ariz. 122, 804 P.2d 1310 (1983) (dwelling requires actual utilization as a dwelling; supports vacation use as dwelling)
- Helvetica Servicing, Inc. v. Pasquin, 229 Ariz. 493, 277 P.3d 198 (App. 2012) (purpose of statute to protect consumers by limiting lender recovery to collateral)