Arizona Homestead Exemption

The Arizona homestead exemption amount increased from $250,000 to $400,000 in 2023.  The homestead exemption, which is automatic in Arizona, is intended to protect an Arizona resident's primary residence ("homestead") from creditors.  But the new law includes several intricacies that make it more complex than it initially appears.  For example, the new law requires any existing judgment liens (recorded in the same county) to be paid when the homeowner either sells or refinances the residence.  The prior law stated that a homeowner with less equity than the exempt amount could still refinance a home loan without having to first pay off any existing judgment liens.  The new law does the opposite - effectively preventing the homeowner from exercising a cash-out refinance.   

The homestead exemption is also complicated by federal bankruptcy laws.  If the home was acquired within 1,215 days (3 years, 4 months) of filing the bankruptcy case, the exemption amount is currently limited to $189,050.  If this rule applies to you, be sure to investigate further with a bankruptcy attorney because there are exceptions that may help you out.