FAQ - GUARANTEES AND LINES OF CREDIT - FORECLOSURE IN ARIZONA
GUARANTEES AND LINES OF CREDIT:
QUESTION: What if I have signed a “Guaranty” for someone on the debt or they have signed one for my debt?
ANSWER: You or they could be liable for the debt or judgment to the extent it falls short of paying off the lender, even on a non-deficiency debt, depending upon how the Guaranty is worded.
Guarantees are enforceable even if for a debt which was purchase money, as the actual is on the separate written Guarantee and not the debt and even where there is no deficiency for the primary borrower. Pure lines of credit (for any use such as a credit card or for cash or for home improvement but not used as part of the purchase price of the property) all pull out money and so they are not purchase money debt and can be claimed upon independently and are not limited by the anti-deficiency statutes. A so-called pure "HELOC" is a line of credit-type loan when not used to purchase the home, though some HELOCs have been used for part or the entire purchase price. It is likely under the Beauvais theory (above) that if the HELOC was actually used to buy the home it is probably “purchase money” in fact and no deficiency on it can be had or, at the very least, as to the amount used to buy the home, it is purchase money if it was spent that way the moment it was generated, but the balance taken out and not used to purchase the home may be collectible in an action on the debt. There is no clear authority on the effect of a “blended” (purchase and non-purchase in the same note) HELOC instrument.
See other consumer defenses to debts under “General Defenses Common to All States”, below. See also other debtor ramifications of a foreclosure, below.