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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
AMENDED
personal
property exemptions; vehicles(NOW: homestead; personal property; exemptions)
As passed by the Senate, S.B. 1540 added, to the property types that qualify for the $400,000 homestead exemption, park model trailers, motor homes, travel trailers, fifth wheel trailers, houseboats and other forms of shelter in which a person resides, plus the land on which the shelter is located.
The House of Representatives adopted a strike-everything amendment that does the following:
Purpose
Exempts a person's value in a homestead from bankruptcy proceedings, up to the amount of the homestead exemption plus any value increase during pendency of the case. Adds, to the property types that qualify for the $400,000 homestead exemption, park model trailers, motor homes, travel trailers, fifth wheel trailers, houseboats, manufactured homes and other forms of shelter in which a person resides, plus the land on which the shelter is located.
Background
Arizona’s homestead exemption exempts up to $400,000 of a person’s equity in their dwelling from attachment, execution or forced sale. The exemption applies to a person’s house and land, condominium or cooperative, mobile home or mobile home and land. A person or married couple may only claim one homestead exemption and must reside in the home for which the exemption is claimed. The homestead exemption is annually adjusted by the increase in the cost of living.
The homestead exemption automatically attaches to a person's interest in identifiable cash proceeds from the voluntary or involuntary sale of the property, which continues for 18 months after the date of the sale or until the person establishes a new homestead with the proceeds. The homestead exemption does not attach to the person's interest in identifiable cash proceeds from refinancing the homestead property. For purposes of determining equity in a sold homestead property or determining if a property owner is receiving cash back from refinancing, the parties may rely on the property value in the final closing document disclosure (A.R.S. § 33-1101).
Federal courts have exclusive jurisdiction over bankruptcy cases which usually begin by the debtor filing a petition with the bankruptcy court. Statute outlines personal property exemptions from the bankruptcy process and other actions to collect from a debtor. The exemptions include specified amounts of money or proceeds. Laws 2022, Chapter 346 exempts the refundable portion of federal or state EITCs and federal or state Child Tax Credits and sets the exemption amount at the lesser of either: 1) the total combined amount of any federal and state tax refunds; or 2) the total combined amount of any federal or state EITCs and any federal or state Child Tax Credits claimed on the return (A.R.S. Title 33, Chapter 8, Article 2 and A.R.S. § 33-1125).
The Joint Legislative Budget Committee fiscal note estimates that S.B. 1540 would have minimal fiscal impact (JLBC fiscal note).
Provisions
1. Adds park model trailers, motor homes, travel trailers, fifth wheel trailers, houseboats, manufactured homes and other forms of shelter in which a person resides, plus the land, to the property types that qualify for the homestead exemption.
2. Requires, for bankruptcy cases, the debtor's homestead exemption amount to initially be determined as of the date the bankruptcy petition is filed.
3. Stipulates that, if a debtor's value in the homestead is less than or equal to the amount of the homestead exemption at the time of bankruptcy filing, the homestead property and any value increase during case pendency is 100 percent exempt from the bankruptcy proceeding even if the debtor's interest increases above the homestead exemption amount.
4. Exempts all, rather than only the refundable portion of, federal and state EITCs and Child Tax Credits from execution, attachment or sale on any process issued from any court or other judicial remedy provided for the collections of debts.
5. Applies the homestead value bankruptcy requirements to any petition for bankruptcy proceedings filed after the general effective date.
6. Makes technical and conforming changes.
7. Becomes effective on the general effective date.
Amendments Adopted by the House of Representatives
· Adopted the strike-everything amendment relating to the homestead exemption.
House Action
COM 3/18/25
DPA/SE 10-0-0-0
3rd Read 4/14/25 55-0-5
Prepared by Senate Research
April 15, 2025
MG/ci