Assigned to FIN FOR COMMITTEE
*pending committee assignment
ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
FACT SHEET FOR S.B. 1543
homestead exemption; equity increase
Purpose
Exempts a debtor's equity in a homestead from bankruptcy proceedings, up to the amount
of the homestead exemption plus any equity increase during pendency of the case.
Background
Federal courts have exclusive jurisdiction over bankruptcy cases which usually begin by
the debtor filing a petition with the bankruptcy court. Statute outlines real and personal property
exemptions from the bankruptcy process, including equity in a homestead (A.R.S. § 33-1125).
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).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
1. Requires, for bankruptcy cases, the debtor's homestead exemption amount to initially be
determined as of the date the bankruptcy petition is filed.
2. Stipulates that, if a debtor's equity interest is less than or equal to the amount of the homestead
exemption at the time of bankruptcy filing, the debtor's homestead equity interest and any
equity increase during pendency of the case is fully exempt from the bankruptcy proceeding
even if the equity interest increases above the homestead exemption amount.
3. Applies the homestead and equity bankruptcy requirements to any petition for bankruptcy
proceedings filed after the general effective date. FACT SHEET
S.B. 1543
Page 2
4. Makes technical and conforming changes.
5. Becomes effective on the general effective date.
Prepared by Senate Research
February 6, 2025
MG/ci