Assigned to FIN AS PASSED BY COW
ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
AMENDED
FACT SHEET FOR S.B. 1543
homestead exemption; equity increase
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.
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 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. FACT SHEET – Amended
S.B. 1543
Page 2
3. Applies the homestead value bankruptcy requirements to any petition for bankruptcy
proceedings filed after the general effective date.
4. Makes technical and conforming changes.
5. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
1. Specifies that a person’s value in a homestead, rather than the person’s equity interest in the
homestead, is 100 percent exempt from a bankruptcy proceeding.
2. Makes technical changes.
Senate Action
FIN 2/10/25 DP 7-0-0
Prepared by Senate Research
February 25, 2025
MG/ci