Arizona Court of Appeals Confirms that Arizona’s Anti-Deficiency Statutes Don’t Apply to Vacant Land

Charles, Christopher updated
By Christopher J. Charles, Esq.


Confusion has plagued the courts since the M&I Bank v. Mueller[1] decision over whether the anti-deficiency statutes apply to vacant land. Thankfully, the Court of Appeals recently brought clarity to that confusion with the BMO Harris v. Wildwood[2] decision.

Prior to Mueller, everyone understood that Arizona’s anti-deficiency statutes were limited to properties that meet the following criteria:

(1) Single family home or duplex;

(2) Situated on 2½ acres or less; and

(3) Actually utilized as a dwelling.

Following Mueller, the confusion revolved around the third requirement: whether the property was “utilized as a dwelling.” Common sense says that in order for the property to be “utilized as a dwelling,” the property must actually contain a dwelling. So that would seem to rule out vacant land.

But in the M&I Bank v. Mueller case, the trial court and the Court of Appeals surprised everyone and ruled that property can be “utilized as a dwelling” as long as the borrower proves that he “intended” to utilize the property as a dwelling.

Thus, the Mueller decision opened the door for borrowers’ attorneys to argue that the anti-deficiency statutes apply to vacant land as long as the borrower swears that he “intended” to use the property as a dwelling.[3]

In an apparent moment of vindication for M&I Bank,[4] the Court of Appeals recently clarified that the anti-deficiency statutes “do not apply to vacant land.” BMO Harris v. Wildwood, 678 Ariz. Adv. Rep. 6 (January 2014).

Importantly, the Court was careful to limit its ruling to the specific facts of the Wildwood case. For example, in Wildwood, the property truly was vacant – there were no improvements or any construction that took place on the property; it was “vacant” throughout the term of the loan. See Wildwood at ¶ 10. Further, although the borrowers in Wildwood swore in affidavits that they intended to build a home on the property to utilize as their dwelling, the lender’s clever attorneys submitted evidence showing that the borrowers in fact “owned three separate parcels, each of which they purportedly intended to use as their “primary residence.” Id. at ¶ 5.

Regardless, the trial court found that no material evidence contradicted the borrowers’ affidavits and ruled in their favor because they swore that they “intended to occupy the property as their primary residence” notwithstanding that the property was vacant land.

The Court of Appeals, however, overruled the trial court and clarified that the anti-deficiency statutes “do not apply to vacant land” even if the borrower “intends to occupy the property as their primary residence.” Id. at ¶ 10.

But the Court of Appeals was careful to limit its ruling to the narrow facts of the case – namely, circumstances where absolutely no “construction of the dwelling had commenced.” Thus, the Wildwood decision leaves the door open for applying the anti-deficiency statutes to cases where some construction or improvements has commenced. As discussed by Judge Kessler in the concurring opinion, what level of construction is necessary is still unknown.

If you or someone you know has questions regarding the recent Wildwood decision or distressed properties in general, call or email Mr. Charles today to schedule an appointment.


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Christopher Charles is an experienced real estate lawyer and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS® (the “AAR”). He has an “AV Preeminent” rating by the Martindale-Hubbell Peer Review Ratings system, which connotes the highest possible rating in both legal ability and ethical standards.


He is a Partner with the law firm Davis Miles McGuire Gardner, PLLC where he serves as the chair of the Real Estate Practice Group. Mr. Charles is an Arbitrator and Mediator for the AAR regarding real estate disputes; he serves on the State Bar of Arizona’s Civil Jury Instructions Committee where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions.


Mr. Charles is a licensed real estate instructor and he teaches continuing education classes at the Arizona School of Real Estate and Business. For a list of upcoming speaking engagements, please visit He can be reached at



Christopher’s company website:


[1] M&I Marshall and Ilsley Bank v. Mueller, 228 Ariz. 478 (App. 2011).

[2] BMO Harris v. Wildwood, 678 Ariz. Adv. Rep. 6 (January 2014).

[3] Following Mueller, a key piece of evidence in deficiency action cases has been the loan application which typically requires the borrower to confirm their intent regarding occupancy of the property.

[4] Even more vindicating is the fact that the plaintiff in the Wildwood case is BMO Harris – M & I Bank’s successor in interest (BMO acquired M & I Bank in 2012).