Opinion ID: 1352228
Heading Depth: 2
Heading Rank: 2

Heading: Persons and Properties Included Within the Statutory Definitions

Text: Mid Kansas argues that neither Dynamic, as a developer, nor the property under construction is protected by an anti-deficiency statute. Neither of the statutes is limited to individual homeowners rather than residential developers. Rather, the statutes apparently protect any mortgagor, provided the subject property is a single one- or two-family residential dwelling on two and one-half acres or less. [4] As we noted in Baker, both anti-deficiency statutes were enacted in 1971, along with several other laws designed to protect consumers. 160 Ariz. at 101, 770 P.2d at 769. As with virtually all anti-deficiency statutes, the Arizona provisions were designed to temper the effects of economic recession on mortgagors by precluding artificial deficiencies resulting from forced sales. Id. (quoting Boyd and Balentine, Arizona's Consumer Legislation: Winning the Battle But ..., 14 ARIZ.L.REV. 627, 654 (1972)). Anti-deficiency statutes put the burden on the lender or seller to fairly value the property when extending the loan, recognizing that consumers often are not equipped to make such estimations. See generally Spangler v. Memel, 7 Cal.3d 603, 102 Cal. Rptr. 807, 812-13, 498 P.2d 1055, 1060-61 (1972); Leipziger, Deficiency Judgments in California: The Supreme Court Tries Again, 22 U.C.L.A.L.REV. 753, 759-61 (1975). Indeed, the articulated purpose behind A.R.S. § 33-729(A) (and presumably behind its deed of trust counterpart, as we held in Baker ) was to protect homeowners from deficiency judgments. See Baker, 160 Ariz. at 101, 770 P.2d at 769. However, absent express limiting language in the statute or explicit evidence of legislative intent, we cannot hold that the statute excludes residential developers. Where the language of a statute is plain and unambiguous, courts must generally follow the text as written. Mid Kansas, 163 Ariz. at 238, 787 P.2d at 137 (citing State Farm Mut. Ins. Co. v. Agency Rent-A-Car, Inc., 139 Ariz. 201, 203, 677 P.2d 1309, 1311 (Ct.App. 1983); cf. Ritchie v. Grand Canyon Scenic Rides, 165 Ariz. 460, 799 P.2d 801 (1990) (rule inapplicable where it would produce absurd result)). While we can infer that the legislature's primary intent was to protect individual homeowners rather than commercial developers, neither the statutory text nor legislative history evinces an intent to exclude any other type of mortgagor. [5] Indeed, the North Carolina Supreme Court decided to apply a similar anti-deficiency statute to a commercial borrower, finding that the statute expressed no intent to exclude commercial transactions and therefore that the court could not read in such an intent. Barnaby v. Boardman, 313 N.C. 565, 330 S.E.2d 600, 603 (1985). Therefore, we hold that so long as the subject properties fit within the statutory definition, the identity of the mortgagor as either a homeowner or developer is irrelevant. In contrast to the lack of legislative limitation as to the type of mortgagor protected, there is specific textual expression as to the type of property protected. Both statutes require that the property be (1) two and one-half acres or less, (2) limited to and utilized for a dwelling that is (3) single one-family or single two-family in nature. In applying a statute, we have long held that its words are to be given their ordinary meaning, unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended. State Tax Comm'n v. Peck, 106 Ariz. 394, 395, 476 P.2d 849, 850 (1970). A.R.S. § 33-814(G) calls for the property to be limited to a single one- or two-family dwelling. The word dwelling is susceptible to several interpretations, depending on the context of its use. See 28 C.J.S. Dwelling (1941 and 1990 Supp.). However, the principal element in all such definitions is the purpose or use of a building for human abode, meaning that the structure is wholly or partially occupied by persons lodging therein at night or intended for such use. Id.; see also Smith v. Second Church of Christ, Scientist, 87 Ariz. 400, 405, 351 P.2d 1104, 1107 (1960) (defining dwelling as a building suitable for residential purposes). The anti-deficiency statutes require not only that the property be limited to dwelling purposes, but also that it be utilized for such purposes. In Northern Arizona Properties v. Pinetop Properties Group, the court of appeals held that an investment condominium, which was occasionally occupied by the owners and occasionally rented out to third persons, fell within the statutory definition. 151 Ariz. 9, 725 P.2d 501 (Ct.App. 1986). In deciding that the statute applied to a dwelling used for investment purposes and not as the mortgagor's principal residence, the court employed the definition of dwelling in Webster's Ninth New Collegiate Dictionary and in several housing codes as a shelter ... in which people live. Hence, although the condominium was held as an investment, it was also used (utilized) as a dwelling. Id. at 12, 725 P.2d at 504. In contrast to the Northern Arizona Properties case, the property in question here had never been used as a dwelling, and was in fact not yet susceptible of being used as a dwelling. There is a difference between property intended for eventual use as a dwelling and property utilized as a dwelling. We hold that commercial residential properties held by the mortgagor for construction and eventual resale as dwellings are not within the definition of properties limited to and  utilized for single-family dwellings. The property is not utilized as a dwelling when it is unfinished, has never been lived in, and is being held for sale to its first occupant by an owner who has no intent to ever occupy the property. Cf. Northern Arizona Properties (mortgagors intended to occupy property occasionally and rent it out). Therefore, we hold that by its terms, the anti-deficiency statute does not apply to Dynamic in this case and A.R.S. § 33-814(G) does not preclude Mid Kansas from waiving its security and bringing a debt action on the notes. [6]