AZ SB1401

Allows owner-occupants of certain foreclosed residential properties to continue living in the property as month-to-month renters for at least one year after notifying the lender-beneficiary of their intent to rent.

Requires lenders to provide a formal notice to borrowers in default explaining the right to rent, including information about the applicable justice of the peace court and a deadline for the borrower to notify the lender (at least 30 days after notice is mailed or posted).

Establishes that renters must pay monthly rent determined by justice court based on fair market value appraisal, maintain the property as their primary residence, and comply with tenant obligations under Arizona residential landlord-tenant law.

Applies only to single or two-family dwellings (including condominiums and planned community units) that served as the trustor's principal residence for at least two years before default and were financed with deeds of trust executed before July 1, 2007, with a purchase price below the median for the area.

Requires justice courts to appoint a licensed residential appraiser to determine fair market rental value at a hearing initiated when a borrower provides written notice of their intent to rent, with either party able to request a redetermination after one year if market conditions have changed.