Property Tax Liens In Arizona
Property Tax Liens In Arizona can be profitable investments. We like Arizona because their most populated counties conduct their auctions online. Thus, we can invest from the comfort of our home office.
Arizona has an initial bid rate of 16% which is strong and we typically see the actual returns somewhere around 10%. Their property tax lien certificate auctions are held in February. You actually will receive what they refer to as a “Certificate of Purchase”.
The smaller counties and their auctions.
The smaller counties in Arizona do not conduct their tax sales online. In these counties you must attend or make arrangements for someone to attend for you. They all require you to register for their sale.
On the day of the sale, the parcel numbers will be read in parcel number order. Blocks of parcels may be read. As interest rates are called, the lowest interest rate bid for the tax lien on a parcel will be awarded. The bidding begins at 16% and works down at one percent increments. The low bidder is declared the winner and is issued the “Certificate of Purchase.”
Bidders must be present; bids by telephone or mail are not accepted. The sale will continue until all liens are sold or the lack of bidding warrants discontinuing the sale.
The successful bidder will pay the entire amount of taxes, interest, and fees on all outstanding tax years with guaranteed funds by 2:00 p.m. on the day of the sale.
All new investors are typically required to pay cash, cashier’s check or money order.
Property Tax Lien Foreclosures
The delinquent property tax owner enjoys a three year redemption period in Arizona. As an investor, you could receive three years of a nice return. However, if you’re looking to own the property the redemption period in Arizona is a tad longer than other states.
After foreclosure, you are awarded a “Treasurer’s Deed” in Arizona which makes you the property owner.
And again, Arizona is another state that is fairly easy to navigate when investing in property tax liens. BUT, do your homework. Study the State laws. Talk to the local governmental officials conducting the sale. AND do your due diligence on the properties you are interested in.
Assignments in Arizona
Assignments offer the investor an alternative way to purchase liens on parcels at a time other that the Tax Lien Sale.
Parcels that are not sold at the county sale are assigned to the State of Arizona with an interest rate of 16% per annum and the registered Certificates of Purchase are recorded in the Tax Lien Records book.
These state owned liens are available to investors by assignment.
An investor must pay all outstanding Certificates of Purchase on the parcel.
Assignment purchases may be made in person or by mail. There is a $10.00 fee for each assignment.
A report listing state owned liens may be reviewed at the county websites or in person at the county Treasurer’s Office. You may also purchased the report which lists the tax amount and year. The buyer will pay the entire amount of taxes, fees, and interest due at the time of assignment.
Redemption of Liens
As a courtesy, Arizona sends a notice when redemptions are made. If a physical Certificate has been issued, it must be returned before the redemption money is paid.
If the Certificate is registered, the redemption check is mailed to your address on record at the Treasurer’s Office.
It is very important that investors inform the Treasurer’s Office of all address changes because your check may expire. A check that is drawn by the County Treasurer that is not presented for payment within one year after the date of issuance is void. A check that is not presented for payment within one year has no further force or effect.
Also, at any time, a tax lien holder is welcome to call the Treasurer’s Office to check the status of their lien(s).
If a property owner fails to redeem the tax lien, the owner of the tax lien may foreclose the property owner’s right to redeem the lien three years from the date the tax lien was first offered for sale. The foreclosure action is described in Title 42, Article 5 of the Arizona Revised Statutes.
On receiving a certified copy of a judgment foreclosing the right to redeem and a fee of fifty dollars ($50.00) per parcel, the County Treasurer will execute and deliver a deed conveying the property described in the judgment. Thus, once received, the deed must be recorded.
Expiration of Lien and Certificate
If an investor owned tax lien is not redeemed and the purchaser or the purchaser’s heirs fail to start the action to foreclose within ten years after the last day of the month in which the lien was acquired, the Certificate of Purchase or Registered Certificate expires and the lien is void. (A.R.S. 42-18127)
All tax liens purchased are done so with the full knowledge of the purchaser that there could be outstanding legal reasons, unknown to the Treasurer at the time of the sale that would make the lien unenforceable. Therefore, should this occur, the successful bidder may recover the amount he has paid less the non-refundable fees.
In addition, any property advertised which is currently in the name of a public entity is automatically withdrawn from the sale.
Also, in the event of bankruptcy proceedings subsequent to the sale of the lien, there is no guarantee that the purchaser of the tax lien will receive the anticipated interest. The rate of interest is up to the United States Bankruptcy Court.
Be aware that the Board of Supervisors can retroactively cancel a property or correct a valuation. In this case, you not receive the anticipated interest. Thus, if the resolution results in increased tax on a property on which you hold an existing lien, the investor will be required to pay the additional amount of tax or the existing lien amount will be refunded without interest.