Foreclosing on Tax Lien Certificates

Foreclosing on Tax Lien Certificates

If you pay your property taxes through your monthly mortgage payment, you probably are not concerned about delinquent property taxes. Your mortgage lender pays those taxes directly when they come due. However, some property owners pay their property taxes directly to the county assessor. Have you ever wondered what happens if a person stops paying their property taxes?

In Arizona, once a land owner is delinquent in paying property taxes, the county treasurers in each county conduct tax lien sales. These sales occur each year during the month of February. At the sale, investors can bid on the tax liens that are up for auction. The bidders are not bidding on the right to own the property, but the right to own the tax lien against the property. The successful purchaser is awarded a tax lien certificate which he or she must hold for at least three years from the original offer date.

If the taxes are not paid within the three-year period, the tax lien can be foreclosed by way of a judicial foreclosure lawsuit. Once the lawsuit is filed, the property can still reclaim the property by paying the tax lien and all accrued interest in full. In most cases, the property owner must also pay the tax lien certificate holder’s attorney’s fees and costs incurred in bringing the judicial foreclosure lawsuit.

If the taxes are not brought current after the judicial foreclosure proceeding is started, then the owner of the tax lien obtains title to the property and becomes the property owner. Once a tax lien foreclosure is complete and a judgment is issued foreclosing the property owner from paying the tax lien, the county treasurer issues a treasurer’s deed giving ownership of the property to the tax lien holder. The tax lien foreclosure proceeding could take up to one year to complete.

Costs to foreclose on a tax lien can run from $750.00 – $1,000.00. These costs include litigation guarantees, filing fees, service of process and recording fees. Attorney’s fees range from $1,200.00 to $2,000.00.

We have been doing this type of work for the last five years. Our clients of real estate law are experienced investors and come from all around the country. We are happy to answer any questions you may have and invite you to call us if you are interested in learning more about the tax lien foreclosure process in Scottsdale.