Here’s what you need to know about the upcoming Arizona tax liens sales (excerpted from Tax Lien Lady’s State Guide which is included in the Tax Lien Investing Basics Program)…
Arizona is a tax lien state. The interest rate starts at 16% and the redemption period is 3 years. The interest rate is bid down at the sale. Tax sales are the responsibility of the County treasurer’s office and are held in February of each year. To bid at any of the Arizona tax lien sales you must first fill out a bidder information form and a W-9 form. Take care to fill out the W-9 form correctly with the right tax identification number. The treasurer’s office is required by the IRS to withhold 31% of all proceeds for noncompliance or incorrect reporting of the tax identification number on the W-9 form.
Since Arizona allows for the electronic registration of tax lien certificates, some counties do not issue an actual tax lien certificate, but a receipt listing your purchased tax lien(s) parcel number, certificate number, amount paid, and amount of interest bid. Depending on the county, payment must be made on the day of the sale or by the next day. Some counties may accept wire transfers, but arrangements for this need to be set up before the sale. Subsequent tax payments can be added to the face value of the certificate (ARS 42-18121). The county treasurer will collect a fee of $5.00 from the holder of the certificate (ARS 42-18121) when subsequent payments are made.
Assignment Liens
Properties that are not sold at the sale are struck off to the state. Arizona does allow for the assignment purchases of liens. Contact the county treasurer’s office to find out if any properties are available for assignment and the procedure that you need to follow in order to purchase assignment liens. A list of “State Liens” is usually available from the treasurer’s office a couple of months after the tax sale. Tax sale information and property data for some counties is available online.
After you purchase an Arizona tax lien
After you purchase a tax lien certificate at one of the Arizona tax lien sales, interest will accrue from February 1, and is added monthly. Any portion of a month counts as a whole month (ARS 42-18053). Should the tax lien certificate be redeemed, you will receive the purchase amount, less non-refundable fees, plus the rate of interest bid at the time of the sale, not to exceed 16% per annum.
If the lien is not redeemed three years from the original date of the sale, the lien holder may file an action to foreclose the lien and receive a judgment deed to the property. This is usually handled by an attorney and must follow the statutory requirements outlined in ARS 42-18202. The judgment must be recorded in the county where the certificate was issued and a certified copy of the judgment (with applicable fees) must be forwarded to the county treasurer for issuance of a Treasure’s Deed. Action must be taken to foreclose the right to redeem the lien within 10 years after the lien is purchased or the lien will expire and become void.
Arizona also sells tax deeds
In addition to lien sales, Arizona counties may also conduct deed sales of properties that have been deeded to the state and have not been sold by private bid. This is handled by a different department than tax lien sales and you can check with the county treasurer to find out who to contact to get information on the deed sale. These properties are held by the state for 5 years after the tax lien sale before they are deeded to the state and then sold at auction.
As with most tax deed sales, Arizona tax deeds are sold without any warranty and you must consult an attorney or title company to obtain clear title to the property. You must register to bid at the sale. No minimum bid is set by Arizona state statutes. Payment is usually expected on the day of the sale in cash, money wire, cashier’s check, or money order. You will receive a receipt for your payment and the deed(s) will be mailed to you within 60 days. Unlike other states where you may be required to pay hefty real estate transfer fees or deed preparation and recording fees, these fees are minimal in Arizona. Unsold properties are not available for over the counter purchase, but will be held until next year’s deed sale.
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