Here’s my answer to a question from Mike about subsequent tax payments and lien priority:

Question: From what I have read, it says that if you don’t pay the subsequent taxes on the lien you bought you lose priority. Can you explain this further because if you bought the 2011 certificate and someone else buys the 2012 certificate your foreclosure period starts in 2013 and they start in 2014. So wouldn’t you be able to foreclose first so how are you losing priority?

Answer: Yes in most states the first lien has lien priority. There are 2 points I would like to make clear though. The first is that even though you have lien priority, if you don’t foreclose at the end of the redemption period and after the following year the subsequent lien holder forecloses, you will be foreclosed out of your lien. You can lose your investment and your right to foreclose on the property in this case. However, the subsequent lien holder must notify you when they begin foreclosure and when they do that you may redeem their lien, thus protecting your interest in the property. In fact you can redeem their lien at any time and they my not redeem your lien – thus you have priority.

The other point that I would like to make is that in some counties in Arizona if you do not pay the subsequent taxes they will sell your lien along with the current lien at the next tax sale. Some counties will only allow one tax lien certificate to exist on a property and this is how they control that.

Thanks for your question Mike,

Joanne