Real Property Tax Lien Issues and Law

What happens when property taxes become delinquent?

Delinquent property taxes accrue interest at an annual rate of 16% simple interest prorated monthly. In addition, when a property tax lien is listed for sale, there are advertising fees ($5.00 or 5% whichever is greater: ARS 42-18107) plus sale fees. Fees include a non-refundable/non-interest earning fee of $5.00/10.00 as per ARS 42-18107. Note: Statutes change, make sure to research the latest version of the Arizona Revised Statutes.

Index of Topics Below

Arizona Revised Statutes

Real Property Taxes:

42-18051. Notice of tax; payment by electronic funds transfer

42-18052. Due dates and times; delinquency

Maricopa County, Arizona Tax Lien FAQ

When notices mailed to addresses on file with county are returned unclaimed, a tax lien holder intending to foreclose must make a diligent and “genuine” effort to provide prelitigation notice to the property owner.

Advanced Prop. Tax Liens Inc. v. Othon, 2 CACV- 2021-0001, 10/25/21  If the holder of a tax lien intends to foreclose on the liened property, A.R.S. § 42-18202(A)(1) requires the lien holder to provide pre-litigation notice. The pre-litigation notice requirement is jurisdictional; that is, if the notice is not sent as required, the trial court may not proceed with the foreclosure action. Under § 42-18202(A)(1) (a)-(c), notice may be sent to the property owner of record according to the county recorder, the records of the county assessor, and—if different— the location of the property along with the tax bill mailing address according to the county treasurer. If, however, notices mailed to those addresses are returned unclaimed, the lien holder must do more to provide notice to the owner of record. Arizona law requires a “genuine investigation into locating persons who have recorded and unrecorded interests in the property, not an incomplete or nominal attempt to locate.” .

Article 2  Judicial Foreclosure

  • 33-721 Foreclosure of mortgage by court action
  • 33-722 Election between action on debt or to foreclose
  • 33-723 Right of junior lien holder upon foreclosure action by senior lien holder
  • 33-724 State as party to foreclosure actions
  • 33-725 Judgment of foreclosure; contents; sale of property; resale
  • 33-726 Redemption of property by payment to officer directed under foreclosure judgment to sell the property
  • 33-727 Sale under execution; deficiency; order of liens; writ of possession
  • 33-728 Recording upon record that mortgage is foreclosed and judgment satisfied; effect
  • 33-729 Purchase money mortgage; limitation on liability
  • 33-730 Limitation on deficiency judgment on mortgage or deed of trust as collateral for consumer goods

Article 1<span “class=”five-sixths”>General Provisions

  • 33-802 Description of trust property; mailing address of trustor and trustee
  • 33-803 Trustee of trust deed; qualifications
  • 33-803.01 Trustee of trust deed; delegation of duties
  • 33-804 Appointment of successor trustee by beneficiary
  • 33-805 Deed of trust as security
  • 33-806 Transfers in trust of real property; uses
  • 33-806.01 Trustor’s right to transfer; transfer fee limit; interest rate increase limit
  • 33-807 Sale of trust property; power of trustee; foreclosure of trust deed
  • 33-808 Notice of trustee’s sale
  • 33-809 Request for copies of notice of sale; mailing by trustee; disclosure of information regarding trustee sale
  • 33-810 Sale by public auction; postponement of sale
  • 33-811 Payment of bid; trustee’s deed
  • 33-812 Disposition of proceeds of sale
  • 33-813 Default in performance of contract secured; reinstatement; cancellation of recorded notice of sale
  • 33-814 Action to recover balance after sale or foreclosure on property under trust deed
  • 33-816 Limitation on action or sale of trust property
  • 33-818 Notice from instruments recorded; assignment of a beneficial interest
  • 33-820 Trustee’s right to rely; attorney’s right to act for trustee and beneficiary

IMPORTANT: THIS FIRM DOES NOT GUARANTEE THE ACCURACY OR CURRENT STATUS OF ANY LAW, CASE, ARTICLE, OR PUBLICATION MENTIONED OR LINKED TO.

For investors – buying property out of foreclosure or a tax sale auction can be very dangerous.  Make sure you are willing to lose the money you invest, plus more.

Trustee’s Sale & Judicial Foreclosure Definitions

Deficiency

Arises when a creditor does not receive the full amount they are owed by contract or court order.

  • If a deed of trust, 2 ½ acres or less, used as a one or two family dwelling AND property sold through trustee’s sale – NO DEFICIENCY. A.R.S. Section 33-814
  • If a deed of trust or mortgage, 2 ½ acres or less, used as a one or two family dwelling AND loan (all or part) was used to purchase the property AND property sold through judicial foreclosure – NO DEFICIENCY. ARS Section 33-729.

Foreclosure

Action taken in court. Mortgages can only be foreclosed in court. Deeds of Trust can either be foreclosed in court (judicial foreclosure) or a statutory process called a trustee’s sale.

Trustee’s sale

Arizona statutory process that takes at least 91 days to complete, assuming no or little ligation and no bankruptcy.

Judicial foreclosure

Takes approximately 9-12 months to complete, assuming no or little ligation and no bankruptcy.

Excess Proceeds

Monies left over after a trustee’s sale has completed and the debt, plus costs are paid to the foreclosing lender.

HOA

An HOA, or homeowners association, is a self-governing organization in “common-interest” communities where homeowners pay fees to keep the units or area in good condition. HOAs are typically managed by resident homeowners who serve as unpaid volunteers on a board of directors that controls the HOA’s operation.