When an owner does not pay their property taxes the County creates something called a Tax Lien. The tax lien is then sold to investors. Tax liens are a way for the county to collect money to keep running the county. If the property taxes are not paid the county still needs the money. The county has to maintain streets, sewers, schools, hospitals, fire departments etc. If people don’t pay their taxes then the county cannot do the needed maintenance, roads would fall into disrepair, hospitals, schools and fire departments would close. Most counties have a process where tax liens are sold so the county has money. The Tax Lien Sale provides for the payment of delinquent property taxes by an investor. The tax on the property is auctioned in open competitive bidding based on the least percent of interest to be received by the investor. Property taxes that are delinquent at the end of December are added to any previously uncollected taxes on a parcel for the Tax Lien Sale. The sale takes place in February of each year. 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) plus sale fees. Fees include a non-refundable/non-interest earning Tax Payer Information Fee of $5.00/10.00 as per ARS 42-18122B. The owners have 3 years to pay off the tax liens before someone can foreclose. Typically the investor who owns the tax liens does not start the foreclosure process for several years because of the attorney fees involved. Often owners discover the outstanding taxes and pay them before the investor starts the foreclosure process. But what happens if the investor starts the foreclosure process?
Unfortunately Sherlock, the owner of one of the properties we manage, had not paid the property taxes since 2012. The problem is the Maricopa County Assessors office does not send tax bills to international addresses. The address listed on the tax bill was an international address. The owner of the tax liens started the foreclosure process. In order to foreclose the owner has to be given proper notice. There are very specific instructions in the Arizona Revised Statute 42-18202 on how the notice is to be served.