In Arizona, one half of the property taxes become due October 1, and the second half the following March 1. By the following December, the treasurer in every Arizona county prepares a list of properties with delinquent taxes. Delinquent property taxes accrue interest at an annual rate of 16%.
The list is published, and delinquent notices are sent to the homeowners stating that a tax certificate will be auctioned on a specific date if the taxes are not paid. Each February the tax lien certificates are sold at a public auction called a Tax Lien Certificate Sale. Anybody can participate in the Tax Certificate Sale. In order to participate in the sale a bidder must register with the Treasurer’s office.
The tax certificate can be purchased from the County Treasurer by paying the total of the back taxes along with any accrued interest plus purchase fees. Tax certificates are a high priority lien against the property, which means that there are very few other claims against a property which would be paid before the tax certificate lien.
When you purchase a tax certificate, you do not own the property. Instead, you own a note on the property, and earn interest for each month the note remains outstanding. The tax liens will accrue interest at the rate agreed to in what is referred to as a reverse auction (i.e. the bidder offering the lowest interest rate wins).
If the actual landowner, as well as anyone else with an interest in the property, wishes to protect their interest in the subject property, they have the right to redeem the tax certificate within the three years immediately following the date the tax certificate is originally offered for sale to the public. If the property owner pays the government the outstanding taxes due before the certificate reaches maturity, the government will send to you your initial investment along with all outstanding interest due.
After three years, if the delinquent taxes have not been paid, the certificate holder has the right to foreclose on the property for monies owed. If the property is not redeemed after the foreclosure proceeding is filed, then the tax certificate holder obtains title to the property via a Treasurer Deed. The foreclosure process can take anywhere from three months to two years to complete depending on the specific details of the parcel.
If you need legal assistance with regards to a tax lien, contact a reputable attorney for assistance.