If you pay your property taxes through your monthly mortgage payment, you probably are not concerned about delinquent property taxes. Your mortgage lender pays those taxes directly when they come due. However, some property owners pay their property taxes directly to the county assessor. Have you ever wondered what happens if a person stops paying their property taxes?
In Arizona, once a land owner is delinquent in paying property taxes, the county treasurers in each county conduct tax lien sales. These sales occur each year during the month of February. At the sale, investors can bid on the tax liens that are up for auction. The bidders are not bidding on the right to own the property, but the right to own the tax lien against the property. The successful purchaser must hold the tax lien for at least three years from the original offer date. If the taxes are not paid within the three year period, the tax lien can be foreclosed by way of a judicial foreclosure. During the foreclosure process the property owner can keep the property by paying the tax lien and all accrued interest in full.
Arizona law requires that the property owner receive notice of the potential tax lien foreclosure. If the property owner still does not pay the taxes after receipt of the notice, the tax lien holder can file an action in the superior court seeking to foreclose any right of redemption by the property owner. However, the property owner has the right to pay the taxes up until a judgment is signed by the court.
If the taxes are not brought current after the foreclosure proceeding starts, then the owner of the tax lien obtains title to the property and becomes the property owner. Once a tax lien foreclosure is complete and a judgment is issued foreclosing the property owner from paying the tax lien, the county treasurer issues a treasurer’s deed giving ownership of the property to the tax lien holder. The tax lien foreclosure proceeding could take up to one year to complete.
Costs to foreclose on a tax lien can run from $750.00 – $2,500.00. These costs include litigation guarantees, filing fees, service of process and recording fees. A foreclosure attorneys’ fees range from $1,200.00 to $3,000.00.