Is It Important to Know About Tax Liens?

Barry Becker

By: Barry Becker


As we all know, virtually all property in the state of Arizona not owned by a government or charity, is subject to a property tax. Interestingly, many people fail to pay their property taxes on a timely basis. When those property taxes are not paid, the County sells liens to interested investors in order to raise the funds necessary to provide the service.

Unpaid property taxes are sold every year by the County to the general public. The sale occurs each February for unpaid taxes of two years prior. For example, the February 2014 sale was for unpaid 2012 taxes.

Maricopa County operates an online auction referred to as a Dutch auction system. The price of the tax lien sold is preset.  Auction participants bid down the interest rate they are willing to accept for the lien. The interest rate starts at 16% and decreases in increments of 1%.

The successful bidder receives not only an investment accruing interest at the winning bid rate, but the opportunity to foreclose on the property on which the tax is levied. Although few tax liens purchased result in ownership, a successful foreclosure can result in a windfall for the tax lien purchaser.

The attraction of tax liens as an investment is the priority over other liens. Regardless of when a lien arose, it is subordinate to the delinquent property tax lien. This is true for encumbrances such as deeds of trust, HOA liens, judgment liens, IRS liens and mortgages. While these inferior lien holders must be served to foreclose their interest, a successful foreclosure removes virtually all clouds of title. However, there are some exceptions to the priority rule.

Whether you intend to participate as a tax lien investor or not, having knowledge of the Arizona tax lien system will assist you with decision-making when the issue of unpaid property taxes arises with your clients.

I have been a panelist for the Arizona School of Real Estate & Business Tax Lien Seminar in previous years and will also be a panelist this year. I look forward to providing you with more information at the seminar on January 30th.

Mr. Barry Becker has been a tax attorney for more than 23 years. He has also taught tax and foreclosure courses at the Arizona School of Real Estate & Business for more than 14 years. Barry can be reached at 602-252-1822 or