The Arizona tax lien sales take place yearly in February. There is a two year gap between the tax year being sold and the year of the sale. For example, the sales in 2022 were for the 2020 delinquencies.
Mark Manoil delivers an extensive white paper and interview on the Arizona tax lien sale process. In this paper, Manoil covers the basics, the risks, due diligence, and even covers alternate forms of tax lien investing. Here are some of the high level points to consider:
- The superiority of the tax lien has been challenged in Arizona through the years so it’s important to understand which other liens travel with the property like nuisance abatement liens, health care liens, etc.
- There are some differentiations between counties on which expenses are recoverable, especially legal expenses when you reach the foreclosure process. (**side note that a case is pending in the Arizona Supreme Court that may work out these differentiations.)
- The interest rate of return in Arizona is a maximum of 16% but it is a bid down interest state so this maximum rate of return is rare.
- Most of the Arizona auctions are held online.
- The winning bidder is issued a Certificate of Purchase (CP).
- Redemption is allowed on the property until the “moment a judgment entered foreclosing the right to redeem,” and the foreclosure suite may be commenced three years after the sale.
- Upon purchase of the lien, some counties require that all past delinquencies are also paid which would redeem any past liens. Check your county’s process.
- Subsequent tax payments are allowed by the purchaser for any future delinquencies.
- If a property is not sold at the tax lien sale, the CP is assigned to the state and available for purchase over the counter.
As with all tax liens, there are risks in these investments and Mark Manoil shares those he believes an investor should consider. It’s also vital to establish your due diligence practices and investment criteria before tackling lien or deed investing. Manoil also speaks to the importance of these two items and his suggestions in this white paper. Download the paper in its entirety to learn the details about Arizona and watch the Tax Sale Resources interview.