KINGMAN - Mohave County depends on property tax revenues to fund many services to the public, but the bad economy has hit a number of Mohave County property owners hard, leaving many of them unable to pay their property taxes.
So how does the county cover that loss in property tax revenue? It asks someone else to pay the bill by placing a lien on the delinquent property and auctioning those liens off to the highest bidder.
The lien is not an outright sale of the property, County Treasurer Cindy Cox explained in a statement.
"It is simply offering at public sale the opportunity for someone else to pay your taxes on your behalf. In exchange, the purchaser becomes a lien holder against your property."
Property taxes are billed in September. The first half of the tax bill is due on Oct. 1 and the second half is due on March 1 of the following year.
The Mohave County Treasurer's Office posted a list of 2011 tax liens available for sale on Feb. 8. As of Wednesday there were 26,787 tax liens available for sale. Last year, there were 23,795 liens, Cox said. The number of liens is updated daily.
Anyone can bid on a tax lien by signing up at the county's auction site, www.bidmohave.com, paying a deposit and placing a bid. Bids are only accepted through the website.
The Treasurer's Office started taking bids on Feb. 8. The last day to bid depends on the sale date for that lien. This year's sale dates are Feb. 22 and Feb. 25.
Property owners who are delinquent on their 2011 taxes have until Feb.15 to pay their taxes and remove their properties from the list.
The tax lien includes the amount of taxes owed, any fees and any interest due, Cox said.
The interest rate on delinquent taxes is set by Arizona Revised Statute and is currently 16 percent. However, tax liens sold during the auction can have a lower interest rate. This is because of how the auction works.
The bidding on a tax lien starts at 16 percent interest, she said. The bidder who is willing to accept the lowest interest rate is awarded the lien. If no one bids on the property, then the lien is sold to the state with a 16 percent interest rate.
Bidders have until Feb. 27 to pay for their purchase. After that, the lien goes back up for auction.
Property owners have at least three years to pay their delinquent taxes before a lien holder can file to foreclose on the property, Cox said.
If the property owner pays their back taxes within that time frame, the money and interest goes directly to the person who purchased the tax lien, she said.
If a property owner doesn't pay their delinquent taxes in time, then the lien holder can foreclose on the property, she said. The repayment period can be longer. It depends on what conditions a lien holder places on the property.
However, after 10 years the lien on the property expires and no payments will be made to the lien holder.
The system actually presents a "win, win, win" situation for the county, investors and taxpayers, Cox said. The county gets the money it needs to support services to taxpayers, property owners may get a break on the interest due on their delinquent taxes and investors have the chance to get a nice parcel of land at a discounted price.