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Tue, Feb. 25

Mohave County Corner: All about the property tax lien sale

This edition of County Corner is on Treasury Department items and I’m going to focus on the annual Property Tax Lien Sale.

Unpaid real estate taxes on real property in Mohave County for the 2018 tax year (and prior years) were published in The Kingman Miner and were available for the annual Tax Lien Sale on Feb. 5 at mohave.arizonataxsale.com.

Mohave County has many thousands of parcels of real property with delinquent property taxes. I realize that not being able to pay taxes causes distress and I do not want to minimize the emotional impact that owing these taxes has on individuals or businesses. I would, however, like to further explain the benefits of the Tax Lien Sale that may help your concerns and stress levels.

Before discussing these benefits, it is important to explain that the Property Tax Lien Sale is not the outright sale of property. It is simply offering at public sale the opportunity for someone else to pay taxes on an owner’s behalf. In exchange, the purchaser becomes a lienholder against this property. The lien amount is for the taxes, fees and interest paid by the lienholder on property until the delinquent taxes can be repaid by the owner (referred to as redemption). In this way, the property owner is given extra time to pay property taxes without the county being forced to reduce vital services or raise taxes. When the lienholder is paid in full, the lien is terminated (referred to as “redeemed”). In actuality, this gives the property owner a minimum of 5 years to pay their delinquent property taxes (with interest and penalties); 2 years prior to the property being taken to the tax lien sale and 3 years after the tax lien is purchased (minimum time period the owner has to redeem their property and repay the lienholder) before a lienholder can take any action.

If the property tax lien is not redeemed during the 3-year minimum (it may be longer depending on the lienholder and other conditions), there are remedies available to the lienholder including foreclosure. Again, this explanation is to clarify the most frequent misunderstandings related to the Tax Lien Sale.

So what are the benefits? Please understand that Mohave County functions on behalf of our residents and visitors to serve and protect. A primary source of income to continue the operations of the county is the real property tax on all county parcels. When these taxes are not paid the county may have to reduce operations or an additional burden may be placed on taxpayers that have already paid their taxes. The first win or benefit is that by allowing others to pay delinquent taxes through the auction process, taxpayers countywide are relieved of having to make up the difference or suffer reduced services.

The second win is that the auction process is competitive so if more than one bidder is interested in acquiring a tax lien on the property, the property owner often receives a reduced interest rate. The current county interest rate on delinquent taxes, as required by Arizona Revised Statute, is 16%. The average interest rate on a property tax lien is 7% which is a large savings to the property owner.

Finally the third win is for bidders who are interested in acquiring a tax lien on property. This represents a great investment opportunity if you understand the process and perform due diligence. The bidder or investor can earn a higher than market return on investment with a small initial cost per parcel. Thus win, win, win!

I do not mean to overly simplify the delinquent tax process. I do want to make clear though that there is an upside to the Tax Lien Sale. Again, there can be complicating factors and if you have delinquent taxes yourself please email the office at liens@mohavecounty.us. If you are an investor interested in acquiring tax liens visit mohave.arizonataxsale.com.

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