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Dealing WIth Tax Liens On Distressed, As-is and Foreclosure Properties

Posted by Ike Devji | Mar 25, 2020 | 0 Comments

Dealing With Tax Liens on Foreclosure Properties

Many of our clients are real estate investors and many had the foresight to have cash and credit available for market opportunities, like a coronavirus recession. As some experts predict that both residential and commercial prices may rapidly adjust downward as renters, borrowers and businesses default, you may have an opportunity with a property that's "distressed", "as-is" or a "foreclosure". These properties all require careful due diligence on variety of issues including the possibility of a tax lien. Arizona law treats tases liens as preferential, as Scottsdale real estate attorney Christopher Charles explains in this excerpt from his recent article:

Failure to pay property taxes in the state of Arizona results in tax liens. Sometimes other lienholders are the ones to foreclose on the property. Among the liens applied to a property, tax liens are considered most “senior.” This means that when a property gets foreclosed upon either under the tax lien or by a more “junior” lienholder, though other liens that are “junior” to the tax liens are wiped out, the tax liens remain...

Moreover, Arizona is a tax levy state. This means the tax authority may sell the lien itself at auction. In this case, someone else pays the government the amount of tax debt owed, at which point that debt becomes the lien purchaser's to collect on. This lien remains first in line among the potential creditors. The purchaser gets the right to collect on the money owed—plus interest penalty charges that in Arizona can range as high as 16 percent—or, after a certain amount of time known as the redemption period (three years), to foreclose on the property and take title.

Serious issues that require experienced guidance. If you are exploring these kinds of investment properties, see the article and consider reaching out for help. 

Read: Tax Liens in the Wake of Foreclosure 

Christopher J. Charles is the founder and Managing Partner of Provident Law ®. He is a State Bar Certified Real Estate Specialist and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS ® (the “AAR”). Mr. Charles holds the AV ® Preeminent Rating by the Martindale-Hubbell Peer Review Ratings system which connotes the highest possible rating in both legal ability and ethical standards. He serves as an Arbitrator and Mediator for the AAR regarding real estate disputes; and he served on the State Bar of Arizona's Civil Jury Instructions Committee where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions. Christopher is a licensed Real Estate Instructor and he teaches continuing education classes at the Arizona School of Real Estate and Business. He can be reached at [email protected] or at 480-388-3343.

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About the Author

Ike Devji

ASSET PROTECTION LAWYER IKE DEVJI Lawyer: Two decades of Asset Protection only legal practice, helps protect national client base of over 6,000 clients and over $6 billion in protected assets- Sample clients include physicians, business owners, real estate investors, C-level execs.


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