Arizona – When Does a Tax Lien Expire?

When does an Arizona tax lien certificate of purchase expire?  This was the only issue in Span v. Maricopa County Treasurer, a 2014 Arizona Court of Appeals decision.  While this decision may not be used to cite as precedent in any case by an attorney, the discussion from the Court is useful for anyone holding tax liens in Arizona.

Arizona Revised Statutes Section (“A.R.S.”) 42-18208(A) states: If a tax lien that was purchased pursuant to A.R.S. Section 42-18114 on or before August 31, 2002 is not redeemed and the purchaser or the purchaser’s heirs or assigns fail to commence an action to foreclose the right of redemption on or before ten years from the date that the lien was purchased, the certificate of purchase or registered certificate expires and the lien is void.

When a property owner is delinquent on taxes, the County secures payment by selling a tax lien at auction.  The purchaser of a tax lien receives a certificate of purchase, known as a tax lien certificate, which then entitles the holder of the tax lien to a deed if certain statutory conditions are met.  Additionally, the certificate holder has the option of paying any subsequent delinquent taxes outside of the auction process.  The payment for such additional liens is then added to the original certificate of purchase.

Prior to 2002, there was no time limit for a tax lien holder to redeem the certificate of purchase or foreclose on the property.  In 2002, the Arizona Legislature amended A.R.S. Section 42-18201 to include a ten-year statutory lifetime for tax liens purchased at auction pursuant to A.R.S. Section 42-18114 from and after the date of the act.  The Legislature added some additional exceptions in the years after this.

In a very straightforward holding, the Court ruled that a tax lien expires ten years after its purchase, regardless of whether a buyer later pays subsequent taxes on the same property.  The Court reasoned: “It is clear from the plain language and history of A.R.S. Section 42-18127, –18201, and –18208 that the Legislature intended certificates of purchase to expire after ten years unless the purchaser begins a foreclosure action on the right of redemption before that time. Thus, any lien purchased through auction expires ten years from the date of purchase absent a timely foreclosure action. The statute does not provide that paying subsequent taxes tolls or extends this ten-year period.”

So, be careful not to lose your entire investment in a tax lien by failing to take action before the lien expires.

 

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