Tax lien investors need to understand the importance of sub-taxing their tax liens in Arizona. When a tax lien investor purchases a tax lien at the February Pima County tax lien sale, for example, that investor then has the right to purchase the next year’s delinquent taxes if the owner does not pay the subsequent year’s taxes prior to June 1st of each year.
For example, if a tax lien investor purchased a 2008 tax lien at the 2010 Pima County tax lien sale and failed to sub-tax in subsequent years, that tax lien investor subjects herself to another tax lien investor redeeming out her position, thus losing her priority position. Additionally, and perhaps more troubling, is the ability of an owner of record to redeem the tax lien investor’s tax lien. Suppose the tax lien investor, who owns the 2008 tax lien, wishes to begin the tax lien foreclosure process after three years (2013). In this example, all the owner of record would have to do is redeem the 2008 tax lien and the investor’s lawsuit has been thwarted. However, had the 2008 tax lien holder sub-taxed the 2009, 2010, 2011, and 2012 taxes, not only would there have been no competing tax lien holders, in order for the owner of record to redeem, that owner would have to pay the delinquent taxes for 2008 through 2012, as opposed to just 2008.
While there is certainly the possibility of successfully obtaining a property by only buying a single year’s tax lien and not sub-taxing, the chances of redemption by another tax lien holder or the owner of record are substantially higher. If you can afford to sub-tax your liens, do it.