The Arizona Legislature is considering legislation that would amend the state’s tax lien redemption statutes. The bill, HB 2098, is being sponsored by Rep. Gail Griffin, R-Cochise County. It is called the Property Equity Protection Act.
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Among other things, the bill amends Section 42-18103, Arizona Revised Statutes, to state, “On or before Sept. 1 of each year the county treasurer shall send by certified mail, return receipt requested, to the last known address of each person or firm that owes delinquent taxes notice that there are delinquent taxes against the real property that is assessed in the taxpayer’s name. If any notice sent pursuant to this section is returned as undeliverable, the county treasurer shall conduct an additional search to locate and notify the property owner of record.
It continues, “the county treasurer shall contract with a title company or an abstract company to provide a property information report in order to identify the person or firm to which notice must be sent pursuant to subsection A of this section. The county treasurer may advertise and accept bids for the contract and may contract with any title company or abstract company, regardless of the company’s location, if:
- “The fee charged by the title company or abstract company is reasonable.
- “The title company or abstract company is authorized to do business in this state.”
It would amend Section 42-18108, Arizona Revised Statutes to state, “At least 60 but not more than 120 days before the sale of a tax lien, the county treasurer shall send by certified mail, return receipt requested, a copy of the notice of proposed sale to the owner of each parcel of property on the delinquent tax list at the owner’s last known address. If any notice sent pursuant to this section is returned as undeliverable, the county treasurer shall conduct an additional search to locate and notify the property owner of record.”
The county treasurer would have to use the property information report to locate and notify the property owner of record for each parcel of property on the delinquent tax list.
It would state that a real property tax lien may be fully redeemed at any time within five years after the date of the tax lien sale, instead of within three years; or after five years but before the delivery of a treasurer’s deed to the purchaser or the purchaser’s heirs or assigns.
It would amend section 42-18201 to state, “Except as provided in subsection B or C of this section, at any time beginning five years after the tax lien sale but not more than 10 years after the last day of the month in which the lien was acquired pursuant to section 42-18114, if the lien is not redeemed, the certificate of purchase holder or the certificate of purchase holder’s heirs or assigns, or the state if it is the assignee, may bring an action to foreclose the right to redeem. The action to foreclose the right to redeem shall be filed in the superior court in the county in which the real property is located and shall name the county treasurer and any other persons with a recorded interest in the property as parties to the action.”
It further states, “For a subsequent year certificate of purchase by assignment issued under section 42-18121, subsection B, at any time beginning three years after the date the subsequent year certificate of purchase was assigned but not later than 10 years after the last day of the month in w h ich the tax lien was assigned under section 42-18121, if the lien is not redeemed, the subsequent year certificate of purchase holder or the subsequent year certificate of purchase holder’s heirs or assigns, or the state if it is the assignee, may bring an action to foreclose the right to redeem the lien represented by certificates of purchase acquired by assignment and held by the party that filed the action to foreclose.”
It also states, “The action to foreclose the right to redeem shall be filed in the superior court in the county in which the real property is located and shall name the county treasurer and any other persons with a record interest in the property as parties to the action.”
It further states, “An action to foreclose the right to redeem may not be filed under this section unless the amount required to redeem the real property tax lien determined pursuant to section 42-18153 exceeds five percent of the fair market value of the real property as shown by the county assessor’s valuation of the real property for the current tax year or $50,000, whichever is less.”
It would amend section 42-18202 to require a certificate of purchase holder to send a notice of intent to file the foreclosure action by certified mail to, among others:
- The property owner of record, including the property owner, as determined by section 42-13051. “If any notice sent pursuant to this paragraph is returned as undeliverable, the certificate of purchase holder shall provide for a search, consistent with section 42-18103, subsection B, to locate and notify the property owner of record.”
- Any lienholder of record that has recorded a lien against the property if an address appears on the recorded lien.
- Any mortgagee of record if an address appears on the recorded mortgage.
- Any vendee of a recorded contract for deed if an address appears on the recorded contract.
- Any person to whom the property was assessed on the tax roll for the year in which the property waslast assessed.
- Any lienholder of record that has recorded a lien against a mobile home that is located on the property is an address appears on the recorded lien.
- Any legal titleholder of record of property that is contiguous to the property described in the certificate of purchase, if the property described is submerged land or common elements of a subdivision and if the address of the titleholder of contiguous property appears on the record of conveyance of the property to the legal titleholder.
The bill defines “contiguous” as “touching, meeting or joining at the surface or border, other than at a corner or a single point, and not separated by submerged lands.” It does not include submerged lands that lie below the ordinary high-water mark that are sovereign lands.
When a county treasurer receives the notice required by subsection B of this section, the county treasurer would have to:
- Publish a copy of the notice in a newspaper of general circulation in the county where the property is located.
- Post the notice and warning statement in a conspicuous place on the property.
- Post the notice and warning statement in a conspicuous place on the county treasurer’s website and at the county treasurer's office.
- Record the notice and warning statement. A person acquiring an interest in the property after the notice is recorded is deemed to be on notice of the pending sale and no other notice to that person is required. The sale of the property automatically releases any recorded notice of tax sale for that property. If the property is redeemed, the county treasurer shall record a release of the notice on payment of the recording fee.
If a court finds the sale of a tax lien is valid and that the tax lien has not been redeemed, the court shall enter judgment foreclosing the right of the defendant to redeem and directing the sale of the property in accordance with the requirements of this chapter.
The foreclosure of the right to redeem would not extinguish the property owner’s or other lienholder’s interest in the proceeds from the sale of the property.
The bill would amend section 42-18205 to state that the county board of supervisors must sell the property in the same manner as the sale of land by the state under tax deed pursuant to Article 7 of this chapter.
On receiving a fee of $50 per parcel, the county treasurer shall execute and deliver to the party that purchased the property pursuant to subsection A of this section a deed conveying the property described in the sale.
The board of supervisors would have to advertise the real property for sale at a public sale, the advertisement would have to be, among other things, posted on a multiple listing service for at least 30 days before the date of the sale.
The bill states, “The board of supervisors may contract with a third party to operate and advertise the public sale. The contract may provide that a property sells for more than the amount of the taxes, penalties, interest and costs charged against the property, the private party operating and advertising the public sale and advertising the property may receive up to 3 percent of the amount of the sale price of a property that is more than the amount of the taxes, penalties, interest and costs charged against the property.”
After a sale, the county treasurer would have to, for a property for which a judgment foreclosing the right to redeem has been entered, distribute the proceeds to the certificate of purchase holder on the property in the amount of the tax lien and any penalties, fees and costs charged against the parcel. For property held by the state under tax deed, after deducting and distributing interest, penalties, fees and costs charged against the parcel, the treasurer would have to apportion the unpaid delinquent taxes to the funds of the various taxing authorities in proportion to their current share of the taxes charged against real property. The treasurer would have to distribute any remaining balance to the property owner who was dispossessed by the sale.
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