Tax Foreclosure in Arizona: What Homeowners Need to Know
A guide from AuctionBlock.org
If you own a home in Arizona and have fallen behind on your property taxes, you need to understand how the state's tax lien certificate system works. Arizona sells tax lien certificates on delinquent properties to investors, and if you do not pay off the lien within the statutory period, the investor can foreclose on your home. This guide explains the entire process, your rights, real exemption programs, and where to get help.
How Property Tax Collection Works in Arizona
Property taxes in Arizona are collected by the county treasurer. Tax bills are due in two installments: the first half is due on October 1 and delinquent after November 1; the second half is due on March 1 and delinquent after May 1. If taxes are not paid by the delinquency date, interest accrues at 16% per year (A.R.S. Section 42-18053).
The statutes governing tax lien certificates and foreclosure in Arizona are found in Arizona Revised Statutes (A.R.S.) Title 42, Chapter 18.
The Tax Lien Certificate Sale
Arizona counties hold annual tax lien certificate sales, typically in February. Here is how the process works:
1. Delinquency When property taxes become delinquent, the county treasurer adds interest and prepares the property for the lien sale.
2. The Lien Sale Under A.R.S. Section 42-18112, the county treasurer holds a public auction for tax lien certificates on delinquent properties. Bidders bid down the interest rate they are willing to accept (starting from the maximum of 16% per year). The bidder willing to accept the lowest interest rate wins the certificate. Many Arizona counties now conduct these sales online through designated auction platforms.
3. What the Buyer Receives The successful bidder receives a tax lien certificate (also called a "certificate of purchase"). This certificate represents a lien on the property, not ownership. The certificate earns interest at the rate bid by the purchaser (up to 16%). The homeowner continues to own and live in the property.
4. Subsequent Taxes The certificate holder may also pay subsequent years' delinquent taxes on the same property (called "subtaxing"), which are added to the lien amount and earn interest at the same rate (A.R.S. Section 42-18120).
Redemption and the Three-Year Maturation Period
Arizona does not use the term "redemption period" in the traditional sense. Instead, Arizona uses a maturation system.
Paying Off the Lien (Redemption) Under A.R.S. Section 42-18118, the property owner may pay off ("redeem") the tax lien certificate at any time by paying the county treasurer the full amount of the lien, plus accrued interest, plus any subtaxed amounts and their interest. There is no formal deadline imposed on the owner for payment -- however, the certificate holder's right to foreclose activates after three years.
Three-Year Maturation Under A.R.S. Section 42-18127, a tax lien certificate must be at least three years old before the certificate holder can begin foreclosure proceedings. This three-year period, measured from the date of the original lien sale, is effectively the homeowner's window to pay off the lien without facing foreclosure.
Foreclosure After Maturation After the certificate has been outstanding for three years, the certificate holder may file a lawsuit to foreclose the right to redeem. Under A.R.S. Section 42-18201, the certificate holder must file a judicial foreclosure action in superior court. The court oversees the process, and the property owner receives notice and the opportunity to contest the foreclosure or pay the lien before the court enters a judgment.
Ten-Year Expiration Under A.R.S. Section 42-18118, if the certificate holder does not initiate foreclosure within 10 years from the date of the lien sale, the certificate expires and the lien is void. However, the delinquent taxes remain owed to the county.
Exemption and Assistance Programs
Arizona has several property tax relief programs that may help you avoid delinquency.
Senior Property Valuation Protection (Assessment Freeze) Under A.R.S. Section 42-11111, homeowners age 65 or older with a total income (from all sources) at or below a limit set annually by the Arizona Department of Revenue may qualify to have the full cash value of their home frozen at its current level. This prevents increases in property taxes due to rising home values. Apply through your county assessor's office. The income threshold is adjusted annually.
Disabled Person Property Tax Exemption Under the Arizona Constitution, Article 9, Section 2, and A.R.S. Section 42-11111, persons with a total and permanent disability may also qualify for the same valuation protection as seniors, regardless of age.
Widow/Widower Property Tax Exemption Under A.R.S. Section 42-11111, qualifying widows and widowers may also apply for the property valuation freeze.
Disabled Veteran Property Tax Exemption Under A.R.S. Section 42-11107, veterans with a service-connected disability rated at 100% by the U.S. Department of Veterans Affairs are exempt from property taxes on the first $28,459 of assessed value (this amount is adjusted periodically). The exemption also applies to veterans rated 10% or higher on a sliding scale. Apply through your county assessor.
Property Tax Deferral Some Arizona counties participate in property tax deferral programs for seniors and disabled persons. Under these programs, the county pays the property taxes and places a lien on the property, with the taxes becoming due when the property is sold. Contact your county treasurer for details.
Legal Aid and Assistance Organizations
If you are facing tax lien foreclosure in Arizona, the following organizations can help:
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Community Legal Services (CLS) -- Provides free legal assistance to low-income residents in Maricopa County (Phoenix metro area). Phone: 602-258-3434. Website: clsaz.org
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Southern Arizona Legal Aid (SALA) -- Serves low-income residents in Pima County (Tucson) and southern Arizona. Phone: 520-623-9461. Website: sazlegalaid.org
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DNA -- People's Legal Services -- Serves Native American communities in Arizona, New Mexico, and Utah. Phone: 1-800-789-7287. Website: dnalegalservices.org
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William E. Morris Institute for Justice -- Focuses on legal issues affecting low-income Arizonans, including housing. Website: morrisinstituteforjustice.org
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Arizona Bar Foundation -- Coordinates pro bono legal services. Website: azbarfoundation.org
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Arizona Department of Housing -- Administers homeowner assistance programs. Website: housing.az.gov
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HUD-Approved Housing Counseling Agencies -- Find approved counselors at hud.gov/findacounselor.
Emergency Action Steps
If you have delinquent property taxes in Arizona, take these steps:
1. Contact your county treasurer. Find out the exact amount owed, including interest. Ask if a payment plan is available.
2. Check whether a tax lien certificate has been sold on your property. Your county treasurer can tell you whether a certificate has been issued, who holds it, and the total redemption amount.
3. Apply for property tax relief. If you are 65 or older, disabled, a disabled veteran, or a qualifying widow/widower, apply for the valuation freeze or exemption through your county assessor.
4. Pay off the lien if possible. You can redeem (pay off) the tax lien certificate at any time by paying the county treasurer the full amount owed plus interest. Do this before the three-year maturation period expires.
5. Contact a legal aid organization. Community Legal Services (602-258-3434) or Southern Arizona Legal Aid (520-623-9461) can provide free legal help.
6. If a foreclosure lawsuit has been filed against you, respond immediately. You have the right to appear in court and contest the foreclosure. An attorney can help you identify defenses.
7. Visit auctionblock.org/get-help. AuctionBlock.org is a mission-driven company dedicated to foreclosure prevention. We can help you understand Arizona's tax lien system and connect you with resources.
Key Statutory References
- A.R.S. Section 42-18053 -- Interest on delinquent taxes
- A.R.S. Section 42-18112 -- Tax lien certificate sale
- A.R.S. Section 42-18118 -- Redemption of tax lien certificates
- A.R.S. Section 42-18120 -- Subtaxing by certificate holder
- A.R.S. Section 42-18127 -- Three-year maturation period
- A.R.S. Section 42-18201 -- Foreclosure proceedings
- A.R.S. Section 42-11111 -- Senior/disabled valuation protection
- A.R.S. Section 42-11107 -- Disabled veteran exemption
Legal Disclaimer
This guide is provided by AuctionBlock.org for educational purposes only. It does not constitute legal advice. Tax laws and local procedures vary by county and change over time. You should consult with a licensed attorney in Arizona for advice specific to your situation. AuctionBlock.org is a mission-driven company organization. We are not a law firm and do not provide legal representation. AuctionBlock.org is a newly established organization and has not yet served any families.
For help with tax foreclosure prevention, visit auctionblock.org/get-help.