What You Should Know About Arizona Tax Sales

There are a few changes to procedures in some counties for the Arizona tax sales, particularly the online tax sales. Here’s what you need to know for this year’s online tax sales in Arizona:

The Single Simultaneous Bidder Rule

Pinal and Yavapai counties incorporated this rule last year and this year Coconino County has a "single simultaneous bidder rule." That means that not only can you not bid under a different name or entity, it also means that if you register to bid at one of these tax sales, you cannot have a contractual, legal or financial relationship with any other bidding entity registered in the same sale. It means that anyone who files a joint tax return with you is not allowed to register in that tax sale, and any entity that you are involved in is not allowed to register to bid at the tax sale either. So if you have interest in a fund or other entity that bids at a certain one of these tax sales, then technically you cannot register to bid in that sale. This is an attempt to make bidding fair for everyone and even the playing ground among the institutions and individual investors. I’m not sure how well this can be enforced but I wouldn’t want to chance breaking this rule because you have to agree to the rule before you are allowed into the bidding site and the agreement states that it is at the county treasurer’s "sole and exclusive" discretion whether or not the rule has been violated. And if it is determined that a bidder has violated this rule after certificates have been awarded, then all bids from the offending bidder will be cancelled, and any certificates awarded will be forfeited and resold, and the offending entities may be banned from future tax sales.

Keep in mind that the single simultaneous bidding rule means that if you register to bid at the tax sale, then your spouse cannot also register if you file a joint tax return, nor can you register your business or your self-directed IRA. In fact no one who is a dependent on your tax return can register and bid at the tax sale, since anyone on your tax return is considered to have a legal and/or financial relationship with you. Please read this agreement carefully if you’re going to bid at any of the counties who have this rule.

Pinal County

The big change in Pinal County is that if you purchase a tax lien in this year’s auction and do not pay the subsequent taxes, your lien will not be redeemed in next year’s tax sale. Although they are doing it in this year’s tax sale, they will no longer require the tax lien purchaser to pay the prior tax lien along with the current lien. They used to require that only one lien could be sold on a property. So if the subsequent taxes weren’t paid on a lien, that lien would be redeemed in the next year’s tax sale. The tax lien purchaser would have to also buy the prior lien, and thus redeeming the prior lien. They will no longer require this for liens purchased in this year’s tax sale, so more than one lien could exist on a property in the future. The prior lienholder has priority when it comes to foreclosing on the property and must redeem any subsequent liens when they foreclose. But if the subsequent lien holder forecloses on the property, the prior lien may still exist and the prior lien holder may still have a right to foreclose.

Non-refundable Fees

Non-refundable fees for each certificate purchased at these tax sales can vary from $10 per certificate where there are no prior liens to $20 per certificate purchased. Make sure that you read the rules and procedures of the tax sale for each county before bidding so that you know how much of your profit you are giving away to the county in non-refundable fees.

Foreign Investors

Pinal and Yavapai counties do not allow foreigners to register to bid at their tax sale. The only way a foreigner would be allowed to bid is if they have a US business with an EIN number from the IRS. They would have to register as an US entity since there is no allowance for foreigners to bid in these 2 counties. The other option for foreigners is to invest with a US fund or agent. The other 4 other counties with online tax sales in Arizona do allow foreign bidders.

Minimum Deposits

The minimum deposit that you need in order to bid in the Arizona tax sales varies from county to county. This varies from counties that have no minimum deposit and though you do have specify a budget there is no minimum amount, to counties that have a minimum deposit of $500, which implies a minimum budget of $5000. (You must have at least 10% of your budget deposited.) Make sure that you read the rules of the sale and know what the minimum deposit requirements are. You also want to know what the deadline in to submit your deposit and be able to bid. Some counties will accept deposits up to the end date of the tax sale, and others want them in ahead of time.