Arizona Update: Subsequent Tax

Got a letter from the Mohave Count Treasurer a couple of weeks ago. A bill, actually: $2,216.40 for subsequent taxes covering two of the three liens I still hold, plus $5 for fees. So what are subsequent taxes? My liens cover taxes due for year 2010. If the property owner does not pay taxes for 2011, I have the right to pay for that to keep my certificates “current.”

Here are details from the Arizona tax codes:

42-18121. Payment of subsequent taxes by certificate holder; fee

A. On or after June 1, if a person who holds a certificate of purchase desires to pay subsequent taxes, accrued interest and related fees due on the property, the person shall exhibit the certificate or receipt of registered certificate to the county treasurer. The treasurer shall enter the amount of the payment on the certificate and on the record of tax lien sales. The amount of subsequent taxes bears interest at the rate stated in the certificate of purchase from the first day of the month following the purchase of the subsequent tax lien.

B. The county treasurer shall collect a fee of five dollars from the holder of the certificate for making the entries.

42-18121.01. Subsequent purchaser; assignment

A. If a person who holds a certificate of purchase does not exercise the option to pay subsequent taxes, accrued interest and related fees due on the property pursuant to section 42-18121, the county treasurer may require a person who desires to purchase a subsequent certificate of purchase on the property to acquire by assignment all currently outstanding certificates of purchase previously issued on the property. The county treasurer shall process the sale as an assignment on behalf of the previous holder of the certificate of purchase.

B. An assignment made pursuant to this section vests in the person all the right and title of the original purchaser with the lien date effective from the original lien sale date.

So, I had an option:

A.) Pony up the money to keep my rights and keep earning the interest rate set when I bid for both the original outlay and the new outlay, or

B.) Give up my rights to forclose in another two and a half years and just let the next lien purchaser pay me off (I guess that would be next February).

I decided to pay up. I had the money from my Tax Lien bankroll sitting in a bank account earning something like 0.25%, and I am not sure I will be participating in any other auctions until next year. I did consider paying one and not the other (one is 6%, one is 5%) so I would learn both sides, but in the end, I wrote the checks.

Next month: Unless some other news pops up, I plan to cover the Florida 5% rule in detail.