Tax Lien Property in AZ

[Bret W.]

Not sure if this is the right category... hopefully it is.

There is land behind my house that is being used for storage. The land has no access to the street. It appears at some time the property owner of the house in the front of the lot installed a fence and sold the back portion. The only access if from the alley. The owner is storing a boat and a pull-behind trailer on it. I have never seen or met the owner. I did some research to reach out and offer to buy the land. I would love to build a garage/workshop on it. After a little digging, I noticed the taxes have not been paid since 2006 and a tax lien is available for last year, all other years already have a lien placed on it. The owed taxes plus interest is +-15k. 

What are my options for purchasing this land? What do you recommend.

[Jerry K.]

@Bret W. - I do tax lien investing in Arizona. I was away from my computer the last few days - sorry for not responding sooner. 

You are definitely better approaching the owner before trying to buy the tax liens. In AZ, the tax lien holder is not supposed to contact the parcel owner directly.

Research and determine if there are any other outstanding liens on the property (city, mechanical, etc.) The more you know that is owed the better. You already know what they paid for the land.

In AZ the lien holder has 10 years from the date of the tax lien sale to pursue tax foreclosure. They can start foreclosure 3 years after the original date the tax lien was sold by the county. So if nobody has started tax foreclosure yet, the first lien is getting close to expiring worthless. 

Find out the date the oldest liens were sold. Not the year of taxes (2006) because that year's taxes would be sold for the time in 2008. If the first lien was sold on (for example) 2/12/2008, then that lien holder has to start foreclosure by 2/12/2018 or they lose the lien amount and any interest that accrued. 

However, that lien holder can start foreclosure at any time. Actually, any liens that are dated before June 2014 can be used to start the foreclosure. So there may be more than one lien holder who can start foreclosure. (I'm assuming Maricopa county)

If there are no other liens and you know they owe about $15,000, you can base your offer to the owner on paying off the taxes. However, I suggest you don't reveal you know how much is owed in taxes. He/she knows, or they can easily find out. Once they see your offer covers at least taxes and maybe a little more, they might bite on your offer.

Do you know how much the parcel is worth on the open market? Don't over pay. 

A tax lien foreclosure in AZ could cost the lien holder $2k-$4K. If the land is worth less than that, that may be the reason no lien holder has foreclosed. 

If the owner does not sell to you, you could track down one of the older lien holders and offer to buy their lien for the amount they paid plus interest. Then foreclose yourself. You'll have to pay off the other liens. The owner may come up with the past money as well. I have not foreclosed in Maricopa, but in other AZ counties I've done a tax foreclosure, the parcel owner has to pay all legal costs you incur filing the foreclosure, plus the back taxes and interest.

The better play is to contact the owner before you buy any liens and work out a deal.