foreclosing a tax lien as an LLC in AZ

[Karen D. Schiano]

Here comes another issue as I am just getting into tax liens. I have an LLC in NM for general purposes which I have applied to register as a foreign LLC in AZ where I am purchasing tax liens, going into foreclosure now and then selling. I thought this would protect me from any suits or countersuits resulting from foreclosing and reselling properties which it would but it appears that in AZ an LLC must be represented by an attorney except in limited circumstances which do not appear to be representing the LLC as a sole member disregarded entity as I am nor an exception for foreclosing tax liens. I do not want to go the attorney route expense and find my way very well with legal matters, reseaching titles, etc and have represented myself well in auto accident suit as plaintiff and in other matters. So does anyone know is the definitive answer that if I bring the foreclosure complaint on a tax lien property as a sole member disregarded LLC, registered to operate in AZ, I must be represented by an attorney?

Then that brings the other matter, I added the name of the LLC to the certificate thinking I would sort out and put in my name the lands I want to keep as personal property and have the others to sell be property of the LLC when I bring the foreclosures. I purchased all out of my personal bank account so no problem did not use LLC funds. As per rules, I could have purchased them from personal account for the LLC but not the other way around. The main name on the certificate is my name because the counties require that it match if using my social security number which is the way the IRS wants as a sole member disregarded entity. So I am hoping no problems. I have to list the LLC because that's what's on the W-9 but I also have a sole proprietorship which hasn't been doing any business for years. I don't know if this has to be categorized as a sole proprietorship if not an LLC? I am extremely low volume and really consider them personal investments, some of which I will sell. Do individuals have investments and sell via internet real estate and it is individual income and not considered a business for tax purposes, but considered personal income? I guess I can check on turbo tax unless someone can tell me...... I'm going to ask them to strike the additional LLC on additional certificates but this first year batch has both names on it with individual name primary. Does anyone see a problem when I do the foreclosure? I can't have two accounts as per county rules because my LLC does not have an EIN so I was going to sort out ownership bring the foreclosures in either my individual name for the personal properties or the LLC depending upon my end intention but now I believe I need an attorney as an LLC soI won't use the LLC for these land investment purposes. I guess I can just tell the county the sole member (me) LLC is assigning the certificates to me the individual and give a formal letter if need be if not listing the LLC along with my name on the certificate will be an issue in court. Yeah, that's it, may have answered that question, but the other questions remain.....thanks.

[Ned Carey]

@Karen D. Schiano 

OK you need some tough love. What I am going to say may sound harsh but you need to hear it. 

Based on what you have written here, I would call you clueless in legal matters. While it is certainly possible and legal to do your own foreclosure, you will not be able to get title insurance unless an attorney does the work. That means you will never get financing and probably will have difficulty selling the property.

Yes it is common for states to require and LLC to be represented by an attorney. The fact you are the sole member is irrelevant. The fact you didn't know that is another example of you not knowing as much about the law as you think you do. I've made hundreds of thousand of dollars winning over people like you for that exact issue. Those wins easily paid for my attorney many times over. ( @Jerry K. does the redeeming party have to pay leg2l fees if a foreclosure has been started in AZ?)

Why did you put your LLC on the certificates? The LLC will not help you if your name is also on the certificates. You have frankly created a mess for yourself.

Fortunately Tax certificates are usually freely assignable. You could probably assign you or your company off the certificate. (Jerry K can you help here) This is as I think you concluded at the end of your post. 

Why did you put the LLC on the W-9 if it is intended as a personal investment and your name was going to be on the certifcate? Are you aware you can get an EIN for your LLC even if it is a single member LLC? You are really scrambling legal and tax issues. They are separate issues.

There is no tax difference between you and your business if you are operating as a sold proprietor. Your business income may need to be put on a different schedule but the tax generally will be the same. 

I think this is another example of you being "penny wise and pound foolish. " A competent CPA can probably save you money over what turbo tax does and can certainly do a better job of keeping you out of trouble.

Fortunately your issues here are probably easily and cheaply resolved but consider using professionals in the future. It may save you money.  Good luck.