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Competing Back Tax Liens Have Parity, Not Lien Priority

Robert P. Lindfors

Robert P. Lindfors


Treasurer’s deeds pose an insurance risk. The uncertainty of tax liens and the foreclosure of others’ redemption rights pose a risk that title companies are reluctant to insure. Unless the Treasurer’s deed is validated by a Court order, title insurers will not even consider insurance.

Under Arizona law, to secure payment of delinquent real estate taxes, county treasurers can sell at auction tax liens. Back tax liens are interest bearing investments. The purchaser of the back tax lien receives a certificate of purchase which recites among other matters, the tax parcel sold and the purchaser’s name. Certificates of purchase entitle the certificate holder to a Treasurer’s deed to the tax parcel after certain statutory conditions are met.

The tax foreclosure suit must be carefully examined for personal service of process on all necessary defendants. Everyone having a record interest should be sued as a defendant.

Where real estate taxes are delinquent for multiple years, there may be numerous separate back tax certificates. Back tax certificates can be enforced independently. However, the back tax certificates are liens in parity and not priority. The back tax certificate for an earlier year’s tax is not preferred to the tax lien for a subsequent year. A.R.S. § 42-17153 (C)(3)(b) provides a back tax certificate is not a prior or superior lien to the liens for taxes in any other years. Rather, the back tax liens have lien parity.

The foreclosure of one year’s back tax lien does not discharge or release the lien of another year’s tax. The back tax liens can only be discharged by payment of the tax.

Title officers should require the payment and redemption of all back tax liens before insuring the tax parcel.

This article is made available with the understanding that it is informational only, and it has not been prepared to provide specific legal advice that may be relied on by a reader. The author is under no obligation to update the information in the event of a change in the law.

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