AZ Property Tax Lien ALERTS

May 21, 2001 - 2001 LEGISLATIVE WRAP-UP

The first regular session of Arizona's 45^th Legislature adjourned in early May. Of the 637 House Bills and 577 Senate Bills introduced this session, a handful affecting the property tax levy, collection and general administration process were adopted and signed by Governor Jane Hull. The general effective date for these bills is August 9, 2001. Following are summaries of the adopted legislation concerning property tax:

Chapter 28 (Senate Bill 1111) - Tax Lien Sale In Error Interest Decreased

Largely concerns investing and money management authority of county treasurers. Makes clear that interest earned on monies collected on behalf of cities, towns and certain "involuntary pool participants" is to be paid into the county general fund for use as determined by the board of supervisors, instead of to the taxing entities on whose claims the interest was earned. Section 5.

Section 6 of this Chapter simplifies the tax payment receipt procedure and provides county treasurers more discretion in the matter of issuance or non-issuance of receipts for tax payments.

Most significant, Section 8 of the Chapter amends A.R.S. §42-18125 by decreasing the sale in error interest rate from 12% to 10% (assuming that amount is less than the bid rate on the Certificate of Purchase) and removes treasurer, recorder or assessor liability on their official bond to the county for interest on sales made through the officer's mistake or misconduct.

Chapter 151 (Senate Bill 1053) - Internet Publication of Tax List

Amends A.R.S. §42-18109, setting forth a new manner of publication for the back tax list prior to the treasurer's annual tax lien auction:

• The list is to be posted near the outer door of the treasurer's office for at least 2 weeks before the date of sale.
• The treasurer is to publish the list at least one time in a newspaper of general circulation in the county at least two weeks but not more than three weeks before the date of sale.
• The newspaper that is publishing the list must also post the list and notice from the first publication date through March 1 of the current year "on the Internet on a website that posts the legal notices of ten or more Arizona newspapers."

This last requirement would seem to limit the possible vendors or the Internet publication, and probably was the result of lobbying by one specific vendor.

Chapter 242 (House Bill 2283) - Priority and 30-Day Notice Reforms Adopted

Amends A.R.S. §42-17153 to make clear that the property tax lien does not have priority over liens for taxes accruing in other years on the same parcel (codifying the holding in Bauza Holdings, L.L.C. v. Primeco, Inc.,  346 Ariz. Adv. Rep. 17, 18 P.3d 132 (App. 2001) - see January 30, 2001 ALERT, Competing Tax Lien Priorities Clarified), and amends §42-18202 to provide a fail-safe procedure for giving the required 30-day notice of intent to foreclose a tax lien by allowing mailing of the notice:

• to the owner according to the county assessor's tax roll;
• to the situs address of the property, if shown on the tax roll (if different from the owner's address on the tax roll); and
• to the tax bill mailing address according to the county treasurer's records, if that address is different.

Chapter 249 (House Bill 2294) - Improvement District Assessment Liens Unaffected by Tax Lien Foreclosure

Amends several tax lien foreclosure statutes (A.R.S. §§42-18115, 18204, and 18258) to make clear that a property tax lien foreclosure does not extinguish the lien for an assessment that an Improvement District assessment levied under Title 48, Chapters 4, 6 or 14 or A.R.S. §9-276. Chapter 4 refers to municipal improvement districts, Chapter 6 refers to county improvement districts and Chapter 14 refers to sanitary districts. Section 9-276 refers to municipal powers to make local improvements by special assessments.

Improvement districts are smaller taxing entities established for the purpose of funding specific property improvements, such as roads, domestic water delivery systems, and sewer construction. Interestingly, the many other types of improvement districts provided for in Title 48, such as power, flood control, agricultural improvement, irrigation and water conservation districts, are not covered by this amendment.

Chapter 267 (Senate Bill 1518) - Omnibus Property Tax - Clarification of Lien Attachment Date

In large part concerns minor changes and clean-up corrections to the property valuation and tax appeal process. Includes clarification by amendment to A.R.S. §42-17153, in Section 44, that the lien for property taxes attaches on January 1 of the "tax" year.

Chapter 306 (House Bill 2432) - Tax Abatement on Brownfields

This is an attempt at "brownfields" legislation, providing an incentive to restore environmentally-damaged properties to the active tax rolls.

In a forthcoming ALERT we will examine legislative agenda items being considered by the county treasurers and that investors may want to pursue. If you have any suggestions or proposals, please forward them.

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Mark L. Manoil
Carson Messinger Elliott Laughlin & Ragan, PLLC
3300 North Central Avenue, 19th Floor
Phoenix, AZ 85012
602-264-2261

Arizona Property Tax Lien Primer: http://members.cox.net/manoil

The information presented in this communication is not intended as legal advice, nor does this communication establish an attorney-client relationship. The opinions expressed are those solely of Mark Manoil, unless otherwise noted. I specifically disclaim any liability for any reader's detrimental reliance on the information and views presented herein. If you need professional advice, please contact a competent professional.

© 2001 Mark L. Manoil