County to auction thousands of tax liens
February 23, 2009
County to auction thousands of tax liens
BY STEPHANIE A. WILKEN, SUN STAFF WRITER
February 14, 2009 – 8:46PM
Yuma County will auction thousands of liens on properties with unpaid taxes, and county officials say investors could earn an interest rate as much as 16 percent.
The 2,016 liens, worth $1.5 million and listed in The Sun Monday, are all from county property with unpaid taxes, and the public can purchase the liens in a Feb. 25 auction. The buyer is not purchasing property, but the lien on the property.
Yuma County Treasurer David Egeberg said the county benefits from getting the property taxes paid, and the investors benefit by earning as much as 16 percent interest on the lien.
And in today’s economy, 16 percent might look good to investors.
“Right now nobody is earning any interest anywhere, so they’re trying to get it where they can,” Egeberg said. “The investors think it’s a win-win.”
This means if an investor bought a lien worth $100 at a 16 percent bid, he or she would receive $16 in income per year, Egeberg said.
Deputy County Treasurer Anna Hernandez said the property owner still pays taxes to the county, then the county pays the investor a percentage of the lien.
Investors purchase the liens at auction for the amount advertised, anywhere from around $7 to more than $63,000, plus a $20 fee per parcel.
The bidding starts at 16 percent interest, which falls as bidders compete for a property.
But, the investment could be a gamble.
Egeberg said property owners have three years to pay back taxes before losing the property.
In addition, if the property owner pays the back taxes by Feb. 27, the last business day in February, the investor doesn’t earn interest on the lien but can get a refund for the amount paid, minus a $10 fee. Hernandez said the money could get tied up if the property owner claims bankruptcy.
The number of liens increased “a little bit” more than last year, something the county staff sees every year, Egeberg said. Last year, there were 2,004 liens, 12 fewer than this year.
He said the reason people don’t pay property taxes varies.
Some people just may not realize they owed because the mortgage company didn’t pay it, or they were out of town when the bill was due. Or they might have bought property without realizing taxes were owed on it, Egeberg said.
Egeberg said in the end, between 98 to 99 percent of the taxes get paid, leaving 1 or 2 percent of the properties with unpaid taxes, which he said is a “really minor amount.”
Hernandez said the county will end up auctioning 50 to 100 fewer properties than the 2,016 listed in The Sun Monday. She said those property owners will pay the back taxes before the auction.
Egeberg said it’s important that people realize they’re not purchasing property at the auction.
“Just because the property is listed (in the paper) doesn’t mean those properties and homes are going to be lost. In the whole scheme of things, very few of these properties will ever change hands, but it’s part of the state law.”
The auction is Wednesday, Feb. 25 at the Yuma County Board of Supervisors Auditorium, 198 S. Main St. Signup starts at 8 a.m. and the auction at 9:30.
For more information on how the auction works, visit the county treasurer’s Web site at www.co.yuma.az.us/treas/taxlien.htm.