From: "Mark L. Manoil" <mlm@tblaw.com>
Subject: AZ Property Tax Lien ALERT - 8/26/2003 Lien Preservation

AZ Property Tax Lien ALERTS

August 26, 2003 - Old Lien Preservation And Redemption Interest Calculations

By Mark L. Manoil, Tiffany & Bosco, P.A., Phoenix

Preserve Your Old Tax Lien Investments

As noted in our Alert of April 25, 2003
<http://members.home.net/manoil/Alert23.htm>, this year's state legislature
passed a bill adding new Arizona Revised Statute § 42-18208, a retroactive
statute of limitations on property tax lien foreclosures.

The new law, which takes effect September 18, 2003, provides that unredeemed
tax liens ("CPs") purchased before August 31, 2002, are expired and void,
unless an action to foreclose has been commenced on or before ten years from
the lien's purchase date.

New A.R.S. § 42-18208 provides that the Treasurer is to give notification of
pending expiration of the lien at least six months before the CP is to
expire; the statute is silent as to the status of CPs for which more than 10
years have already passed since their acquisition, calculated back from the
effective date of the new law.

Lawyers for CP holders will be able to argue that the holders must be given
notice of pending expiration before their lien is "expired;" lawyers for
property owners and other competing interests now have ammunition that the
10-year or older CPs are immediately expired upon the effective date of the
Act. As noted above, the arguments about continuing lien validity can simply
be avoided if before the effective date of the Act the CP holder has
"commenced an action to foreclose the right of redemption."

To commence an action to foreclose before the effective date of the new law
would require that a 30-day Notice of Intent to Foreclose have been given at
least 30 days before then or by August 17, 2003.

Many investors holding such older CPs may have already written off their
investments as worthless. However, it will probably make sense to at least
give the 30-day notice even if you do not intend to foreclose the CP, just
to preserve the possibility of selling it to someone else who will pursue
the foreclosure. This way, some salvage value may be obtained for the
investment.

All is not necessarily lost if you fail to start your foreclosure before
September 18, 2003, however. A.R.S. § 12-505 arguably provides a year's
grace period before the new statute of limitations cuts off the oldest CPs.
Sub-paragraph C of the statute says: "If an amendment of pre-existing law
shortens the time of limitation fixed in the pre-existing law so that an
action under pre-existing law would be barred when the amendment takes
effect, such action may be brought within one year from the time the new law
takes effect, and not afterward." Also, you may be able to: (1) challenge
the constitutionality of the new law, or (2) rely on certain Treasurers'
announced intentions of how they plan to interpret the new statute.

The Maricopa County Treasurer has announced that his office will not scratch
off older liens until after he has at least given the notice and the time
has passed. He also stated that he interprets the "purchase date" being the
last date of paying subsequent taxes on the CP. The Yavapai County Treasurer
has indicated a preliminary analysis that the "purchase date" means the
original acquisition date, regardless of sub-taxing activity.

If, as an investor, you consider yourself more of a risk-taker, this may be
an opportune time for you to acquire some of the older tax lien positions,
assuming your research indicates the property subject to the tax liens will
secure the lien investment.

Our office will be pleased to prepare your 30-day notices according to
statute for $50 per parcel, although at the time of this writing it is too
late to send 30-day notices which will allow suit prior to the new Act's
effective date. If you wish to take advantage of this opportunity, please
send a cashier's check or money order with your Parcel/CP list to us at
Tiffany & Bosco, attention: Mark L. Manoil, 1850 N. Central Avenue, Fifth
Floor, Phoenix, Arizona 85004.

If you'd like to offer your older CP for sale to other possible lien buyers,
then please mention that when you contact us.

Treasurer's Interest Calculations Questioned

Is the CP you bought at auction supposed to earn interest for the month of
February in which it was sold? If you pay subsequent delinquent taxes on a
CP in June, should the redemption of that lien include interest on the
subtax amount for June?

The Pima County Treasurer apparently answers "no" to both questions.

Most of Arizona's county treasurers agree on the following analysis to
answer these questions: (1) interest on delinquent taxes is calculated on a
basis of a fraction of a month counting as a whole month (A.R.S. §
42-18053); (2) interest to be paid on a certificate of purchase is to be
computed pursuant to A.R.S. § 42-18053 (A.R.S. § 42-18114); and (3) the
amount required for redemption of a tax lien is the amount for which the tax
lien was sold, with interest at the rate stated in the CP (see A.R.S. §
42-18114), and all sub-taxes paid by the purchaser at the same rate as
stated in the CP (A.R.S. § 42-18153).

Accordingly, because a partial month counts as a full month, the answer to
the redemption interest calculations should be "yes," in both cases.

The Pima County Treasurer's office, however, has explained to us that they
believe neither February nor June interest (on sub-taxes) should be included
in the redemption amount calculation. Their reason is that they believe the
"simple" interest direction of A.R.S. § 42-18053(A) prohibits further
interest accrual for February after they have calculated interest on the
delinquent tax up to the date of sale as part of the lien sale amount. They
argue that paying CP interest for February would convert that pre-sale
interest to principal, upon which the tax lien bidder's bid interest rate
applies following purchase.

The statutes cited above though, make clear that this compounding event is
supposed to take place. A.R.S. § 42-18114 specifies that the successful
bidder is the one "who pays the whole amount of delinquent taxes, interest,
penalties and charges due on the property . . .", which in its aggregate
form is what the CP bid interest accrues on for purposes of calculating the
redemption amount under A.R.S. § 42-18153.

If you have purchased tax liens in Pima County in the last two years and
have had redemption, very likely your redemption interest was discounted by
the Treasurer's office.

The Treasurer's office has rejected our early efforts urging it to review
and correct its approach to calculation. Several of my clients have decided
to pursue appropriate legal action to enforce state law.

If you would like to join in the claim for reimbursement of unauthorized
discounts and to have the Pima County Treasurer compute interest in
compliance with the statutes in the future, please contact me at .

Announcements

Arizona Property Tax Liens: Guide to Profit, Protection and Prosecution
(ISBN: 0-9669711-1-6) June 2002, is available for sale at cpexchange.com.
Order your copy and see why the State Bar of Arizona named this its
February, 2003 book of the month. You can order online, or by fax or mail.
The 272 page Guide is packed with examples of successful investing
techniques, details of how the tax lien sale and foreclosure system works in
Arizona, with citations to pertinent legal authority, and useful checklists
and forms. Please take a look at the table of contents, the list of
illustrations and list of appendices from the book at
http://members.cox.net/manoil/newbook.htm. You can order on-line or print
out an Order Form at the website for faxing or mailing. This is a must-have
reference to best profit from buying and managing an Arizona tax lien
portfolio!

Website Moving - Please note that the Arizona Property Tax Lien Primer
website will move soon to cpexchange.com. New content, particularly our
extensive "frequently asked questions" area, is being added.

Arizona Property Tax Lien Buyers consider new organization - The National
Tax Lien Association ( has proven to be an effective resource for its
members in disbursing information concerning property tax and municipal lien
matters nationwide. Some individuals and organizations have mentioned the
possibility of organizing/creating a similar trade organization at the state
level for Arizona property tax lien investors. If you are interested in
learning more about such a group and possibly becoming a member if it is
formally organized, please send me a short note at Be sure to include your
name, address, daytime phone and fax number (if you have one).

Mark L. Manoil - 602/255-6000
Tiffany & Bosco, P.A.
1850 North Central Avenue, Fifth Floor
Phoenix, Arizona 85004-4546
Fax: 602/255-0103

http://cpexchange.com

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.

© 2003 Mark L. Manoil