By, Dick Zimmermann, Tempe, AZ
In February, Maricopa County will conduct the annual tax lien auction. It attracts investors because of high interest rates and a chance to acquire property cheap. However, there is unnecessary risk because the county never removes absolutely worthless properties from the tax rolls. Tax liens are repeatedly auctioned off on properties that do not, and never will, have any value.
One of the more egregious examples is in the Golden Palm subdivision in northwest Phoenix. Around 1960, a developer subdivided a large parcel of land. So that garbage trucks could provide service to the first unit, his survey included a narrow strip of land for their use. A temporary easement given to the City of Phoenix stated that the land would revert to a yet un-subdivided parcel when it was subdivided. However, the rest of the land was never subdivided.
Instead, someone built a large estate on it. The original sub divider continued to pay taxes of about $50 per year on the strip until the late 1990s. At some point, the parcel was given a street address:1219 West Golden Lane. Then, the assessors’ office increased the tax from $50 to $550. The person who had been paying the $50 tax quit paying, and the property appeared on the tax lien auction list. Because it has a street address, it appears to be a buildable lot in a good neighborhood. It is actually a completely worthless piece of alley still used by garbage trucks. As of 2014, the county has collected over $20,000 at tax lien auctions. Every investor has lost 100% of their money.