A Phoenix-based company which specializes in foreclosing on property tax liens is not untitled to attorney’s fees and court costs in its failed attempt to obtain a deed to a Sierra Vista property owned by a state prison inmate, a judge has ruled.
CHUAR, LLC obtained tax liens (also known as certificates of purchase) on a home owned by Thomas Kershner at 313 West Busby Drive in Sierra Vista for several years of unpaid property taxes dating back to 2013. Thomas Kershner died at home in April 2021.
Then in August 2021, the company mailed a Notice of Intent to foreclose on the liens. The owner’s copy of the notice was addressed to 313 Busby Drive, a fact which recently caused the company to lose out on more than $5,900 in attorney’s fees and court costs it incurred during the foreclosure process.
Tax liens for delinquent property taxes are periodically auctioned by each county.
The property owner or owner’s agent has certain rights to redeem the tax lien by repaying the tax amount plus interest to the county treasurer, who then pays off the lien holder.
Redemption can occur any time before a notice of intent for foreclosure is issued and for a short period after formal foreclosure is initiated in court. If redemption does not occur, a judge can award the lien holder a deed for the property.
This wipes out the prior owner’s interest in the property even if the property’s value is considerably greater than the value of any tax lien.
Public records show Thomas Kershner’s only known heir, Kenneth Kershner, has been incarcerated with the Arizona Department of Corrections since 2019 and is not set for release until 2024.
After CHUAR initiated the legal process to foreclose someone who learned of the effort notified Kenneth Kershner in prison. A short time later the Cochise County Treasurer received the funds to redeem the tax lien certificates with interest and pay off CHUAR’s claim to the property.
CHUAR, however, was still entitled under Arizona law to seek recovery of its attorney’s fees and court costs because the redemption occurred after the foreclosure lawsuit was filed.
On Jan. 14, Judge David Thorn of the Cochise County Superior Court awarded the company more than $5,900 on top of what was paid to redeem the tax liens. But last month the judge reversed himself after Kenneth Kershner challenged the award.
In an Aug. 16 court order, Thorn cites CHUAR’s handling of the foreclosure effort. He noted the legal address for the Kershner property was 313 West Busby Drive as listed on Thomas Kershner’s death certificate. There is also a 313 East Busby Drive in Sierra Vista.
Further, the person against whom recovery of legal expenses is sought -in this case Kenneth Kershner- must be personally served a copy of the legal action or served by publication via a local newspaper.
“(Kenneth) Kershner was neither personally served nor did he have access to the publication because he was in prison,” Thorn noted. “It is ordered vacating the Judgment awarding attorney’s fees and costs.”
Attorneys for CHUAR had until Sept. 16 to appeal Thorn’s reversal order, which they did not.