Pub. 6 2016 Issue 1

Zia Trust, Inc. The Advisors’ Trust Company ® 11811 North Tatum Boulevard Suite #1062 Paradise Village Office Park Just north of East Shea Boulevard Announcing the opening of our new office. We are honored to serve Arizona families! • We work alongside your client’s investment advisor • Providing independent trust services working alongside community bankers www.ziatrust.com 602.633.7999 CPs can be bought, sold and as- signed. The person who successfully bid for the CP at the tax sale may thus not be the same person foreclosing the CP three years later. Until a final judgment is entered in the foreclosure action, the taxes can still be redeemed. But the price goes up. After the filing of the foreclosure action, the reasonable attorneys’ fees and costs must also be paid in order to redeem the property and dismiss the action. Once the CP holder obtains a judg- ment in the foreclosure action, it applies to the County Treasurer for a Trea- surer’s Deed. It is this Deed which then transfers the title to the property to the grantee of the Deed. As noted, the taxes and the tax lien, including the CP, are senior to the lender’s deed of trust lien on the prop- erty securing its loan. Completing the foreclosure and obtaining judgment and a Treasurer’s Deed will extinguish the deed of trust, turning the lender’s loan from secured to unsecured. As statutorily required, prior to filing the foreclosure action the CP holder must send a notice letter to the owner of the property and the County Treasurer informing of the imminence of the fore- closure action. However, the CP holder is not required to give notice to the lender. If the lender has not previously addressed the unpaid taxes, it may learn of the foreclosure for the first time only when it is served with the Complaint. At that point, in addition to the taxes, interest, and penalties, there would also be due the attorneys’ fees and court costs in order to redeem and dismiss the action. A borrower’s failure to pay taxes is typically an event of default under the loan documents. Those same docu- ments almost always allow the lender to advance money under the loan in order to pay delinquent taxes. If the lender wants to protect its lien position in the property, it should advance money to pay off the delinquent taxes far before any final judgment of foreclosure. w THE CP HOLDER MUST SUCCESSFULLY PROSECUTE THE TAX LIEN FORECLOSURE ACTION, INCLUDING NAMING THE LENDER AS A DEFENDANT, AND THEN PROCEED TO JUDGMENT. 9 ISSUE 1 . 2016