How to Buy Over-the-Counter Tax Liens in Arizona

To buy over-the-counter tax liens in Arizona, you open an investor account with the county treasurer where the property is located, pick parcels from that county’s list of liens left unsold at the annual February auction, and pay the full delinquent balance in certified funds. Because no one bid these certificates down at auction, they carry the statutory maximum interest rate of 16 percent per year.¹

What an OTC Lien Actually Is

Every February, Arizona counties auction tax lien certificates for properties with unpaid taxes. Bidders compete by accepting lower interest rates, sometimes into single digits. Certificates that draw no bids become state-held liens and land on the treasurer’s over-the-counter list, available for direct purchase for the rest of the year.

A certificate represents the full amount of delinquent taxes, interest, penalties, and fees on one parcel.² You step into the county’s position as lienholder. If the owner later pays off the debt (redemption), you get your principal back plus 16 percent annual interest. If the owner never pays, you can eventually foreclose and pursue the property itself.

These liens went unsold for a reason. The parcels tend to be vacant desert lots, landlocked slivers, or properties with title problems that scared off auction bidders. The guaranteed 16 percent rate is real, but whether you collect depends on redemption or on whether the property is worth foreclosing on.

Register With the County Treasurer

Before buying anything, set up an investor account with the treasurer’s office in the county where the parcel sits. Registration involves an investor application and a federal W-9 so the county can report interest income to the IRS under your taxpayer identification number.³

Payment rules are strict. Most counties accept only certified funds — cashier’s checks, money orders, or cash — and payment is due when you purchase.³ Maricopa and Pima have online portals, but accepted payment methods and processing timelines vary from county to county. Call the treasurer before you show up with a personal check.

Research the Parcel Before You Commit

This is where OTC investors either protect themselves or lock in a loss. Assume something about each parcel made experienced bidders walk away.

Start with the county assessor’s records. Look up the parcel number for assessed value, legal description, and location. Then pull the county recorder’s records for existing liens, mortgages, and ownership history. A parcel buried under a federal tax lien or multiple prior encumbrances is a different bet than a clean parcel where the owner simply forgot to pay.

Drive by the property or pull it up on satellite imagery. Vacant land may have contamination, dumping, or access problems the assessor’s file won’t show. On improved parcels, check whether structures are standing and habitable. A condemned building on a small lot rarely justifies the foreclosure costs you would eventually spend to take title.

Finally, compare the total delinquent amount against realistic values in the area. If the back taxes approach the property’s market value, redemption becomes unlikely and you are effectively betting on the land.

Buy From the Unsold List

OTC liens are typically available from March 1 through December 31 each year.³ Treasurers publish the unsold list on their websites, usually as a downloadable spreadsheet or searchable database showing parcel numbers, property descriptions, and amounts owed.

Once you have your list, submit the parcel numbers with certified payment to the treasurer. You pay the entire delinquent amount for each parcel — taxes, accrued interest, penalties, and fees.² The treasurer issues a certificate of purchase in your name, and the 16 percent interest clock starts. A fraction of a month counts as a full month for interest.¹

There is no bidding. It’s first-come, first-served. Parcels with actual structures or buildable land can go quickly after the list posts. Less desirable parcels sit for years.

What You Earn and When

OTC liens earn 16 percent simple interest per year, the statutory maximum.¹ That rate is locked in at purchase.

The owner can redeem the lien at any time within three years after the original sale date, and you receive your principal plus accrued interest. Even after that three-year window closes, the owner can still redeem as long as a Treasurer’s Deed has not been delivered to you.⁴ Most liens that redeem do so within the first few years, because 16 percent compounds against the owner fast.

One detail catches new investors off guard: the county deducts a non-refundable fee from each redemption payment. If the owner redeems within a few months, that fee can eat enough of the return to produce a break-even result or a small loss.

Protecting Your Position With Subsequent Taxes

Property taxes come due every year. If the owner skips the next year too, a new lien goes to the following February’s auction, and another investor could buy it. That complicates any later foreclosure.

To keep your lien position clean, you can pay the subsequent years’ delinquent taxes yourself and have the amounts added to your certificate. The same 16 percent rate applies. The ten-year deadline to foreclose on a subsequent certificate runs from the date you acquire it by assignment, not from the original purchase.⁵ Paying subsequent taxes increases your total investment and also increases what the owner must pay to redeem.

If the Owner Never Redeems

After three years without redemption, you can sue in Superior Court to foreclose the owner’s right to redeem and eventually receive a Treasurer’s Deed. The window opens at three years after the sale and closes ten years after the last day of the month in which you acquired the lien.⁶ Miss that deadline and the lien expires. The investment is gone.⁷

Required Notice Before Filing

Before filing suit, send a notice of intent by certified mail to the property owner of record and the county treasurer. The notice must go out at least 30 days before filing and no more than 180 days before. It must include the owner’s name, the parcel number, the assessor’s property description, the certificate of purchase number, and the proposed filing date. It must also tell the owner that if the property has value beyond the tax debt, they should request an excess proceeds sale.⁸

Skip the notice, or send it to the wrong address, and the court can’t enter judgment until you fix it. Sending to the address on the assessor’s records, the property’s physical address if different, and the tax bill mailing address if different from both satisfies the requirement.

The Court Action and Deed

File the foreclosure in the Superior Court of the county where the property sits, and name the county treasurer as a party.⁶ If the court finds the sale valid and the lien unredeemed, it enters a judgment foreclosing the owner’s right to redeem. Present the certified judgment to the treasurer with a $50 per-parcel fee, and the treasurer issues a Treasurer’s Deed in your name.⁹

What Foreclosure Actually Costs

The $50 deed fee is the smallest line item. Real costs include:

Attorney fees, typically several thousand dollars for a straightforward case and more if it’s contested.
Superior Court filing fees and process service for every named party.
A title search or litigation guarantee from a title company, identifying anyone with a potential interest in the property.

On a small parcel, foreclosure costs can easily exceed the value of the lien itself. Foreclosing on a $300 lien attached to a worthless lot doesn’t work when the legal process alone runs into the thousands. This is why the research step matters so much before you buy.

Title Cleanup After the Deed

A Treasurer’s Deed gives you legal ownership, but not automatically clean, marketable title. Title insurers are often reluctant to write policies on tax-foreclosed property because notice defects, unknown heirs, or unrecorded interests can surface later.

You’ll often need a separate quiet title action asking the court to confirm ownership and extinguish remaining claims. That’s more attorney fees and months of additional waiting. Without a quiet title judgment or title insurance, selling or refinancing is difficult because a buyer’s lender won’t close without insurable title. Some investors call a title company before buying the lien to gauge whether the title can eventually be insured.

Risks That Can Wipe Out the Investment

Owner Bankruptcy

If the owner files bankruptcy at any point during redemption or foreclosure, the automatic stay under federal bankruptcy law halts your ability to proceed.¹⁰ You can’t file suit, serve notice, or take collection action while the stay is in effect. Moving forward means filing a motion for relief from stay in bankruptcy court, which adds legal fees and delay.

Arizona law provides a safety valve: if a court order or applicable law prohibits bringing the action, the ten-year limitation extends by twelve months after the prohibition ends.⁵ Track the deadlines anyway.

The Ten-Year Expiration

File the foreclosure action within ten years after the last day of the month in which you acquired the lien, or the certificate expires and the lien is void.⁷ You lose principal and accrued interest with no recourse. Investors holding liens across multiple counties should keep a calendar of every expiration date.

Parcels Not Worth Pursuing

A 16 percent return on a $500 lien is $80 a year. If the owner never redeems and the parcel turns out to be an unbuildable sliver of desert, you’ve paid $500 for a certificate that isn’t worth foreclosing on. The lien sits in your portfolio earning theoretical interest, then expires.

Reporting the Interest

Interest you receive when an owner redeems is ordinary income for federal tax purposes. The county treasurer reports it on Form 1099-INT when the amount is $10 or more in a calendar year.¹¹ You must report the interest on your return whether or not you get a 1099. The threshold governs the county’s obligation to issue the form, not yours to report the income.

If you acquire property through foreclosure instead of collecting redemption, the tax picture is more complex. Fair market value at the time you receive the deed, minus your total investment (purchase price, subsequent taxes paid, and foreclosure costs), determines your gain or loss. Talk to a tax professional before your first foreclosure, because basis and holding period rules for tax-deed property aren’t intuitive.

1
Arizona Legislature. Arizona Revised Statutes 42-18053 – Interest on Delinquent Taxes; Exceptions; Waiver
2
Pima County Treasurer’s Office. Tax Lien Sale Information
3
Navajo County, AZ. Tax Lien FAQs
4
Arizona Legislature. Arizona Revised Statutes 42-18152 – When Lien May Be Fully Redeemed; Partial Payment Refund
5
Arizona Legislature. Arizona Revised Statutes 42-18201 – Action to Foreclose Right to Redeem
6
Arizona Legislature. Arizona Revised Statutes 42-18201 – Action to Foreclose Right to Redeem; Subsequent Certificates of Purchase by Assignment
7
Arizona Legislature. Arizona Revised Statutes 42-18127 – Expiration of Lien and Certificate; Notice; Applicability
8
Arizona Legislature. Arizona Revised Statutes 42-18202 – Notice
9
Arizona Legislature. Arizona Revised Statutes 42-18205 – County Treasurer’s Deed; Form
10
Office of the Law Revision Counsel. 11 U.S. Code 362 – Automatic Stay
11
Internal Revenue Service. 2026 Publication 1099 – General Instructions for Certain Information Returns