If your property taxes are delinquent, you could lose your property to tax lien foreclosure. This means that you will lose everything that you have already invested in your house. Here are some things to know about tax lien lawsuits in Scottsdale and what you can do to defend yourself against a tax lien lawsuit.
What is a Property Tax Lien?
A property tax lien is a strategy where an involuntary lien is placed on your property to try to force payment for outstanding debt. It is a legal claim against your property by a tax collecting organization, such as your municipal property tax office or the IRS, to ensure that it receives a specific amount of money when the property is sold.
In the case of delinquent property taxes on certain types of properties, the tax collection agency can force a sale to cover unpaid taxes. This can often occur in an auction, where the property goes to the highest bidder willing to take over the delinquent tax payments on your behalf. They then will become the legal property owner for properties without mortgages. (The process can be more complicated on mortgaged properties, as the financing company has a responsibility to ensure property taxes are paid, usually through an escrow account).
Building a Strong Offense
The best way to defend yourself against a tax lien lawsuit is to build a strong offense with a skilled Scottsdale tax lien lawyer. Ideally, your lawyer will have a strong understanding of local, state, and federal laws that apply to asset protection and management. The sooner that you start building an offense, the better because it allows your lawyer ample time to identify and execute strategies to stop the tax lien from impacting your life.
Tax lien lawsuits are complex. Every situation is different and will require a different approach. For instance, if you face bankruptcy or substantial medical debt, your lawyer might recommend a different strategy than if something else caused the delinquent tax payments.
Identifying Defects in Lien Creation
One defense against a tax lien lawsuit is to identify defects within the lien itself. If the lien doesn’t meet certain laws and standards, it can be thrown out. Some common defects found within tax liens include liens that are:
● Filed before or after time limitations
● Missing information
● Non-compliance with regulations
Exempt Assets
When the property is considered exempt, it cannot be seized by a creditor for debt repayment. Debtors can keep certain pieces of the property so that they are not left destitute. In the case of bankruptcy, there is an automatic stay that applies to liens and repossessions. In the state of Arizona, residents that have lived in the state for at least 180 days and that file bankruptcy locally can claim exemptions that protect their property. It is critical that exemptions are applied as soon as possible to be covered in this way.
In addition, you can exempt up to $150,000 in home equity in Arizona during bankruptcy. If you haven’t had your mortgage very long, it is unlikely that you have more than that amount in equity already in your home. Your tax lien lawyer can potentially use this exemption to protect your property.
High Cost of Repairs
What condition is your property in? Property in disrepair may not have enough value for a tax lien to be placed on it. Your tax lien lawyer could try to argue that the high cost of repairs and the poor state of the home makes it unfavorable for a tax lien because the party that issues the lien won’t be able to recover the amount they need to from the sale of the property.
As you discuss this strategy with your lawyer, you can discuss the factors that impacted the current state of the home. Were there job losses or natural disasters? Did the pipes burst and flood the home, causing significant water damage? The more information that you can provide your lawyer, the clearer picture they’ll have about the strategies that might be the most effective in getting a positive outcome for your case.
Contact a Scottsdale Tax Lien Attorney
It is possible to build a strong defense against a tax lien lawsuit. Contact Attorney Mark E. Hall at (480) 495-6963 or fill out the online contact form to schedule a consultation with a Scottsdale tax lien lawyer. Mark E. Hall has experience representing plaintiffs and defendants in tax lien suits.
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