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Easements and Deed Restrictions in Tax Foreclosures

March 2, 2009

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No. The tax lien sale and foreclosure statutes explicitly provide that easements and certain liens for special improvement district assessments are not extinguished by the sale or foreclosure of property tax liens.
Special improvement districts are sometimes established in municipalities or in unincorporated county areas to provide local funding for local street, sidewalk, sewer/wastewater, and other projects. The wording of these protections does not make them superior to property tax liens, as in most cases the special assessment statutes state that their liens are subject to the general liens for taxes. Instead, general tax liens and the special assessment liens identified in the tax lien statutes should be seen as having parity – equal priority – on the property, so that the foreclosure of one is subject to the other (i.e., not extinguishing it).

While it might be argued that deed restrictions, or newer subdivision CC&R’s fit into the general idea of easements as burdens on the property, the Arizona Supreme Court in 1947 established a case law protection for deed restictions. The Court wrote: “It would seem that a most inequitable solution would arise if a purchaser at a tax sale of a lot in a highly restricted area could claim that the lot had been relieved of all building and use restrictions to the detriment of his neighbors, the state, and municipalities, through the lessening of valuation for tax purposes.”

ARS § ,
ARS §§ ,
Allied American Investment Co. v. Pettit, 65 Ariz. 283, 179 P.2d 437 (1947).

 

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