Should I making repairs?

Question

Honest Input,

There is this property I am interested in buying as a tax lien. With me being new to the tax lien property process, I am hesitant.

The property is vacant. I have visited the property and can see where windows are busted and it looks as if squatters may have lived there once. The yard has no signs of upkeep and it is littered with trash.

My concern would be the rehabbing part. Say I go ahead and buy the lien, what are my options as far as making repairs and moving a tenant in? I feel I can have needed repairs made to make the property nice and ready to place a tenant in the property within 3 months.

Should I pursue this. I am in Alabama if this helps. Would I be wasting money?

Tai Bhattad · Answer

@Sam Shinn things to consider before buying from the state:

1. ensure it’s not on the blight list (based on your description) because the city could well be on their way to DEMO it. How do you find out? Call the city. Unless you want a vacant lot at city cost, i.e. a municipal bill.
(I had the pleasure of talking them out of not demo’ing a Structure and taking it off their list)
2. If you are purchasing a cert: send notice even it ‘appears’ vacant/ abandoned. And then file ejectment after 6 months to take possession/ preservation improvements.
*** a few people around the block argue about assumed vacancy and hence proceed without filing ejectment and proceed to take possession (with improvements) and then wait it out for the admin redemption period to end and proceed with quiet title action.

Denise speaks on the former hence I follow her guidance. There’s a nice post she did on AL tax deeds and certs. https://www.biggerpockets.com/...

She also may weigh in with more clarification as needed.

Denise Evans · Answer

@Sam Shinn, you must pass a threshold question of whether the property is abandoned or not. Abandoned means the owner has communicated an intention to never redeem and never do anything with the property.  Find the owner and talk to him/her.

If you find them and the indicate the property is not abandoned, you will have to file an ejectment lawsuit and gain lawful possession before you will be paid for any improvements.  If you have lawsuit possession and if the property contains a residential structure, any redeeming party will have to pay you for the value of preservation improvements, which is repairs and a few other things. If the property is located in an official urban renewal or urban redevelopment district, then you must be paid for anything that increases the value, for any kind of property.

If you cannot find the former owner (or heirs, if he/she is dead) you should still file an ejectment lawsuit. It is tricky because you'll have to get service by publication, and there is no specific rule allowing that. You'll need to make sure you hire an attorney who is familiar with the very specialized law having to do with Alabama tax sales.

Please do not take advice from anyone from any other state, because Alabama tax sale laws is completely unique and not at all intuitive and absolutely cannot be learned simply by reading the statutes. The statues have been interpreted by the courts in ways that greatly change what the original words seem to say.

Ned Carey · Answer

@Sam Shinn If you are buying a tax lien NO you should not do any repairs because you do not own it. You only own it after you foreclose on the property.

However if you are buying in AL I believe that is a tax deed state. The rules will be different in a tax deed state.

Sam Shinn · Answer

@Tai Bhattad yes Mobile

Sam Shinn · Answer

@Tai Bhattad Thank you!

Sam Shinn · Answer

@Jermaine Chad Ingram thank you for the suggestion on reading the law. Clarification is sometimes still needed from experts concerning land rights.

Tai Bhattad · Answer

@Sam Shinn I assumed city of Mobile for my post above based on your location regarding blight list

Jermaine Chad Ingram · Answer

@Sam Shinn have you read the law, in Alabama and in your county, on tax liens and tax deeds?  All your answers are there. Then you should have the info you need and you’ll be able to teach us.

I’ve read Florida’s statutes and the rules in 4 counties as rules vary by county. I don’t consider myself an expert but I can understand the process and I have a reference point to verify any word-of-mouth advice.

Ned Carey · Answer

@Sam Shinn the problem is all states have different laws that can vary tremendously. In most tax lien states, the "right of redemption continues until the day a foreclosure is final. This means you start a foreclosure before the right of redemption is over. However there other timelines you need to meet.

But I don't think AL sells tax liens I believe they sell tax deeds. That is another set of rules altogether.

Sam Shinn · Answer

@Ned Carey thank you for responding! By foreclose do you mean after the redemption period expires?

Should I making repairs?

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