Alabama Tax Deed Purchase Help

9 Replies

I am in negotiation with someone who is selling a Tax Deed from 2010.  They will be selling with a quit claim deed.

The property is vacant and has been so for a couple of years according to neighbors and condition of property is not livable.  It will need a total rehab.

I know I will have to get a file a quiet title lawsuit to be able to sell and/or refinance once rehabbed. 

We have verbally agreed on a price but I am not signing a contract with them until I understand the process and the risk involved.

Any tips, advice, & guidance on how I can do my due diligence so that I do not put myself in a bad situation.  Thank you so much.

Do you want the deed or the property?

I presume you want the property and the benefits that come with it (possession, rent, cash flow, appreciation, tax befits, equity and title). Did I miss any others?

I would align myself with one if the major title insurance companies and ask your T.O. what s/he wants to oasis marketable title post sale in Alabama.

There are a couple other BP posters who are experienced, successful Alabama Tax Sale investors. Hopefully they'll chime in.

@Rick H. I want the property so I can rehab and flip it.  Second exit strategy is to rent if it won't sell for some odd reason.  I do want all the benefits that come with it if I have to hold on to it long term.

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@Anastasia Jordan

Tax deeds are generally transferable so long as everyone knows the rights that are actually being transferred.  Of course, state rules apply and you need to know what those are for the specific property.  A transfer does not negate the redemption rights and rules and thus it may be possible but not proftble to transfer.

@Donnie M.

Be sure you understand the redemption risks and include a lien check in your due diligence.  City, sewer and fire liens can add up and may not have been cleared by the tax deed or may have accrued after that.  Also you should check to make sure taxes since 2010 have been paid.

PM me if you want to discuss specifics for this property.

You need to understand the risks of a void tax sale, and the risks of judicial redemption rights. I have some blog posts on these two things. Please review them. Even though your seller has a tax deed, the former owner might still have redemption rights.  Those are called judicial redemption rights. Lienholders might also have redemption rights.  PM me if you want details.

I am not familiar with the Tax Deed laws in Alabama yet, but if the tax deed is being sold with a quit claim deed, that means the redemption period has expired. A quit claim deed is only issued after the redemption has expired and the investor follows all of the procedures to obtain a title. Verify the quit claim deed as this is the final step in the possession process after the redemption period runs out. Also, you should have a title company complete a title search for you, in such, you can obtain title insurance and later sell it with a warranty deed.

@Donnie McGriff I would start with a call to Tax Title Services and enquire about their cost/services.  I also work  with another Title company and Alabama law firm that specializes in RE properties that can walk you through the process.  What's concerning about this is the previous owner; more importantly the Bank or Mortgage holder can possibly step up and request ownership.  FYI - Alabama has a quirky law whereby it's a 3 yr + 3 yr redemption process as noted by Denise.  Which begs the question, did the Tax Deed owner notify ALL parties?  Obviously not.  Roy also brings up some very important points of checking with the city about any specific liens.  Based on experience, I do know that certain city's have been sending out the inspection crews and will issue at citation for any graffiti, trash, etc.  I've been fortunate to contact the current owner and have them rectify the citation.

after the expiration of the administrative period or first 3 years,  can i negotiate my own price for my DEED to a redeemer who holds a mortgage during the JUDICIAL 3 years or am I limited to the 12 percent plus expenses?

By law your limited to the 12%. But if a mortgage company really want to redeem you can add in others expensive to cost also. The cost to litigate and take you to court to force you to sign redemption is MORE then if they pony up and pay a little more then the 12%. Add in your time and inconvenience spent.