Alabama Tax Deed Use Question

8 Replies

Are you allowed to rent Alabama tax deed properties? What about tax certificates? Assuming that would note be wise just incase the original owners redeem the property within their 3 year statute? Tax deeds on the other hand could you rent them while in the process to quiet title? Enterprise, AL 

@Jonathan Hart , you are entitled to possession with an Alabama tax certificate or a deed. As a result, you are entitled to rent them out.  But, you need a 30 day cancellation clause in your lease in case the property is redeemed. Even with a tax deed the former owner might be able to redeem.   The real issue is not whether you are entitled to rent the property, but did you take possession lawfully and peaceably. Please read my other forum posts on this topic.  Below are some blog posts I published, also.

Alabama tax sale redemption rights:

Peaceable possession:

@Denise Evans Hello! I don't know where I would be in my research in Alabama tax sales if it weren't for your blog and bigger pockets replies in these forums.So, thank you.

I have a question when it comes to purchasing tax certificates from previous owners through "assignment" How do you avoid running into an issue when purchasing an assignment of a tax lien certificate and not recouping my  intial investment if the actual owner of the property redeems it. We all know this tax certificate "wholesalers" are adding on there fees when I purchase...would I only receive back in a redemption what taxes and SUB taxes the original purchaser of the certificate paid? How do I even make sure that the SUB taxes were paid and/or how do I find out the original cost of tax certificate if the current tax purchaser doesn't want to disclose the information before purchase. What are your thoughts on buying assignments of tax certificates?

@Shirea Carroll , I would be very hesitant to buy certificates from the wholesalers. First, you can't ever be sure the property is abandoned, rather than merely vacant and in bad shape. If merely vacant and in bad shape, you will have to give written notice to surrender possession, wait six months, and then file your ejectment lawsuit. That will cost around $1,000.  You cannot make any improvements until then. If they redeem, they will pay only the taxes and interest, not any add-on fees you had to pay. PLUS, anyone buying now from ADOR is quoted a price that includes the October 1, 2020 taxes. They are not even due yet!  You might not be paid for that portion.  YOu can contact the county and ask what the redemption price tag is, or many counties have that on their tax assessor websites. That redemption price will not include the October 1, 2020 taxes, so you won't know exactly how much the investor paid, but you can get pretty close.  You can usually estimate how much the coming year's taxes are going to be.

@Denise Evans thank you, thank you. In this case, the tax certificate being sold/assigned has a redemption date May 2022, has paying tenants, has been newly remodeled (not sure by owner or lien holder), and according to the current purchaser of the tax certificate, the owner has been notified to surrender possession twice with no response (how do I verify that the notices have been sent?).

The problem is what looks like a sweet deal is possibly suspect because the the person selling the certificate will not disclose any information that feels pertinent, but claims ejectment can start immediately - is that true? Like I don't know the original amount of the tax certificate purchase (thanks for telling me I can look that up and I will), how much rent the current tenant is paying so I can decide if I need to evict or not (can I even do evict as certificate owner?) and if the notices have been sent when the property is transferred/assigned to me does the six months I have to wait start from the date she sent the out the notice to surrender possession or will I have to send them out in my name and restart the 6 month wait?

Lastly Denise if I were to proceed is an attorney needed for the initial transfer and assignment. I know I'll need legal assistance for the lawsuits, but should I have lawyer process the tax certificate transfer which is much simpler than a normal house closing, do you know how much it averages if it is needed?

Hi @Shirea Carroll . I wholesale tax liens frequently in Alabama, and keep several as buy and holds. To answer your question, you do not have to wait another 6 months to file ejectment. You can file ejectment 6 months after the delinquent tax payer has been given proper notice. You will probably want to get proof from the wholesaler as to when and how the notice went out.

I would have attorney @Gregory Stanley handle your escrow. He is with Stanley and Associates. You can search and find them on Facebook. I believe he usually charges $250.00 for escrow. He will verify that the wholesaler has an interest to sell you. Greg is an investor himself and is also an expert on any issues that may arise out of tax sales. I have several tax deeds for sale if you are interested.

Thank you @Johnathan Williams I think I actually began correspondence with someone at Stanley and Associates as I started my search for the right attorney for my team feels like you mentioning @Gregory Stanley feels like just the confirmation I needed! 

Is there a way to check with county if proper notice was given, is that something that is recorded with county and able to be researched?

Will PM you regarding the tax deeds.

@Shirea Carroll most folks mail a certified letter and also post the notice on the property and take a picture of the notice with the property in the background. I like tax deeds because you can file for ejectment immediately without. In my experience ejectment usually results in settling with the delinquent tax payer. Most of the time I don't get the property.

@Shirea Carroll , it is critically important to find out who made the improvements and who the tenants are paying.  If the taxpayer/owner, then there is practically 0% chance you will be able to eject successfully. The owner will counterclaim and redeem, and you will have lost the premium above redemption amount that you paid to acquire the property.

If someone is not willing to disclose information relevant to making a buying decision, then turn and run away from them as fast as you can!