After redemption period on a tax lien what paperwork do they issue?

Question

I have called several title companies and attorneys and none of them can lead me in the correct direction. After the 3 year period to redeem property, what am I to do as the tax payer? Am I just issued another certificate that I paid this years taxes or will I have rights over the property? Should I foreclose immediately or am I supposed to wait the 3 years post? Am I issued some sort of deed after 3 years of paying? This really turned into a money gimmick it seems.

Denise Evans · Answer

Under the tax lien system, current law, the investor may file a foreclosure lawsuit when its been at least 3 years since the first auction but no more than 10 years. If nobody redeems, the judge forecloses the lien, quiets title, and orders the clerk to issue a deed to the investor.

Because of a May 2024 statute amendment, anyone who has not received a final order of judicial foreclosure by 10/1/24 will be under the new rules.

The new rules are the earliest you can foreclose your liens is 4 years after the first auction. If nobody redeems in the judicial foreclosure lawsuit, BUT somebody with redemption rights demands a public auction, then the judge will order an auction on the courthouse steps.  Investor makes the opening bid for the total owed to it--taxes, interest, legal expenses and auction expenses. Bidding goes up from there. The investor can bid also. Winning bid gets the property, the quiet title order and the clerk's deed. First money goes to the investor for its taxes, interest, etc. Next money is paid into court for the judge to decide how it should be distributed among the people claiming to have redemption rights.

Denise Evans · Answer

@Justin Mason, the job of the guardian ad litem is to protect the interests of the unknown people who cannot be found, served with lawsuit papers, and defend their own interests.  If there are no unknown (heirs for example) then there is usually nothing for the GAL to do.  Sometimes the court will appoint a GAL even if there do not seem to be any unknown parties. In that case, the GAL simply reports to the court that is has reviewed the title work and done some preliminary research and agrees there are no unknowns.  In such a case, if nobody demands an auction, the GAL will not demand one, either. The investor will get the deed and the quiet title order with no auction.

If, however, there are unknowns, the GAL will have to demand an auction. That is because the  unknown parties could have done it, if they'd only known about the lawsuit. So, the GAL will have to do it for them. Then there will be an action.

Justin Mason · Answer

@Denise Evans Thank you for your reply!

If no-one responds to the foreclosure suit, what are the chances a court would assign a guardian ad litem for the case?

In my opinion and I'm not a judge, but if an individual has paid taxes on a property for 4 years, that's sufficient time for anybody to redeem a property, I would see no need for a guardian ad litem.

Denise Evans · Answer

@Justin Mason, the new law applies to ANY tax lien certificate foreclosures, no matter when the auction took place. That is why the new law changed the holding period from 3 years to 4 years, to give people who were just about ready to be sued time to take advantage of the law change.

Someone with redemption rights does not have to hire an attorney.  Technically, an LLC or corporation with redemption rights would have to hire an attorney to enter an appearance and demand the auction, but that is very inexpensive. A natural person can represent themselves in court, and make the demand without having to hire an attorney.

You are correct, if auction is not demanded then the deed will be issued and title quieted. That's why I recommend investors find owners or their heirs if the property seems to be abandoned and buy quitclaim deeds from them if you can get them cheaply. It gets rid of potential auction-demand troublemakers and it gives you the right to immediate possession. Even if you buy out only ONE of twelve or more heirs, you are now a co-owner and entitled to possession.

Justin Mason · Answer

@Denise Evans so is the new amendment relevant to any tax liens that have not be eligible for foreclosure as of 10/1/2024 or liens purchases after this date?

And just to clarify, the new law gives someone with redemption rights, the opportunity to demand the judge hold a public auction, but would require them to hire legal counsel to do this?

If auction is not demanded and no response is made from anybody with redemption rights, the deed will be issued and title quieted correct?

And this moved the foreclosure from 3 years of the date of the sale to 4 years now? Do you think eventually this time will be shortened?

Thank you for all your help!

Tom Yung · Answer

@Jocelyn Bernstein

Assuming you are in Al.

@Denise Evans is the expert for Alabama tax lien on BP.

After redemption period on a tax lien what paperwork do they issue?

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