Dothan, AL · Member since 2012 · 36 posts · 2 votes
I bought a house during last years tax sale in ALABAMA that was owned by a mortgage/debt company. I took possession of it after I got the tax certificate and have paid this years taxes.I also sent the mortgage company a letter informing them their house was bought during the tax sale.
Months later I was looking at foreclosures in the area and to my Surprise , the house is going for a foreclosure auction at the courthouse in about a week. What should I do? Call the Lawyer who is handling the auction? Call my lawyer?
@Devon Daniels, if you notify the bank right now, and let them know you've made preservation improvements and the value of those improvements, they will probably postpone the foreclosure and redeem right away. Even with a foreclosure, they cannot pass good title until they redeem.
On the other side of the coin, if you wait, then eventually someone will pull a title report and will redeem, and you will earn more money due to the passage of time and the 12% per year interest.
BUT, if a third party buys the property at auction, and is then surprised to find out about the tax sale, there is a high likelihood of that buyer getting into a dispute with you about the value of the preservation improvements, with resulting litigation.
Maybe you want to hedge your bets, go to the auction, and announce that you have the tax certificate on that property and it will have to be redeemed. Then it will not be a surprise to third party bidders, and you are less likely to end up in litigation. If you do that, be prepared to answer questions about what it will cost to redeem the NEXT DAY, and what the daily interest accrual. Be sure to remember that it's not just the value of your preservation improvements, but also 12% per annum interest on that number, from date of completion.
Remember, it is the VALUE of the repairs, not the cost. There is a mandatory binding arbitration process in Alabama related to preservation improvements. If you miss a deadline, or don't do something in exactly the right way, you could forfeit the right to be paid anything at all. The time limits are VERY short. Please read my BP blog post on this topic HERE.
Suggest locating the the owner of Record (i.e. person being foreclosed on) and giving that information to your Lawyer. An Alabama Title Attorney will know what to do from there.
@Devon Daniels, if you notify the bank right now, and let them know you've made preservation improvements and the value of those improvements, they will probably postpone the foreclosure and redeem right away. Even with a foreclosure, they cannot pass good title until they redeem.
On the other side of the coin, if you wait, then eventually someone will pull a title report and will redeem, and you will earn more money due to the passage of time and the 12% per year interest.
BUT, if a third party buys the property at auction, and is then surprised to find out about the tax sale, there is a high likelihood of that buyer getting into a dispute with you about the value of the preservation improvements, with resulting litigation.
Maybe you want to hedge your bets, go to the auction, and announce that you have the tax certificate on that property and it will have to be redeemed. Then it will not be a surprise to third party bidders, and you are less likely to end up in litigation. If you do that, be prepared to answer questions about what it will cost to redeem the NEXT DAY, and what the daily interest accrual. Be sure to remember that it's not just the value of your preservation improvements, but also 12% per annum interest on that number, from date of completion.
Remember, it is the VALUE of the repairs, not the cost. There is a mandatory binding arbitration process in Alabama related to preservation improvements. If you miss a deadline, or don't do something in exactly the right way, you could forfeit the right to be paid anything at all. The time limits are VERY short. Please read my BP blog post on this topic HERE.
I was thinking of going to the Auction , like you said, and telling everyone that I owed the property and had made preservation improvements. Are there any negatives to calling the bank and letting them know? Do they even care? I did send a letter months ago.
There is no downside to notifying the bank, although the better thing is to notify the attorney doing the foreclosure. His/her name is in the foreclosure notice. Depending on the size and location of the bank, how would you know who to call? Wells Fargo and BofA are large organizations!