Commercial Property Deed

11 Replies

@Denise Evans I bought some commercial land (there are not any structures) and received the tax deed. Are there still redemption rights on the property? Would it be feasible to put a building there and start a business?

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Could depend on the state where you are.  In Texas there would be a 6 month redemption period unless it had an agricultural exemption. However, in Texas again, there is a 2 year period that a previous owner could contest the sale if he was not notified and given a chance to pay the overdue taxes.  Even though it is difficult and you almost never see it happen, it would preclude your getting a title insurance policy for that period.  Until that was resolved, you may not want to build on it until that period has passed.

Should be easy to find in your state statutes. If a state has redemption rights, which AL does, usually all properties have a redemption period, with homesteads/occupied properties perhaps having a longer one. 

@Mellva J Patton ,

I think @Arnie Abramson gave you some great advice there.  

I have purchased tax sale properties in another state.  

There are a couple of big things to keep in mind, that I have seen with my purchases:

1. There is a redemption period.  I would not build anything that you don't want to lose during that period.  Just think about it.... If I give up a 20k piece of land because I really can't afford the $5k in back taxes, that is one thing.  

Then I see that you have built a $50k -$100k building on it..... Now I can take my truck to the title loan place or hit up my friends or start a to get the 5K plus fees and now I have my land with the building that you have kindly donated.

2.  There can be clouds on the title.  This is something I ran into when I went to sell one of my first tax sale purchases.  There were liens on the property that were probably about 5x or 10x the value of the land. 

I ended up selling that with a quitclaim to a developer who was going to have to pay a few thousand dollars to get the clouds off the title.  

@Mellva J Patton , there are extended redemption rights in Alabama that are tied to whether or not the investor has taken and held exclusive possession of the property. Whenever that happens, even if it is after the tax deed date, the taxpayer has 3 years from that date to redeeem. Since you bought from the State of Alabama, nobody has ever gone into possession. You will have to burn off 3 years of possession before the redemption rights expire. If you do not gain sole and exclusive possession within three years of the tax deed (either through exclusive possession and use of the property by your or a tenant, or by an order in your favor in an ejectment lawsuit) then all rights will return to the taxpayer, who will not have to pay you anything at all. Not taxes, nor interest, not anything.  Unless the property is in an urban renewal or urban redevelopment district, you will not be compensated for any repairs or improvements you make if there is a redemption. Can you track down the former owner and get a quitclaim deed from them? That is the best thing to do. Usually they agree to that after a tax deed has been issued, because they do not know about the extended redemption rights.

@ Denise Evans thank you very much....there are others holding classes giving inaccurate information....I recalled you saying something different in a post which is why I asked you the question.....again thank you....

@Mellva J Patton , I don't know who exactly you are referring to about classes, so my comments are very very generic. I'm not asking who it is. I don't want you to say, because then this will turn into a troll contest, which is not the purpose of BP.

Some people give classes because they THINK tax sales laws everywhere are very similar to their own, and they don't have the legal training and/or legal research skills to find out differently. So, those are honest mistakes. Without a legal education, it is hard for people to even realize how subtle some of these issues can be. It's like asking a 1st grader to explain driving a car. They think they know, but they just don't have the experience to realize how much they don't know.

That's why I'm always happy to answer questions on BP. There is far too much bad information, people can get hurt really badly, and I truly want them to know the risks and benefits of tax sale investing in Alabama. The benefits are huge, but if you don't know the risks ahead of time, it can be disastrous.

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