Tax Deed Sale in Alabama

36 Replies

Hi everyone!

I'm new to Bigger Pockets & have been looking into investing in tax deed properties, so I thought this was a good place to ask my question.

I have 2 properties that I am interested in now in Jefferson County, Alabama. One is occupied- taxes have not been paid on it in over 4 years. I believe it would be a deed sale- 3 years is the redemption period and since no one has purchased a lien on it... If I paid the 4 years of taxes, would it become mine as soon as the title arrived in the mail? If so, how would I go about evicting the people living there currently?

The other property I am interested in is a condo. I plan on doing legwork for it today (at least looking to see if it's occupied, which it more than like is- it is in a very desirable area). Taxes haven't been paid on it for 4 years, just like the other property. Since it's a condo, I was interested to know how soon I would have to take over HOA fees? Is there a way to find out if HOA fees are paid up currently? I've never worked with a condo before, but would love to snatch this one up.

Tips from your personal experience? I do intend on speaking with a real estate lawyer soon. Any recommendations?

It's a complicated matter, i've done two of these so far in Jefferson County. For owner occupied property you have to eject them and then adverse posses property for 3 years to then have the chance to do a quiet title lawsuit.

For HOA property, you just call the HOA and ask them how much it would be to make them current.

This is what you need to buy and read...

http://www.deniselevans.com/Alabama-Tax-Sales.html

I would be very cautious with these, i learned the hard way that in the end you will probably need a lawyer.

@Rebecca Wadsworth @Morgan Smith ....I'm interested in tax deeds as well. There's limited information, but many opportunities. I went to a sale in May several years ago, but didn't purchase. Lots of heavy hitters buying up certificates....

Morgan do you know an attorney who handles quiet title?

To follow up on this...

I spoke with my lawyer. Essentially, I can purchase these for the price for back taxes. From there, a quiet title lawsuit would be necessary. Should there be a contest (which, according to my lawyer, would be unlikely), I would get my money back + 12%.

As far as tenants, I can simply ride their lease out & not renew it once it ends. I wouldn't mind either one of these turning into an almost immediate cash flow property.

@Rolanda Eldridge , my lawyer does quiet title. If you need a lawyer, let me know. :)

In Alabama, the three year right of redemption does not start "ticking down" until you take possession. If the property is occupied, and they don't leave voluntarily, you have to send written notice and then wait 6 months before you can file the eviction suit.

Regarding condos, the personal property in the condo does not pass with the tax sale. If it was furnished, you are not entitled to use the furnishings. This means that if the owner redeems, and wants a credit for the reasonable rental value of the furniture, you have to give that. Or, if the owner demands their furniture but without redeeming. Nobody ever asks for that, but you need to know when you are on weak ground in an argument, just in case it happens.  Never antagonize the redeeming owner into the arms of a lawyer if you are on weak ground.

I would be interested in your attorney that you use ... 

So if I am correct once I receive the tax certificate I can begin proceedings with a lawyer to gain possession of the property via quiet title and so on? Also the owner has 3 years from the date of possession of the property to redeem? 

I am interested in buying a property FROM someone who bought it as a tax deed. He said it would need to be conveyed via quitclaim deed. It's been vacant since he bought it, so does that mean the three years from date of possession wouldn't start ticking until I (or a tenant) occupy it?

@Denise Evans after @Rebecca Wadsworth receives the tax Deed, would the Quiet title action satisfy any noticing to the creditors, lien holders, etc?   I have looked into Tax Title services and that's something they take want you to pay them to handle. 

Joe

Tax Title Services does a good job for people who do not want to fool with the details of ordering a title commitment from a local closing company and then sending out notices to lien holders.  If you are okay with DIY, it is significantly cheaper to do it yourself.  I'm okay with DIY legal stuff and electronics, but would NEVER DIY even simple electricity or plumbing.  People tell me it's easy and nothing can go wrong, but I don't believe them. Each person is different.

The quiet title action must name all known or identifiable claimants to the property as parties Defendant. The lawsuit begins with a Verified Complaint, in which the plaintiff makes some version of the following statements, under oath:  

"Plaintiff has made diligent inquiry and has not been able to ascertain any other person or persons making claim to or interest in the said lands."

"The Plaintiff does not know of any person who claims any interest in the above described lands or any part thereof, or lien thereon, or encumbrance thereon, except as alleged in this Complaint."

If your lawsuit is an "in rem" quiet title action, then you also name the real estate itself as a party defendant.  In that case, the Circuit Clerk publishes notice of the lawsuit in a local newspaper for three consecutive weeks. That technically and legally puts any unknown defendants on notice that they must enter an appearance in the lawsuit and present evidence as to their claims to the property.  If they do not, then they are barred from complaining in the future. The quiet title order affects them, as well as the named defendants.  (Kind of like the wedding line, "Speak now or forever hold your peace.") Unknown defendants might be the heirs of a certain person, but you don't know the names of the heirs or where they live.  Other unknown defendants might be the shareholders of a defunct and dissolved corporation. Or, it might be people with liens that did not show up in the title search because of bad indexing or something.  The court appoints a Guardian ad Litem to represent the interests of the unknowns, and that satisfies constitutional due process requirements.

@Denise Evans In CA, we start with a Litigation Guarantee, which is similar to a Trustee's Sale Guarantee.

Is that similar to what is used in Alabama? 

I met with the owner of Tax Title Services at his office some  years ago, as they are relatively close to my office. We know many of the same people and run in the same circles, since I've been in the forced sale property game nearly 40 years.

Interesting that you file QTA In Rem, as my cases typically are barring people from subsequent claims. 

PM me sometime and we'll compare notes and statutes.

There are two types of quiet title in Alabama. In personam (which bars only the people named in the complaint) and in rem (which bars everyone, forever, whether known or unknown.)  In order to file the in rem quiet title after a tax sale, you must have three years of active possession counting from the date you were entitled to demand a tax deed, going forward.  In researching Litigation Guarantee in California, it appears that it is not necessary in Alabama, because of the availability of the in rem proceeding in Alabama.  We don't need a company to track down all possible claimants to a property. We simply do our own good faith due diligence, and then file the in rem proceeding and name whoever we've been able to find.

@Denise Evans If I am receiving a tax deed instead of a tax certificate (the property was sold at tax sale in 2012), how long do I have to wait before I can quiet the title? I would like to be able to pull out the equity of the property for repairs.

Three years after the tax deed at the earliest to file an in rem quiet title, 3 years after you take exclusive possession, if that started on some date after the tax deed date.

@Denise Evans

So when I receive the tax deed, what kind of title will I have? Will my name be on the title? I am sure my banker will want to see that. He says that he can give me a loan on the tax property but I just want to make sure and tell him everything upfront. This is a multi unit property, did you know someone who just did one of these deals? I sure would love to speak or message him. 

You will not have a clear title until you perform that quiet title action that Denise references above.   Best of luck

Joe

@Denise Evans

 I see from the posts it is important to take possession of the property to get the clock ticking. What is considered possession say for vacant lots or land that you are buying the tax certificate or tax deed on? Signs, etc... 

can I sell a house that I have a tax deed on with out clear title? 

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can I sale a tax deed with out doing a quiet title? 

You can sell a tax deed without doing a quiet title, but you cannot get top dollar and you run the risk of the buyer suing you for fraud if the taxpayer redeems. You should probably disclose that there might be outstanding redemption rights. No banker will loan you money on real estate without title insurance. The FDIC would go ballistic if that showed up in an audit, and every banker knows it. Very few title companies will write title insurance without a quiet title lawsuit. At one time I knew a title company who would do that, but no longer.

if there are no other clouds on your title after a title search is there still a need to quiet title action? 

Hello Everyone, I am new to the forum. I am also currently researching information on Tax sale purchases. I attended my first tax sale this year and purchased 1 piece of property valued at $50K for just over $200.00. Unfortunately the property tax was paid during the grace period so my refund was the amount actually paid during the tax sale. Hello Denise Evans. Can you tell me if property that was sold to the state more than 3 years ago, if I purchase it from the state am I still obligated to wait 3 years before proceeding with a quiet title? Also, if land that is available from the states website for purchase was sold to the state over 9 years ago, should i still be worried about liens on the property or does the tax sale and years overshadow any liens? Can you explain how liens work for tax sale purchases? Is the buyer obligated to pay any liens? Thanks in advance Eric.

@Denise Evans I have purchased one property from the tax delinquent property online list, and I have already sent payment for 3 more.  3 of the properties are land only with no structure.  1 of the properties has a historical home on it which is currently occupied.  

Once my Certificate of Sale comes in, what are my options as far as having the current residents vacate the property so that I can take full/exclusive possession?  Also does assuming "full/exclusive possession" require me to physically live in the residence more than 50% of the time?

Thanks in Advance.

Stephanie

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