Can someone please explain the Jefferson County, Alabama Tax Sale

Can someone please explain the Jefferson County, Alabama Tax Sale

Residential Real Estate Broker · Birmingham, AL · Member since 2015 · 139 posts · 43 votes

Hello BP Community,

I am blown away with an experience that is playing out right now, in regards to the tax sale that just took place in Jefferson County, Alabama. My hope is, I have been clear enough with this post that someone can  please lead me down a path of least resistance and without having to get an attorney involved. Thanks in advance.

I am really hoping there is someone with the experience and knowledge that can help.

The company I work for is attempting to purchase a property who's taxes were bought at the tax sale. This is the first year the seller of the property missed paying his taxes. In attempting to help the seller, who is out of state, I went to the tax collectors office to find out what needs to be done to redeem the taxes. The ladies behind the counter could not have been more helpful They are truly above the bar. I was told the taxes were purchased for what was owed. The purchaser is actually in this chat thread. The purchaser who paid a little over $700 turned and sold the tax certificate to another person in the amount of $2,500. I sent a certified letter with the papers for them to sign, along with a self addressed stamped envelope to the individual who paid the $2,500. I received a letter today and the individual who paid $2,500 has sent us a total amount due of $7,263.83. This includes the taxes owed of $734.01+interest and $6,529.82 for the mold remediation, debris removal and door repair.

So, here is my quesiton. CAN THEY DO THIS? They bought the taxes less than a few weeks ago and they are telling us they did over $6,000 worth of work. This does not seem right.

The good in all this is you learn the nature of people. Also, we have pictures time and date stamped prior to the tax sell taking place. We have contacted an attorney, which in my opinion is so unnecessary. We are going to ask for the invoices from the parties who did the $6,500+ worth of work and the attorney said, "we will subpoena all parties and get to the bottom of this".

Again, of my many questions, can a person who bought the taxes go into a house, clean it out, do mold remediation and fix a door on a property that they do not hold any type of a deed too? If they actually did go in, I have the only set of keys as far as I know, I would think this would be considered breaking in.

Someone please tell me the law without having to pay an attorney. 

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JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
9y

Sorry, I've been off computer for several days due to a family matter.  Please read my post about Alabama tax sale redemption rights time periods:  https://www.biggerpockets.com/forums/70/topics/181...

As soon as an investor receives the tax sale certificate, he/she is entitled to possession. 

If the property contains a residential structure, the investor can make "preservation improvements" (repairs, basically) and a redeeming party must pay for the increased value of the property due to the preservation improvements, in addition to taxes and interest.  There are strict time limits involved in making demand for redemption, valuation of the improvements, and disputes.  If someone misses their deadline, they lose valuable rights. This is a free downloadable on my website. I'm sorry I can't put a link here, but BP for some reason monitors external links and does not allow them.  Check out my profile, go to my website and get it.

If the property is located inside the official boundaries of an urban renewal or urban redevelopment district, then the investor is entitled to the value of ALL improvements. Property type does not matter, improvements can be repairs, or they can be complete upgrades.

See this reply in the discussion

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    9y

    I thought in Alabama that the redemption period was 3 years and they kept selling more liens to other investors for each of the 3 years. If this is correct it makes AL a poor state to invest in tax liens. My state only has a 12 month redemption period  and they send me the deed in the mail if the owner doesn't redeem in 12 months. So every 1r months or so I have a couple more deeds to houses show up in my mailbox. I believe GA is also a good state to buy liens. AL if I understand correctly takes 3 years then you have multiple investors and other legal hurdles before you would own anything.

  • Investor · Chicago, IL · Member since 2016 · 25 posts · 4 votes
    9y

    Awful story. They seem to be pulling a fast one. That $2500 seems to be an arbitrary number as well. Wouldn't you just have to pay the taxes plus interest? They had no claims to fix the house. It's not their house. Sounds like a case of them counting their eggs too soon. Good luck. 

  • Birmingham, AL · Member since 2017 · 93 posts · 15 votes
    9y

    I am a purchaser of tax liens here in Alabama and my suggestion to you and anyone else that wants to purchase tax lien properties here in Alabama, learn the laws first. Anything that you do to preserve a house to livable condition is redeemable provided that you show documents but you will be reimbursed however months you take ie.12%. You have to learn the laws contact your attorney so you would know your rights before you post because everybody that post and answer is not correct.

  • Rockwall, TX · Member since 2014 · 380 posts · 211 votes
    9y

    My @ link doesn't work from my phone or I would link in Denise Evans on this.  Yes, in Alabama the lien purchaser does have the right to make preservation repairs and add the value of those repairs to the lien amount for redemption .  Since the process is so long, protecting the housing stock from deteriorating is a good thing.

  • Investor · Chicago, IL · Member since 2016 · 25 posts · 4 votes
    9y

    Found this. Hope it's helpful. https://www.biggerpockets.com/forums/70/topics/320140-can-i-rent-a-property-with-a-tax-certificate-in-hand-alabama

  • Residential Real Estate Broker · Birmingham, AL · Member since 2015 · 139 posts · 43 votes
    9y

    Thank you all for your responses.

    Alisha D, we are not purchasing the tax lien. We are under contract to buy the house from the owner.

    Since you are in the business of purchasing tax liens, can someone who purchased the taxes this May immediately go in and do work to the house? I read Roy Oliphant's response.  What if the house is occupied, can they still go in the house? 

  • Birmingham, AL · Member since 2017 · 93 posts · 15 votes
    9y

    @Bryan Miles that would be a question for a tax lien attorney. I don't deal with occupied houses. For those reasons. It can get sticky.

  • Birmingham, AL · Member since 2017 · 93 posts · 15 votes
    9y

    Bryan I do know that the lien trumps the seller unless the seller goes and redeems all the tax debt that incurred while the property was bought through the state.

  • JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
    9y

    Sorry, I've been off computer for several days due to a family matter.  Please read my post about Alabama tax sale redemption rights time periods:  https://www.biggerpockets.com/forums/70/topics/181...

    As soon as an investor receives the tax sale certificate, he/she is entitled to possession. 

    If the property contains a residential structure, the investor can make "preservation improvements" (repairs, basically) and a redeeming party must pay for the increased value of the property due to the preservation improvements, in addition to taxes and interest.  There are strict time limits involved in making demand for redemption, valuation of the improvements, and disputes.  If someone misses their deadline, they lose valuable rights. This is a free downloadable on my website. I'm sorry I can't put a link here, but BP for some reason monitors external links and does not allow them.  Check out my profile, go to my website and get it.

    If the property is located inside the official boundaries of an urban renewal or urban redevelopment district, then the investor is entitled to the value of ALL improvements. Property type does not matter, improvements can be repairs, or they can be complete upgrades.

  • Specialist · Birmingham, AL · Member since 2017 · 39 posts · 21 votes
    9y
  • Specialist · Birmingham, AL · Member since 2017 · 39 posts · 21 votes
    9y

    @John Underwood the redemption period is technically 6 years and you have to pay the taxes for all years. You get your deed after the first three years but the taxpayer can still redeem for three years after the deed is issued. If you never take possession the redemption period could technically never end. There are also as you said other hurdles but the system is designed to be fair to both I guess.

    Thanks for the information about your state. I though Alabama was ok until I read your post. Your state just automatically sends the deed no application needed? Is the competition there steep and when can you take possession in your state?

  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    9y

    @Ashley G.

    That is correct if you don't get a redemption check. Your investment plus up to 12% interest then a Deed shows up in your mailbox after the 12 month redemption period ends. Either way something shows up in the mail from the county.

    Once I get a deed I own it and I can do what I want to with it. If there is a tenant already there I usually just have them start paying me rent.

    One State that is better than SC and there aren't many, is Texas. 6 Month redemption period and the investment pays a 25% penalty even if its redeemed the day after the auction.

    I am from Alabama and have family there, but it just doesn't make sense for me to go through all that when it is so much easier in other states.

  • Specialist · Birmingham, AL · Member since 2017 · 39 posts · 21 votes
    9y

    Thanks @John Underwood . True compared to SC and TX  it is a lot to go through. Does SC do over the counter sales or do you have to show up at the auction?

  • Birmingham, AL · Member since 2017 · 4 posts · 0 votes
    9y

    Does anyone know of a good tax sale lawyer in the Birmingham area? We ran into an issue with the owner redeeming the property through probate and lying saying he never received a invoice of improvement expenses when i know for a fact he picked it up may 12 at the post office via verification of email. So now i need a lawyer and was also told i need to vacate the premises and was never suppose to move in until i had the deed. This is in Jefferson county AL.. Is this right?

    Any advice is helpful thank you!

  • Tampa , FL · Member since 2018 · 2 posts · 0 votes
    8y
    John Underwood do you have to be present for tax lien sales in South Carolina and can you purchase over the counter liens? Thanks for your help.
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    8y
    Originally posted by @Mary Bell:

    John Underwood do you have to be present for tax lien sales in South Carolina and can you purchase over the counter liens? Thanks for your help.

     Yes the Auctions are only in person so you must be present. They also have OTC  liens that no one wanted at the auction and if 12 months have gone since the original auction you can purchase the property on the spot. Most of this that no one would buy at the auction is junk. I look at every property available before my county's auction so that I don't miss anything. There might be smaller counties in the state where you could find a decent OTC property.

    SC is one of the top 5 best states to buy tax liens.

  • Tampa , FL · Member since 2018 · 2 posts · 0 votes
    8y

    Thanks for that information.  

  • Member since 2018 · 1 post · 0 votes
    8y

    So i live in Lawrence County Alabama.. my dad couldn’t afford to pay to taxes on my grandmothers property for 2017 (she’s deceased, but his property) anyway.. he’s been in and out of hospital withh cancer can’t work (self employed, no health insurance) and i couldn’t pay it either... so scrimping and saving to get t back.. mean while the man that bought it in January-March at the sale has cleared off a lot of my dads personal property and been in the house which still holds all of my grandmothers personal items/furniture/pictures/ antiques etc... and is planning to have it logged off....can he do that ??? 

    Thank you

  • Member since 2018 · 8 posts · 0 votes
    8y
    Hello John Underwood . How do you get the current tenants to start paying you rent? How will know if the lease is up?
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    8y

    @Account Closed I send them a letter stating that I am the new owner. I give the the Tax Collectors name and number in case they want to verify. I usually get a call in 2 to 3 days from when I put the letter in the mail.

    In the rare case they don't call, I file an eviction, then I definitely get a call.

    No one is ever surprised from the news. They always want to stay and are more worried about having to find a new place to live.

    I generally find some small stuff to repair or replace so they get a good feeling that I am going to take care of them and the property.

    I have never had anyone pull out a lease to show me. So I just have them sign a new one with me. I have all this prepared when I meet with them for the first time. Since they are already living there I don't ask for a deposit, which they may not be able to afford. I get a key or go make a copy of one they have if they don't have a spare. I have asked that they have a key ready for me when we meet, sometimes they do and sometimes they forget.

  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    8y
    Originally posted by @Charity Goodwin:

    So i live in Lawrence County Alabama.. my dad couldn’t afford to pay to taxes on my grandmothers property for 2017 (she’s deceased, but his property) anyway.. he’s been in and out of hospital withh cancer can’t work (self employed, no health insurance) and i couldn’t pay it either... so scrimping and saving to get t back.. mean while the man that bought it in January-March at the sale has cleared off a lot of my dads personal property and been in the house which still holds all of my grandmothers personal items/furniture/pictures/ antiques etc... and is planning to have it logged off....can he do that ??? 

    Thank you

    Check with @Denise Evans on this.

  • JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
    8y

    @Charity Goodwin, he can't have it logged off for a tax sale in 2017. He can't clear out a lot of personal property. Notify him immediately and tell him you are redeeming.  Who is the person who bought at the auction?  If he starts making repairs to the property, you will have to pay him for however much he increased the value, in addition to taxes and interest. It sounds like you won't be able to do that. Perhaps you could just negotiate a straight-up sale to him?

  • JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
    8y

    @Account Closed, was your question about tenants of the taxpayer, and you want those tenants to now pay you instead of their original landlord?  You should not contact those tenants.  It can give rise to a lawsuit by the taxpayer against you for interference with a contractual relationship. Your remedy is to get the taxpayer to sign a master lease with you and then let him sublease to the tenants, or give written notice to vacate to the taxpayer and then wait six months and sue the taxpayer and tenant for ejectment.

    You have no right to file an eviction lawsuit unless they are your own tenants, or tenants you inherited in a normal real estate sale with an assignment of an existing lease. If they just taxpayer tenants, you will have to file an ejectment lawsuit, which is in Circuit Court and more expensive and takes longer.  Of course, if you file ejectment and the taxpayer redeems, he will also have to pay your legal fees.

  • Member since 2018 · 8 posts · 0 votes
    8y
    @deniseevans my question for for the persona that stated that when he purchased a tax lien and their were tenants he would start making them pay rent to him. I purchased the tax certificate and there are tenants or squatters currently in the property. I do pay the taxes.
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