Flipper/Rehabber · Birmingham, AL · Member since 2016 · 74 posts · 58 votes
Hey Bigger Pockets Family,
I currently have the opportunity to buy a tax deed from the State of Alabama for a piece of land that contains the pool for a neighborhood. Taxes haven't been paid since 2013 and according to the tax records it looks like the HOA owns this piece of property, and the pool.
My question is simply, what am I missing? It seems to me that I could easily buy this deed and pretty much force the HOA to redeem the 4 years of back taxes, plus interest. Would I have any other exit strategies if they decided to not redeem for some reason? Do I shut down the pool and cause neighborhood chaos?
@Denise Evans I know you are the Alabama expert. Any advice? Wanted to see if anyone has ever dealt with anything similar?
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
9y
I don't know if this is the same type of case, but I was interested to see in my old neighborhood recently someone had bought the swim club, torn it down, filled in the pool and is now building something like 12 "city homes" on it. Lots are ready to go, but no construction yet.
Sad memories for me, but probably a good idea as the kids are pretty much all gone now...and I'm sure very little use at that pool any more. Better for everyone probably there is interest in new construction.
Someone probably made a very nice profit on that move.
Is the HOA in your case active and functioning?
Is the pool used/usable?
Is the lot usable for something else?
You might talk to planning and zoning at the city to see if you bought such a lot, would they be open to getting it rezoned for something else.
Realtor · Chelsea, AL · Member since 2014 · 10 posts · 3 votes
9y
If it is southeast of Birmingham off county hwy 36 I looked it a couple of years ago. The pool is being used. It is a very nice subdivision. You wouldn't be able to build a home next too it. When I found it I imagined using it during the summers. :)
Flipper/Rehabber · Birmingham, AL · Member since 2016 · 74 posts · 58 votes
9y
@Kristina Knowles - That's the one! Its in a great area. I cant imagine the HOA doesn't own it, right? How would I confirm that the HOA is operating and active?
Wholesaler · Lehi, UT · Member since 2015 · 333 posts · 144 votes
9y
@Kristina Knowles Find out if HOA fees are still outstanding and if they are delinquent too then that could be an answer to if it is used and in good condition. You could look up the HOA company to see if they are still in business and active. A business must be registered with the SOS of the state. Keep us posted as to the outcome.
Realtor · Chelsea, AL · Member since 2014 · 10 posts · 3 votes
9y
@Jamie O'Brien - I did a little leg work for you. It appears someone dropped the ball and just failed to pay the taxes. The build out on this subdivision came to a halt during the recession so the HOA is being managed by the developer and it is the developer that is the owner of record for the pool. I don't want to put it out on the forum but I have the name and number if you would like to have it.
Flipper/Rehabber · Birmingham, AL · Member since 2016 · 74 posts · 58 votes
9y
So another total novice question. This will be the first Lien of Deed I've bought from the state, assuming I buy it, which I will if it makes sense. After further review, the quote I received from the State seems to include interest on the back taxes. As I have no desire to actually own this property (again, unless I'm missing being able to sell it or something) then how do I make money on this if I force a redemption? Seems that I'd be paying the State 12%. So when the owner redeems do I just make my money back?
I'm obviously a li role confused by this. Any inputs or experiences are appreciated.
Denise Evans Kristina Knowles Josh Carr
Wholesaler · Lehi, UT · Member since 2015 · 333 posts · 144 votes
9y
@Jamie O'Brien when you get a redemption check then you will get your money back plus interest for the time that you purchased it not counting the month you purchase it in and if it redeems in the middle of the month then you don't get to take that month's interest either. The first of the month is when interest accrues and it's done by the month.
Sandy Springs, GA · Member since 2017 · 17 posts · 6 votes
9y
I don't have anything to add here. I just thought this was an interesting thread and wanted to know the answers to the OP's questions. Awesome discussion.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
9y
I don't know Alabama law, Denise does. However typically you pay interest on the lien from the sat it was issued until you purchase it. When it redeems you get the stated interest rate the the original issue date. So you are getting your interest back.
Most liens are simple interest and do not compound. So you will effectively get a little lower interest rate than the stated rate. EX; You buy a $100 lien that pays 12% interest. You buy it 6 months after is was issued. You pay $106. However you are only getting 12% interest on the original $100, not on the $106 that you invested. You do get the $6 back but you don't earn interest on that $6. Alabama law may be different but that is typically how it works.
Apopka, FL · Member since 2017 · 7 posts · 0 votes
9y
I'm new on the forum but on thing to consider would be liability insurance. If you buy this deed are you liable for anything that happens in this pool? If you had to purchase liability coverage for a community pool what would that cost?