Duluth, GA · Member since 2014 · 47 posts · 14 votes
I've been purchasing Alabama Tax deed properties for several months and I am running out of resources. I continue to receive these price quotes from the State of Alabama for approximately $5k - $7k. Good rental property that may require some cosmetics but a good buy and hold property for $5k - $7k. Can I transfer the price quotes to someone else? If so, what is the process.
Make sure you know the redemption rules in Alabama, and don't over-improve. Even with a tax deed, the former owner can still redeem by paying the taxes plus 12% per annum interest. That redemption period runs for three years after the investor takes possession of the property. If the property contains a residential structure, the former must also pay the value of "preservation improvements" made by the investor, but not additions or upgrades. The investor gets to keep any rents collected up until the redemption.
You must also make sure the tax sale was not void. The most likely culprits are death of property owner before tax sale, or sale of property to someone else but failure to assess in the new owner's name. In other words, the wrong person's name was called off at the auction. If the tax sale is void, the former owner (or heirs) can redeem for the taxes plus interest, but do NOT have to pay you for preservation improvements. Also, you will have to disgorge any collected rents.
Not sure if they can be transferred or assigned . I considered a tax deed on a property and filed the application and the option to buy was good for 20 days.... then it goes to the next person in line. I would call Montgomery and ask if assignment of this option to buy is allowed.
@Helen Kirk you can goto http://revenue.alabama.gov/property/landsales/ and search the site. These are properties that have gone through the tax sale auction and now the State is selling over the counter. If the property on the list if less than 3 years from the date of tax sale then you are buying the tax lien. Greater than 3 years, you are buying the tax deed. You might also need to check and find out if there is a Judicial process after the 3 years which makes it more like 4 years.
@Helen Kirk You can bid on any of the properties in the list. That field is kind of misleading. That is really the amount of the opening bid and no one bid on that property. Here's an explanation of the fields. http://revenue.alabama.gov/advalorem/forms/transcr...
In Alabama you have to apply for the tax deed and once an application has been submitted you will receive a price quote from the state department of revenue. You can submit twenty applications at once if you want but after 40 and you haven't purchased one then you will be banned for a year from submitting applications to purchase. You should be able to purchase at least one out of 40 in a years time. It's an easy process. Sifting through the listings take the most time out of any of it. There are many to choose from in Alabama.
@Josh Carr let me clarify one item. In Alabama, they sell over the counter Tax Liens and Deeds. If the tax sale was less than 3 years old then the buyer will receive a Tax Lien Certificate which the buyer can trade for the tax deed after the 3 year mark. If the tax sale was greater than 3 years old then the buyer will receive a Tax Deed. I totally agree with your other comments.
Make sure you know the redemption rules in Alabama, and don't over-improve. Even with a tax deed, the former owner can still redeem by paying the taxes plus 12% per annum interest. That redemption period runs for three years after the investor takes possession of the property. If the property contains a residential structure, the former must also pay the value of "preservation improvements" made by the investor, but not additions or upgrades. The investor gets to keep any rents collected up until the redemption.
You must also make sure the tax sale was not void. The most likely culprits are death of property owner before tax sale, or sale of property to someone else but failure to assess in the new owner's name. In other words, the wrong person's name was called off at the auction. If the tax sale is void, the former owner (or heirs) can redeem for the taxes plus interest, but do NOT have to pay you for preservation improvements. Also, you will have to disgorge any collected rents.
@Denise Evans What is the end result with lands that are sold but owners are deceased? If investors avoid these and they are never bought from the state, are they destined just sit in limbo forever? Or at least until the current owner needs to clear liens to to sell, refinance, etc? I've got a similar situation on my hands. I have an open quote from the State Land Commissioner that I am very interested in. Sold to state in 2014. Upon research, owner died in 2011 and heirs still occupy the property. Can they fight a void sale even after the deed is issued after 3 years? Or is there a time frame to dispute sales?
@Account Closed, if the owner died before the tax sale, then the tax sale is void. You can "cure" a void tax sale with 3 years of adverse possession that starts on or after the date a tax deed could have been issued, In other words, you start with the date 3 years after the tax sale, and if some time after that the investor adversely possesses the land for 3 years, then the statute of limitations expires and the heirs cannot claim the tax sale was void. If it was void, you are not entitled to possession and cannot maintain an action in ejectment, but you can at least start ejectment and force them into "redemption." Technically it's not really a redemption if the tax sale is void, but they do have to pay you for the taxes plus interest, and you have a lien on the property for that. If they don't pay, you can foreclose your lien, somewhat similar to a sheriff's auction.
If the owner died after the tax sale, then their heirs have simple redemption rights. You can file your suit to eject. They will either redeem (and pay your legal fees as part of the redemption costs) or they will default and hopefully you will get possession.
@Denise Evans -- What actually constitutes possession? Ex. I'm looking at a home that vacant and in terrible disrepair. But... the sellers (or their agent) is actively trying to sell the home for them. Let's say I'm able to acquire the tax deed from the state (state has had for 3 years) --- do I take physical actions to the property? do I just call and notify the seller that I now own a tax deed and cloud on their title? What actually constitutes possession?
Side thought/question: how would I actually 'possess' this property for 3 years in order to quiet the title??
@Brooks Conkle, is there a real estate agent sign on the property? If so, contact the agent to see if they have a current listing agreement. Often, they don't, and are in violation of license law. Once you have the tax deed, you are the owner. Of course, there will still be redemption rights. But, as the title owner you can tell the agent to remove its sign. As either tax deed or tax certificate owner, you can change the locks, secure the windows, and start making repairs. Do the things you would normally do if this were a property you purchased off MLS and wanted to get it ready right away for rental. Tell the neighbors you are the new owner. Put up your own "For Rent" sign. Ask the neighbors to keep an eye on the property and call you if they see anything suspicious. That is a good idea, plus it counts as possession if done in conjunction with acts of physical possession. The neighbors will probably be grateful someone is fixing the property up, and will work with you.
The State of Alabama will no longer submit a name change at the time funds are remitted. They will only supply the deed under the name of the person applied. I was told the only way to transfer the deed is to do it at the time you record the document. To protect both the buyer and the seller there will need to be a contract in place prior to remitting the funds to the State.