All Forum Posts by: Denise Evans

Right now, you probably can't go wrong anywhere with a buy/refurb/flip strategy. With interest rates up, homeowners are holding on to their homes until interest rates come down again. The pool of buyers continues to grow. Fewer houses are available for purchase. Bidding wars don't help, because high interest rates make it harder for buyers to hit their required debt to income ratios.  With continued logistics problems, labor shortages and the high cost of materials, builders can't simply start building more to meet the demand. The answer is to buy and upgrade existing inventory, which seems to be your target.  My only advice to tag onto that is find properties in peripheral neighborhoods and buy at least 4 homes on the street. That way, you turn the street yourself, instead of waiting for the market to produce more refurbing buyers that will eventually turn the street.

They pay the BPO amount plus interest since the date of purchase. The original statute said the redemptioner had to pay the full amount of taxes plus all interest. That made buying BPOs VERY lucrative. But, the Alabama Supreme Court ruled the statute unconstitutional in the mid 1980s. Ever since, redemptioners pay only the BPO price, plus interest.

Payment is made directly to the investor who owns the tax deed.

I'd be more comfortable with $1 million of liability. All it takes is a house fire or similar and a death to climb way above your $350,000 limits. 

In Alabama, a wrongful death lawsuit carries punitive damages as the measure of damages. That can reach $1 million quickly. In other states, the measure of damages is the loss to the person bringing the lawsuit. For a baby with a long life expectancy, damages might be large. For an elderly person with multiple health problems the damages might be small. All irrelevant in Alabama.  How much does the jury think the defendant should be punished for the death is the measure here.

When I say "punitive" I don't mean how horrible was the property owner in its actions that led to the death. It's just how the jury wants to redistribute insurance company wealth.  I've been a defendant in a boundary line lawsuit (I was the evil developer) where exactly that happened.  I had insurance company lawyers. My surveyor, who was also a defendant, had insurance company lawyers. The plaintiff was a little old lady with a lawyer who dressed liked he bought his clothes at the church rummage sale.  After a week of trial, SIX of the jurors wanted to give the little old lady a huge paycheck of actual and punitive damages, on the first vote. Because supposedly we cut down 1/3 acre of "her" so-called "old growth hardwoods" of poison ivy and hackberries (a trash tree around here.) It took a solid day of jury deliberations and a cautionary instruction from the judge for them to do their job according to the law and the facts and return a verdict against the plaintiff.  Which should have been clear from the very first minute.  

So, get a $1 million. Additional liability coverage is relatively cheap.

Okay. Just curious. Thanks for sharing.

Why do you avoid Alabama, @John Underwood?

The city can foreclose their lien and sell the property at auction. That lien trumps your tax certificate, so the city foreclosure purchaser can get the property and not pay you anything. As far as I have been able to find out (Somebody PLEASE correct me if you know better) the demolition lien is good for 20 years. It racks up interest that whole time. The city does NOT have the ability to accept less than payment in full to release a lien. Their hands are tied because the statutes do not allow that. So, you can ignore the lien, but the eventual price tag will increase by 7.5% per year, meaning the lien will double every 13 years.

They will put a demolition lien on the property.

Ala. Code Section 40-10-197(a) says:  At any time not less than three years after the auction or sale of a tax lien but not more than 10 years after the auction or sale, if the tax lien has not been redeemed, a holder of all of the sold tax lien certificates for a parcel of property may bring in the circuit court of the county in which the property is located an action to foreclose the right to redeem and quiet title to the property in the name of the holder of the tax lien certificate.

Two points: The three years starts to run from the date of the auction. Next, the statute says you have to own ALL of the tax lien certificates, but most experts agree you have to own all of them that qualify for the three year holding period. In other words, if Alpha buys Year One and Bravo buys Years 2, 3, and 4, then Bravo can file the foreclosure lawsuit.  I think this is on a list to be clarified in the 2023 legislative session.

If you own three consecutive years of tax liens, you can foreclose.  You will then redeem from any earlier tax liens. The wording of the statute is a bit unclear about who you have to name as defendants in the lien foreclosure lawsuit. It seems to refer to liens arising from debts, but it might also refer to prior tax liens.  The safest course of action is to name prior lienholders as defendants, but specifically state in your lawsuit you are not naming them as parties with redemption rights, but only as parties from whom you will redeem so the court can quiet title in you.

I am happy to help. You can reach out via PM