All Forum Posts by: Denise Evans

The declaratory relief action is not in the 2019 book but will be in the 2020 book. Worst case for vacant land and a void tax sale is former owner getting it back after paying you for taxes plus interest until that date, and the possibility of suing you for the reasonable rental value.  Few people do that for vacant land.

The fact that a tax sale is void is what is called an affirmative defense. That means somebody has to assert it in a lawsuit. The court does not just officially notice it all by itself. So, you could still file your declaratory relief/ejectment lawsuit and get an order if nobody answers and raises the void tax sale defense.

@Donald Lowe, if it is Jefferson County, then the 1937 statute probably saves you from it being a void tax sale.  Yes, you would receive a tax deed. The problem with 3 years of possession after the tax deed date is the risk somebody asserts the tax sale was void and sues you for the reasonable rental value of the property.  You cannot obtain service by publication for an ejectment lawsuit, in my opinion.  It's done, because nobody knows what else to do when you can't find the defendants. I would file a declaratory relief suit to have the property abandoned and get service by publication on the unknown defendants that way. I'm pretty sure that would be allowed, because it is a traditionally equitable remedy, and the Alabama Rules of Civil Procedure allow service by publication for equitable causes of action. Ejectment sounds in law, not in equity, that's why you can't get it for an ejectment lawsuit.  Quieting title specically allows service by publication in that statute, plus quiet title sounds in equity, historically. Find everybody you can and name them as defendants and get service on them. Get the rest by publication.

@Michael Watts, No.  Sorry.

@Bryce Davis, a quitclaim deed transfers any and all real estate rights in certain described real estate, but does not make any promises or warranties that the grantor actually owns anything at all. 

It is frequently used to clear up possible title defects, or when someone makes a gift of land. Nobody wants to sign a regular warranty deed under those circumstances, later find out the title is defective, and then get sued.

At least in Alabama, there are two other types of deed in common usage.

A general warranty deed makes promises that the title is perfect and clean.  If it is not, then the grantee can sue the grantor.  Even if there is title insurance paid by the grantor, to protect the grantee, the grantor is not safe.  That is because if there is a title defect, even if it arose before the grantor's period of ownership, the title insurance company will pay off, and then step into the shoes of the grantee and sue the grantor under its warranties. Usually the grantor goes a little crazy at that point and says to the title company, "It was your responsibility to FIND the title defects before we closed, and also, I was the one who PAID for the title insurance!!!  It's not fair that you are suing me for your own mistakes!!!!!" The title company says, "Too bad, so sad..." and continues with their law suit and will ultimately win.

They tell the grantor, "Don't worry, now you can sue your own grantor under the title insurance you got when you bought the property."  That is good advice, unless you inherited the property, or it was a gift, or the title company is out of business, or you bought it cheaply and quickly with no title insurance.  Never be lulled into a false sense of security by a title company saying you should not worry about something because if they sue you, then you can sue somebody else. Plus, who wants to go through that grief and expense, anyway?

Another type of deed is a statutory warranty deed, also called a special warranty deed. This type makes promises that the grantor did not allow any title defects to arise during its period of ownership, but makes no promises about things that make have clouded the title from earlier.  Same result with the title insurance company lawsuit as the general warranty deed, but the grantor knows if he allowed an IRS lien or placed a mortgage or something similar during his period of ownership. So, it is not unfair for it to get sued for its warranties. A warranty is a promise, by the way.

Bear in mind, this is all Alabama law. Tax sale investors should usually give only quitclaim deeds unless they have a Quiet Title court order.  Nobody should ever give a general warranty deed, even with title insurance.   There is just too much risk over things you have no way of knowing about. 

Be careful about using quitclaim deeds found on the Internet or passed around among friends or colleagues. Something might say "Quitclaim Deed" at the top of the instrument, but contain words of warranty down in the body, using language nobody understands or pays attention to.  The usual warranties are of seisin (possession), quiet enjoyment (freedom from interference from others, such as the lack of a boundary line dispute brewing, or condemnation proceedings in process, etc.) , right to convey (the right to sell the whole of the interest recited in the deed, and not just a partial owner, for example), freedom from encumbrances (no liens, undisclosed leases, or other claims) and defense of title as to all claims (a promise to sue other people to clear up the title if the warranties are broken).

Usually (but not always) the language with the warranties will be near the end of the deed, and will say something like, "And we do, for ourselves and for our heirs, executors, and administrators, covenant with the Grantees, and the Grantee's heirs and assigns, that we are lawfully seized in fee simple of said premises..."

@Ahmad Moore, if you are able to get financing in 30 days, I would not worry about things like escrow accounts. You DO need to get insurance in your own name as soon as you have the deed, though.  The insurance being paid out of the lender's escrow account protects only the lender and the current owner. It will not pay you anything at all if there is a loss.

@Karen Y Cole, with a tax deed it is not necessary to give a notice to vacate, but it is a good idea.  You should send it to the owner, not to the tenant.  If the owner does not respond within 30 days, then it is probably okay to approach the tenant about a new lease. That is true only with a tax deed, not a tax certificate. It is uncharted territory, meaning no statutory or appellate guidance on that particular topic, so proceed cautiously and stop and rethink everything if you get push-back.

@Ahmad Moore, a limited power of attorney lets you do certain things for the person who signed the POA. So, if the POA said so, you could sign a deed. But, you already have a deed, or will have a deed shortly, right?

The "seasoning" issue has to do with FHA insured mortgages on property that has changed hands again within 90 days. There is always a suspicion of flipping in that case. But, again, you will already have the deed, so I don't understand the real estate agent's concern.

"Who gets what" depends on the contract you sign with the owner.  If nothing was said about the matter, and you did not get your own financing until 4 months later (as an example) then your payments will have included tax and insurance escrows.  When the mortgage is paid off, the remaining balance in escrow accounts will be paid by the mortgage company to the original owner, not to you.

Insurance is also an issue, because if the "subject to" mortgage payments you make each month include an escrow for insurance, that insurance protects the former owner, not you. But, he doesn't even have an insurable interest any longer.  He can point that out to the insurance when you close on your new mortgage and he can get a refund. Part of that will be money YOU paid into the escrow accounts. 

Remember, the insurance paid by the mortgage company protects lender and former owner. You will need to get your own casualty insurance.

You cannot make decisions based on an assumption you will close in 30 days on a new loan. Prudent business people always assume the worst, and make provisions for that in their agreements, just in case. 

@Ahmad Moore, you should have three worries. (1) Make sure you get a payoff letter from the current lender showing total amount due and no delinquencies.  (2) Discuss with seller the handling of the escrow accounts, and who that money goes to when you refinance. (3) Assume refinance will take longer than 30 days, because there are often delays with things like appraisals, underwriting, corrections.  Surprise delays can be the result of a credit report that shows a foreclosure on your record but it's not really you, or a prior mortgage on the property that was paid off but never released in the real estate records, or other such matters. Assume it will take 120 days to refinance. Does that change anything about your plans. One example is handling of the escrow accounts. It means 4 months of taxes will be paid by you, but the former owner will get all the money when the refinance takes place.

@Karen Y Cole, an ejectment order requires the defendant to remove themselves and their possessions.  I would think that if the trailer remains after that order, it is fair game as abandoned, but it's tricky and depends on how you word your ejectment complaint and what the ejectment order says. You should consult with a local attorney about that issue.  My book is available on my new website at www.TaxSales-Alabama.com.

@Tai Bhattad, it requires a conversation. Too much to write, too many add'l questions to ask.  Call me.