All Forum Posts by: Denise Evans

@Justice NA, you reply to the email that sent you the price quote.

Thanks!

Always do after-tax cash flow analyses. Especially with cost segregation and bonus depreciation, it can make a HUGE difference in your calculations.

@Jay Y., the clause you quoted says the management company shall "collect" those fees. That is similar to saying they "collect" rent. It does not mean they get to keep all the fees. Check the compensation section of the management agreement. It is not unusual for the management company to keep all of the late fees plus other fees that are attributable to increased management work/oversight.  On the other hand, it is also common to split the late fees 50/50, but the management company keeps the other fees. Every company is different.

There is nothing magic about the AAR management contract or any other forms they provide as a convenience for members. I do not use their forms, for example, and provide my own forms for my classes and videos.

A 10% late fee is common, but might be considered excessive if there were litigation. Late fees are supposed to be liquidated damages to cover the landlord's damages due to the breach of the lease agreement (timely payment of rent) but are too general to calculate mathematically. When payments are late, the landlord suffers loss of use of money and might have to pay their own mortgage late. That might result in mortgage late fees. If it happens often enough, the landlord's credit score might drop and result in higher credit card interest rates, higher car lease rates, higher insurance premiums. Lots of waterfall damages. So, the parties say they will agree on a sum for liquidated damages, which might be 5% of the rent.

We know 5% is safe because the Alabama Mini-Code, a consumer protection chapter for small loans, specifically allows a 5% late fee. With a 10% late fee, a court MIGHT rule that 5% is allowable liquidated damages and 5% is a penalty. Penalties are illegal. So, if you are charging penalties, you can be forced to refund them, plus legal fees. There is no statute or appellate decision in Alabama that says what is a "safe" late fee for landlords.

@Kristine Ann, even under the "older" system in Alabama, winning bidders do not get a quitclaim deed. They get a tax certificate and ONE of the "sticks" in the "bundle of rights" that belongs to the owner. The winning bidder gets the right to possession, but usually cannot exercise DIY possession. Instead, it usually requires voluntary surrender by the owner, or a successful ejectment lawsuit suit. Three years later the investor will surrender their certificate to the Probate Judge, pay a $5 fee, and obtain a tax deed. Even after that, there might still be redemption rights in former owners (or heirs) and lien holders.

PS--DO NOT ask county personnel for legal advice. They are not allowed to give it. Often they do it anyway, but are usually wrong. Rely on industry acknowledged experts for advice. In Alabama, the rules are complicated and subtle.

Most people will not go pro se into a lawsuit. So, to demand a sale, they'd have to hire a lawyer to make an appearance, appear at a hearing to prove redemption rights, have a mini-trial on the issue, and then demand an auction. Usually not worth the money to be just a troublemaker.

I agree about Huntsville and also Madison. Prices are getting really high. You might want to explore Athens or Decatur, still within commuting distance to Huntsville government jobs, but real estate prices not so high.  Florence is a University town, plus a strong military retiree component.  It is a beautiful area. Just across the bridge, in Colbert County, is more modest housing, also. That would be Sheffield, Tuscumbia and Muscle Shoals.

A few Alabama counties are still on the old system. They are some of the rural counties plus Lee County (Auburn University) and Houston County (Dothan--VERY large agribusiness area).  Alabama has already changed in response to Tyler v. Hennepin County, for the new system. Now, if someone has redemption rights they can demand a public auction at conclusion of the lien foreclosure lawsuit. If it brings enough to cover taxes, interest, legal fees and auction expenses, plus some extra, the people with redemption rights share the "extra."  If nobody demands a public auction, the tax sale investor gets the property, free and clear.

You are welcome:)

If you in fact purchased a tax lien under the new system (people bid down the interest rate) then you are not allowed to set foot on the property and you certainly cannot cut the timber until after a judge forecloses your liens, quiets title, and orders the clerk to issue a deed to you. That is, at a minimum, 4 years in the future.  You must file the lawsuit and then you must obtain the order.

If you purchased a tax certificate under the old system (people bid up the purchase price) you are not allowed to cut the timber while you have only a tax certificate, which is the time period up to three years after the auction. There is no appellate or statutory authority that allows to you cut the timber after the tax deed date, but while judicial redemption rights might still be outstanding. I personally think you can, and if the former owner redeems, they get cutover timber land. But, a court could rule differently.