Someone has begun development on a property that I have the tax deed on

[Brandon Robertson]

I purchased a tax certificate from Alabama a few years ago and I now have the tax deed dated a month ago. I just picked up the tax deed yesterday and am filing it today. 

Someone started bushhogging and surveying two parcels beside each other a couple of days ago (one of them being the one I have the tax deed for). After being surprised by that activity I looked into the records for properties around my parcel and found that years ago a developer had originally bought the two parcels in one sale. For whatever reason the developer paid the taxes on one of the parcels but didn't pay taxes on the other so it went to tax sale. My guess is after they bought the parcels they only had one of them assessed in their name, but I'm new to this and am not sure.

I haven't spoken with the developer yet. I didn't even realize they had originally purchased the parcel I have the tax deed to until the heavy equipment showed up which made me look closer at deeds for sales in the area and discovered my parcel listed on the other property's deed.

This is my first tax certificate/tax deed so I'm not sure what comes next. I don't want to have an adversarial interaction with the developer or to try and keep the property for myself. All I'm looking for is return on my investment. Any thoughts or advice would be appreciated.

[Denise Evans]

I'm the woman who is the expert. The owner still has redemption rights for a period of three years after the tax deed date. 

If you bought the certificate from the state for the full amount quoted to you, you must contact the state and get the calculations of how they arrived at that number. The reason is, you must continue the interest clock on each year's taxes to up to the present, at whatever the interest rate was at the time of the auction. Pre-2020 it was 12% per year. After that it was 8% per year.  You can't just take what you paid and start charging interest on that figure, because part of what you paid was already accrued interest. You are not allowed to compound interest.

If you bought the certificate from the state on a best price offer, you charge interest on your purchase price, not on the full amount of the taxes that were due, but were not paid by you when you purchased.

After you obtained your tax deed, you are entitled to something called "mesne profits" if you file an ejectment lawsuit against the former owner and they redeem during that lawsuit.  If you talk to a lawyer about the concept, some of them pronounce it "main profits" and some say "mez-knee profits." Either is correct.  I'm telling you this so you don't get confused when talking to different lawyers. 

Mesne profits is a measure of damages for the unauthorized use of real property. It is the reasonable rental value of the property from the date of your deed until the date of redemption.  Because it is raw land, it won't be much money in your situation.

My advice is to contact the developer, show him/her this post, and come to an agreement for a redemption. Redemption is accomplished by paying you money, and you sign a Redemption Quitclaim Deed. That is the same thing as any plain vanilla Quitclaim Deed except it has the word Redemption in the title.  Tell the developer to pay someone to prepare the deed. It seems simple, but it's not a DIY thing because of technical rules that are different depending on circumstances.

Or, you can pay a lawyer to file an ejectment lawsuit, the developer can pay a lawyer to defend the lawsuit and redeem, and the developer will also be responsible for reimbursing your legal fees, plus interest.  At the end of the day, you won't make a pile of money, it will cost the developer more money than if they were just reasonable, and only the lawyers will be happy. 

The solution is to work it out, with the developer paying you more than the redemption price tag, but less than the legal fees it would incur to fight about it.  For your part, it might seem like a free roll of the dice to go to court, but there are surprises and landmines along the way, litigation always takes far longer than anybody expects, and the time and emotional expense of fooling with litigation are energy drains on more productive endeavors. I speak from experience as a former defensive litigation attorney.  Work it out peacefully!