Can I rent a property with a tax certificate in hand (Alabama)

Question

I can't seem to get clarification on this.  If you purchase a tax lien certificate and the property is vacant, do you have any right to rent it or only to physically secure it?

Jared Irby · Answer

yes sir buddy. In fact the city of mobile has argued in court that you have an obligation to secure and maintain. I would get possession as quick as possible.

Denise Evans · Answer

Hi Brooks, it's Denise. We know each other.  You came to one of my tax sale investing classes several years ago. Yes, you are entitled to possession and can rent the property out. If the owner redeems, you can keep all the rents up until redemption. If the property contains a residential structure, you can do any necessary repairs to make the property habitable (but not upgrades) and the VALUE (not the cost) of those repairs is an additional charge if there is a redemption. If the property is located in an official urban redevelopment or urban renewal district, you can recover the value of ALL improvements, not just repairs.  If in one of those districts, the property does not have to contain a residential structure. I think Mobile has several districts.   I have an 18 minute video about tax sales and possession on my website. Send me an email, and I'll send you a coupon code so you can watch it without charge, since you've already been to one of my classes.

Beware of a void tax sale, though. In that case, you are not entitled to possession, or rents, or value of your repairs or improvements. The most common reason for a void tax sale is the name called off at the auction was not the current owner of the property. Usually that is because the assessed owner died, or sold the property, or it was foreclosed on.

Denise Evans · Answer

@Julie Dawn tapia. Jefferson County switched types of tax sales. There are two different sets of laws, what we call the old system and the new system. Most counties now use the new system. A few still use the old system. Jefferson County changed to the new system for auctions starting in 2021 and afterwards.  Under the new system, you have only a lien on the property. You are not entitled to possession. You cannot rent it out. You cannot make improvements. All you can do is wait the required number of years and then file a lawsuit to foreclose your lien.

Josh Carr · Answer

This is from the revenue.alabama.gov site where the state laws and listings are located.  I thought it was also informative as to how the tax lien certificates can turn into tax deeds and besides it's a good read too.

If  the  state  has  held  a  Certificate  of  Sale  less  than  three  years  from  the  date  of sale  by  the  county  tax collection  official,  the  Certificate  will  be  assigned  to  the  purchaser.    If  the  property  is  not  redeemed  by the  three  year  anniversary  of  the  sale  to  the  State,  the  Certificate  holder  can  surrender  the  original assigned  Certificate  the  county  redemption official  and  receive  a  tax  deed  upon  payment  of  a  nominal issuance  fee.    If  the  State  has  held  a  Certificate  of  Sale  more  than  three  years  from  the  date  of  sale  by the county tax collections official, a tax deed will be issued to the purchaser by the State. Tax deeds are given without warranty or covenant of any type; it is the purchaser’s responsibility to determine what, if any, interest in the property is actually being purchased.  No refunds are made unless the State had no interest to sell, and then only within two years from the purchase date.  It would be advisable for the potential purchaser to thoroughly investigate every aspect of the property prior to purchase, including, but not limited to, the location of the property, type of buildings, if any, on the property, determining what, if any, liens or encumbrances exist on the property, and any other facts which  may  be  pertinent  to  the  contemplated  purchase.    The  perfection  of  tax  title  into  indefeasible ownership  (“good”  or  “merchantable”  title)  is a  very  complex  process  requiring  meticulous  compliance with  the  law.    It  is  recommended  that  a  competent  attorney  be  consulted  in  any  case  where  legal questions or concerns arise. MUST I PAY DELINQUENT TAXES IF I DID NOT OWN THE PROPERTY IN DELINQUENT YEARS? Yes. The taxes follow the property. The tax liability must be    satisfied by the property owner whether the taxes were incurred prior to  current   ownership. Never purchase property before having a title  opinion from a   reputable source. It is advisable to consult a  competent attorney   regarding your contemplated purchase of tax  delinquent property.

If  the  state  has  held  a  Certificate  of  Sale  less  than  three  years  from  the  date  of sale  by  the  county  tax collection  official,  the  Certificate  will  be  assigned  to  the  purchaser.    If  the  property  is  not  redeemed  by the  three  year  anniversary  of  the  sale  to  the  State,  the  Certificate  holder  can  surrender  the  original assigned  Certificate  the  county  redemption official  and  receive  a  tax  deed  upon  payment  of  a  nominal issuance  fee.    If  the  State  has  held  a  Certificate  of  Sale  more  than  three  years  from  the  date  of  sale  by the county tax collections official, a tax deed will be issued to the purchaser by the State.

Tax deeds are given without warranty or covenant of any type; it is the purchaser’s responsibility to determine what, if any, interest in the property is actually being purchased.  No refunds are made unless the State had no

interest to sell, and then only within two years from the purchase date.

It would be advisable for the potential purchaser to thoroughly investigate every aspect of the property prior to purchase, including, but not limited to, the location of the property, type of buildings, if any, on the property, determining what, if any, liens or encumbrances exist on the property, and any other facts which  may  be  pertinent  to  the  contemplated  purchase.    The  perfection  of  tax  title  into  indefeasible ownership  (“good”  or  “merchantable”  title)  is a  very  complex  process  requiring  meticulous  compliance with  the  law.    It  is  recommended  that  a  competent  attorney  be  consulted  in  any  case  where  legal questions or concerns arise.

MUST I PAY DELINQUENT TAXES IF I DID NOT OWN THE PROPERTY IN DELINQUENT YEARS?

Yes. The taxes follow the property. The tax liability must be    satisfied by the property owner whether the taxes were incurred prior to  current   ownership. Never purchase property before having a title  opinion from a   reputable source. It is advisable to consult a  competent attorney   regarding your contemplated purchase of tax  delinquent property.

Julie Dawn tapia · Answer

I went to the courthouse in Birmingham Alabama to leave it legal documents so as I was there the lady had let me know that as of 2021 they passed a new law that when you buy a tax lien a house you are not allowed to rent it out renovate it or even step foot on the land or in the house

SaDedeedra Taylor · Answer

Hello, what i'm wondering is, if you buy a tax certificate and the original owner is still occupying the property can you legally make them leave or pay rent?

John Lynn Ayres · Answer

Denise

I just purchased a duplex off tax deed in Arkansas.  It has four units that are all rented. The owner had an additional 10 days to redeem and did not. Can I write a letter explaining to the renters I bought this property and put a copy of the title with the letter and ask them to start sending me rent?

Gene Walker · Answer

I am new to BP as well, just to make sure I understand what was said.. You can take possession of let's say vacant land with a tax lien certificate?  I Thought you had to have the tax deed before you could access the property?

Dustin Smith · Answer

I'm new to BP and came across this  forum. I've read a tax certificate book for montana. I have never bought a tax lien before but wondering when and if you do how do aquire the keys to be able to rent it.

Roy Oliphant · Answer

@Denise Evans

We purchased it from the state and received our deed.  Then got a letter to return the deed and they would refund since the original sale was invalid.  Happened right after we sent out letters in prep of filing Ejectment.  Found out there is probably an unrecorded mortgage that would redeem anyway.  Might even be the same that challenged the sale at the county.  I was just surprised the county overturned it without any notification of proceedings.

Can I rent a property with a tax certificate in hand (Alabama)

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