Alabama Tax Deed Property

[Pamela Holmes]

I've been purchasing Alabama Tax deed properties for several months and I am running out of resources. I continue to receive these price quotes from the State of Alabama for approximately $5k - $7k. Good rental property that may require some cosmetics but a good buy and hold property for $5k - $7k. Can I transfer the price quotes to someone else? If so, what is the process.

[Denise Evans]

Make sure you know the redemption rules in Alabama, and don't over-improve. Even with a tax deed, the former owner can still redeem by paying the taxes plus 12% per annum interest.  That redemption period runs for three years after the investor takes possession of the property. If the property contains a residential structure, the former must also pay the value of "preservation improvements" made by the investor, but not additions or upgrades.  The investor gets to keep any rents collected up until the redemption.

You must also make sure the tax sale was not void. The most likely culprits are death of property owner before tax sale, or sale of property to someone else but failure to assess in the new owner's name.  In other words, the wrong person's name was called off at the auction.  If the tax sale is void, the former owner (or heirs) can redeem for the taxes plus interest, but do NOT have to pay you for preservation improvements. Also, you will have to disgorge any collected rents.