All Forum Posts by: Denise Evans

The bank has not transferred title to a third party yet. If attempted, the tax sale would have shown up in the title search for title insurance. On the other hand, I've known of one foreclosure sale to a third party that did not pick up the tax sale. The title insurance company had to pay off the redemption charges.  You might want to keep track of the title status.

In Alabama, if the tax sale was before the foreclosure, then the mortgage "detaches" from the property but the lender has redemption rights. 

Those redemption rights can be exercised during the 3 years post-auction period via something called administrative redemption. Depending on whether the investor has taken exclusive possession of the property or not, and for how long, the lender might have additional time, up to three years after the tax deed.  

Lenders also have a special redemption time period of one year after certified mail, return receipt requested notice from the investor regarding the tax sale and the investor's contact information.  If the notice does not even go out until 6 years after the auction, the lender still has that one year after the notice. If the notice goes out 2 years after the auction, then the lender period and the administrative period burn off at the same time.

If the tax sale was after foreclosure, the lender is treated like any other owner. They have the above redemption time periods, but NOT the special one year for lenders.

The only way to clear title of an existing lender mortgage is to file a quiet title lawsuit and hope they don't redeem during that lawsuit, or obtain a release of their redemption rights.  Otherwise, you will not be able to obtain title insurance.

If you fail to take possession of the property within three years after the tax date, the lender or owner can file a lawsuit to reclaim the property under something called the Rioprop decision, and get the property back without paying the investor anything at all. That is because the investor's statute of limitations will have expired to gain possession.  Without possession, the investor cannot legally quiet title. 

When I talk about the "investors" possession, I mean the current holder of the tax sale rights plus any prior owners of tax sale rights. Their possession  is "tacked" together to reach the requisite time periods.

Hi folks, Peter provided me with some additional information. Just FYI, this was my advice:

So, if I understand this correctly, using some example numbers:

Tenant paid a $1,000 security deposit, equal to one month’s rent.

Tenant failed to pay $2,000 for last two months’ rent.

There was another $1,000 in damage.

Tenant vacated voluntarily.

PM sent out letter that said, “Your security deposit will not be refunded because we applied it as a $1,000 credit against your outstanding balance of $3,000.”

There was no “you owe us another $2,000” in the letter.

There was no “pay by date” in the letter.

Is that it?

If so, you will have to sue the tenant for the remaining sums due. If you do not have a waiver of exemptions in your lease, you will not be able to garnish their wages, in all likelihood, because they will be below the exemption amount.

It does not affect your ability to sue that the PM did not demand the additional money in the disposition letter. It is HIGHLY unlikely the tenant would have paid up, even if that demand were in the disposition letter.

How did your tenant get into you for two months rent without an eviction lawsuit? There should be have been a Notice of Default and Opportunity to Cure on whatever date the late charge attached for the first month’s rent. Then 7 business days during which the tenant could pay the rent and cure. Without that, an eviction lawsuit on Day 8 and a default judgment 7 calendar days after that. What happened?

Hi Peter. I need more info before I can give you an answer. Please contact me. I can't just tell you what I need here, because some of what I need depends on your responses to my questions. Sorry for the bother.

Jacksonville is close to Anniston, not Mobile. Mobile is on the coast. Jacksonville is about 300 miles NE, in the foothills of the Appalachians.  If you can't find an Anniston property management firm, a large firm in Birmingham (80 miles away) or a mid-sized one in Gadsden (30 miles) might work.

I'm in Alabama. 

I'd hire a collection agency associated with a law firm. That way, if needed, they can escalate to filing suit if just collection activities do not work. 

Most collection attorneys work on contingency. You might have to pay a court filing fee of around $250 and maybe a default judgment fee of $50, but I think it would be worth the money to try to recover some of what you are owed.

Does your  lease contain a waiver of exemptions clause? It makes a difference regarding being able to collect a judgment after you obtain one, because of a recent Alabama Supreme Court decision.

What do you know about the tenants? Employed in highly skilled jobs, making it easy to track them down?  With rental rates in Alabama, they had to be something like that if rent was $3,000 a month. Or is the $6,000 rent plus damages?

The most likely hazard you face as a landlord is not damage to the premises, but an ungrounded Fair Housing complaint.  Legal fees can run tens of thousands of dollars. If you get an attorney who does not handle a lot of Fair Housing defenses, they will be very cautious and advise you not to do anything until the case is resolved. In other words, don't rent the property to somebody else, don't evict the current (complaining) tenant despite non-payment of rent in the meantime.   In the end, most landlords make a cash settlement to the complaining party, because it is cheaper than the mounting legal fees and the non-performing rental unit. 

Whatever insurance company you use, make sure you add coverage for Fair Housing. It is not standard, even in landlord policies. In the industry they call it Housing Discrimination insurance.  If your company does not offer it as a rider, it is available as stand-alone insurance in the market.  

Lienholders have one year after receipt of CMRRR notice, or the original three years, whichever is longer. So, it would never happen that the county would let the lienholder redeem incorrectly, because they always have redemption rights during the admin period.

Your only obligation is to notify the recorded lienholder at their last known address.  If they sold the mortgage but did not record the sale in the real estate records, then you do not need to send to the new lienholder. If they sold the mortgage and recorded an assignment of the mortgage in the real estate records, then you do need to notify the new owner.

We have live online and recorded video classes on Alabama tax deeds and on the newer tax lien system. Next on will be October 16, but other dates available. 

Strategies, opportunities and pitfalls to avoid. Some free downloadable materials also on the web page, or register for a course or purchase a video. Check out the variety of resources from THE acknowledged expert on Alabama tax sale investing, Denise Evans. 

https://www.butlerevanseducation.com/collections/distressed-...

Several years ago the Alabama legislature and the Alabama Supreme Court, acting separately, eliminated the surplus funds tax sale strategy in Alabama. The strategy related to partnering with former property owners to claim tax sale overbid money on deposit with the counties. The strategy became useless because the surplus funds could be claimed ONLY if the owner redeemed first. In order to GET the money, the property owner had to first PAY the money, plus the taxes and interest to date.

Now, I think the strategy will return. That is because of the newer tax lien sale process that almost all Alabama counties follow.  In a tax lien sale, the county auctions only a lien on the property. Investors now bid down the interest rate. Under the old system, they bid up the purchase price, which caused the surplus funds. Today, after buying three consecutive years of liens, the investor can judicially foreclose. If nobody redeems during that foreclosure lawsuit, the court awards the property to the investor.

I've heard rumors the law will change next year, and there will be a public auction if nobody redeems in the judicial foreclosure lawsuit. That's good for interest-only investors, because it makes it more likely they will be paid.  It's bad for want-the-real-estate investors, because they will have competition at the auction. (I do have some strategies to solve that problem if it happens.)  It's great for surplus funds investors because what happens to the winning auction bid money after the taxes and interest are paid?  That's right--it will need to be held until someone claims it.  The surplus funds treasure hunt will return. 

Stay tuned for announcements by me in early Spring 2024, when the pre-filed legislative bills will be available for me to read. Something will almost definitely change in 2024, we just don't know exactly what. I'm betting on public auctions.