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All Forum Posts by: Denise Evans

Denise Evans has started 56 posts and replied 1460 times.

Post: Alabama Tax Sale Redemption Rights

Denise EvansPosted
  • JD, CCIM , Real Estate Broker
  • Tuscaloosa, AL
  • Posts 1,585
  • Votes 1,504

Toi, I don't understand your question. Was there a recorded mortgage in the county real estate records on the day of the tax sale?

Post: Alabama Tax Sale Redemption Rights

Denise EvansPosted
  • JD, CCIM , Real Estate Broker
  • Tuscaloosa, AL
  • Posts 1,585
  • Votes 1,504

Any redeeming party, whether former owner or lien holder, must pay for the value of preservation improvements and casualty insurance premiums if the property contains a residential structure.

Notices to lien holder can be sent out whenever you want--right after the tax sale, two years after the tax sale, or five or ten years after the tax sale. The notice simply starts the redemption time period. If an investor fails to send out any notice at all, then theoretically the lien holder would have forever to redeem, although courts would probably cut this off after 20 years.

Yes, during both redemption periods, preservation improvements must be paid in order to redeem, but only if the property contains a residential structure.

The mechanism during the administrative period is that all counties now require a redeeming party to obtain an affidavit from the investor before the county official will allow redemption. That affidavit says the investor has been paid, or is not owed anything, or has made satisfactory payment arrangements with the redeeming party.

During the judicial period, all communication is directly with the investor, so there is no need to alert the investor that redemption is being attempted.

Post: Alabama Tax Deed Property

Denise EvansPosted
  • JD, CCIM , Real Estate Broker
  • Tuscaloosa, AL
  • Posts 1,585
  • Votes 1,504

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.

Post: Is it possible to dissolve an owner financed mortgage

Denise EvansPosted
  • JD, CCIM , Real Estate Broker
  • Tuscaloosa, AL
  • Posts 1,585
  • Votes 1,504

Check with an Alabama attorney.  Ask a real estate agent in your area to recommend a closing company. Then call the closing company and ask for the name of the attorney they use. Then call that attorney. It will be your BEST chance at finding an attorney who knows this area of the law. It can be tricky for the uninformed.  All all-purpose attorney who does divorces and car accidents and DUI cases will most likely NOT know enough to help you properly.

Post: Is it possible to dissolve an owner financed mortgage

Denise EvansPosted
  • JD, CCIM , Real Estate Broker
  • Tuscaloosa, AL
  • Posts 1,585
  • Votes 1,504

Yes, this is called a "deed in lieu (that's French for "instead") of foreclosure" in Alabama.  People just shorten this and call it a "deed in lieu" or a "DIL."  In some states, a DIL is the same as a foreclosure. In other words, if there is a second mortgage on the property, and/or a tax lien, and/or a judgment lien, they are all wiped out by the DIL, the same as if there had been a foreclosure.  This is NOT true in Alabama.  A DIL in Alabama allows all junior liens to remain on the property.  Be sure to get a title commitment before going forward, and then also pay for title insurance and make sure the title insurance covers "the gap."  Here's the problem Even if there are no junior liens at 3:30 on Friday afternoon, but one gets recorded at 4:40 and closing takes place at 4:50 and the deed recorded the same day, the junior lien got recorded before the deed. Technically, it would remain on the property. This rarely happens. Most insurance companies insure "the gap" so even if this happens, the title insurance would take care of the problem. Some do not insure the gap. That's why you need to ask.

A DIL shows up as a foreclosure on the borrower's credit report. A borrower might prefer to just deed the property to the lender and simultaneously have the note marked "paid in full" and a mortgage satisfaction recorded in the real estate records. This is a matter for negotiation between the parties. An FDIC-insured bank is not allowed to do this because of issues related to accounting and transparency. A private lender can.

Post: Alabama Tax Sales Auction, Excess Bid, and Redemption

Denise EvansPosted
  • JD, CCIM , Real Estate Broker
  • Tuscaloosa, AL
  • Posts 1,585
  • Votes 1,504

@Toi H., there are all types of properties on the state list. You've just been unfortunate if all you've encountered was unimproved land.

Post: Alabama Tax Sales Auction, Excess Bid, and Redemption

Denise EvansPosted
  • JD, CCIM , Real Estate Broker
  • Tuscaloosa, AL
  • Posts 1,585
  • Votes 1,504

Hi Toi, What list are you using? The county's list of properties set for auction (that list will come out in the spring) or the State's inventory of properties offered at previous tax auctions but not purchased by anyone (in which case, they go to the state) or some 3rd party list?

Post: Right of redemption - owner financed mortgage went to tax sale

Denise EvansPosted
  • JD, CCIM , Real Estate Broker
  • Tuscaloosa, AL
  • Posts 1,585
  • Votes 1,504

If you purchase the note AND the mortgage from the original seller/lender, you have the right to redeem from the tax sale and the right to foreclose. Your foreclosure will not pass good title until you redeem from the tax sale.  If another investor buys the tax lien from the state, that investor can make "preservation improvements" and your redemption price will include the VALUE of those preservation improvements (not just the cost to make them.) That amount can rack up to a large number pretty quickly. If you plan to act, I'd probably do something sooner rather than later.

Post: Not Finding Deals, or not Looking Correctly? Examples Inside.

Denise EvansPosted
  • JD, CCIM , Real Estate Broker
  • Tuscaloosa, AL
  • Posts 1,585
  • Votes 1,504

Contact Jonathan Keith in Mobile. He works with a lot of foreclosure investors and is VERY knowledgeable about spotting those unusual deals that are overlooked by less sophisticated buyers. He operates in Mobile and Baldwin counties. Contact me via private message, and I'll send you his email address and phone number. I can also give you some Baldwin County contacts for short sale opportunities. Short sale properties can typically be purchased for 20% less than FMV.

Post: Alabama Tax deeds /Tax Lien

Denise EvansPosted
  • JD, CCIM , Real Estate Broker
  • Tuscaloosa, AL
  • Posts 1,585
  • Votes 1,504

You can take possession as soon as you get your tax certificate, but you can't just throw someone's stuff out into the street. If the property is vacant, then take possession. If it is occupied, you must give written notice to vacate and then must wait 6 months before filing an ejectment lawsuit.

It is critically important to take possession as quickly as possible, because this is the event that starts the judicial redemption clock ticking down. There are several redemption time periods in Alabama. It is tricky to figure out yourself, but fairly easy to explain. Contact me privately for more information.

If you have a tax deed (available 3 years after the tax sale) then you do not have to give the written notice and wait 6 months. You can file for ejectment immediately.

Often, once the investor indicates that it plans to take possession of the property, the owner will begin redemption. Be aware that even if you have a tax deed, the owner can still redeem.

If you file an ejectment lawsuit and the owner counterclaims for redemption, your legal fees will be added to the redemption cost the owner will have to pay.

If the owner files a lawsuit against you to force redemption, and then you counterclaim for ejectment, you are NOT entitled to recover your legal fees.  The owner does not get legal fees, either, though.  Why would you counterclaim for ejectment? Your counterclaim would say, basically, "We don't think the owner will be able to redeem. Judge, we want you to decide the redemption price tag, and then give the owner a short period of time to cough up the money and, if he doesn't, we want you to order him off the property so we can go ahead and take possession."

Because of the legal fee rules, it is tactically important that you be the first one to file a lawsuit.

It is a good idea to get liability insurance whether you have a tax deed or tax certificate. Premium will be around $50 per year.  Not all insurance companies will write casualty insurance on a tax certificate.  Since you have possession rights but not ownership, your insurable interest is limited.

If you do purchase casualty insurance, and the property contains a residential structure, then if the owner redeems, they will have to reimbursed you for the premiums, plus 12% interest.  Remember, the property MUST contain a residential structure in order for you to be compensated for the premiums.

Good luck!