All Forum Posts by: Denise Evans

Hi Josiah, First, what a great market you are in! I just heard the news about future NASA plans in Huntsville. Congrats!

Regarding evictions, you should issue a Notice of Default and 7-Day Opportunity to Cure notice on the first day the tenant is in default. Depending on the wording of your lease, that is usually the first day on which a late charge is due. The exact wording of your lease on this point could be very important.

In Alabama, you cannot file an eviction lawsuit until you have issued the 7-day letter and the tenant does not cure in time. The longer you wait to send the letter, the longer you are delaying your ability to file an eviction. You don't have to file, but at least you can, if you decide to evict.

In a typical lease, the rent is due on the 1st and late on the 6th. Your notice letter would go out on the 6th. That is counted as Day "0".  The 7th of the month would be Day "1."  The tenant can get current, plus late charges, all the way until Day 7, which would be 13th of the month in my example.  You can file your eviction lawsuit on the 14th, unless the 13th is a weekend or holiday. In that case, the first business day afterwards is counted as Day 7.

Just because you are allowed to file an eviction lawsuit that quickly, doesn't mean you need to do it on Day 8 after the notice letter.  I like to send out a Notice of Termination letter on Day 8. It tells the tenant I am serious. It is usually a "Call to Action" and causes the tenant to call me. Ideally, that is what I want.

You can continue to talk to them during that time period, and discuss payment arrangements, but make it clear the clock is ticking down. If you agree to give them extra time--say, until the 18th--then you and the tenant should sign a Forbearance Agreement. It can be as simple as a letter both of you sign. It would say the tenant acknowledges it is in default, you have given them additional time cure this one time, but if they don't get completely current by the agreed date, then you may start eviction proceedings immediately.  You do this because you want the tenant to understand you don't have to give a NEW 7-day letter if they don't pay by the agreed date.  But, unless you put this in writing and both of you sign, a judge might make you start your notice all over again.

Also, most landlords get some sort of payment in connection with the Forbearance Agreement. The agreement should acknowledge that partial payment, and also say the landlord is not accepting that as payment in full, it does not cure the default, and the landlord is under no obligation to accept partial payments in the future.

If a tenant does not cure within the time period, but then you agree to let them get caught up later, think about requiring the tenant to sign a new lease as a condition of not evicting them. The new lease might be more restrictive than the old one. It might make the rent due on the 1st and delinquent on the 2nd. The rent might be slightly higher because the tenant is a risker tenant. You might require  a guarantor.  Whatever you can get to make yourself feel safer in your future rent payments.

If you will consistently issue 7-day default letters for all of your tenants when they are late, you will see timely rent payments improve.  Some tenants will become offended if they are late one month and receive the default letter. You should explain that you recently learned you must do this consistently whenever a tenant is technically in default, otherwise you might be vulnerable to Fair Housing complaints. That is actually true. If only some tenants receive default letters, then you run the risk of some tenant claiming you treated them more harshly because of their race, familial status, disability, etc.

Good luck!  Let me know if you have other questions.

Hi Reed, I sometimes have classes in the Auburn area.  Check out my website, and I'll comp a ticket for you.  As far as investing, you should start out in Auburn. Look for those sad little, faded-out, yard signs that say "For Rent." Maybe you can't even read the phone number any more. THAT is an owner who is looking for someone to take a problem off their hands. You can master lease such a property for a term of three to five years with an option to purchase, and then make any necessary repairs, do your marketing, and put a tenant in place for a larger rent than you are paying. OR, better, you can often buy such a property with owner financing. Usually, the owner just wants regular income anyway, not a lump sum. That is why they are a landlord. But, landlording hasn't been working out so well for them in recent times, and they are looking for a solution.

Another option is tax sales. I'm a BIG believer in buying tax sale properties.  You can buy them for next to nothing, you rent them out, and even if the owner redeems, you get to keep all the rent. Often, the owner does not redeem, and you just got a decent property for a couple thousand dollars in acquisition cost and repairs.

Thanks, Ryan, I'll give them a call.

I have some free and paid resources specifically created for Alabama landlords. Check out my book in the Marketplace--"Alabama Landlord's Desk Reference and Forms Book." The post below includes a link to the table of contents and index, so you can see the book covers all the topics you need.  It is at

http://www.biggerpockets.com/forums/517/topics/186...

I'm always happy to answer questions, ,and take phone calls.

Can anyone recommend an Alabama accountant who is familiar with tax planning issues important to small real estate investors?

If the tax sale investor never took possession, then the prior owner still has redemption rights, even though it might be more than three years since the tax sale. Contact the prior owner or heirs, and see if you can get a quitclaim deed for very little money. This will entitle you to redeem from the investor. I have classes, books and dvds on tax sale investing in Alabama, if you want more information.

Julie, what do mean "there are outstanding back taxes from 2007-2008?" Was the property sold for unpaid taxes back then?  Every property with unpaid property taxes MUST be sold in the next year's tax auction.  Or, do you mean an IRS lien?

If the owner died before the tax sale, but the tax auction is in her name, then the auction is void.  If you buy at a void auction, the heirs will eventually be able to get the property back, even many years later. They will have to pay you for the taxes you've paid. Some experts say they must also pay you interest. Some say not.  You will not be able to rent the property out and keep the rents, nor will you be able to make preservation improvements and receive their value upon a redemption.

Regarding lien holders, everyone except local government liens (grass cutting lien, sewer lien, etc.) must redeem from the tax sale investor BEFORE they can foreclose their lien. As a result, the investor is protected.

I use www.AlabamaLegals.com It is an online database of all the published foreclosure notices (and other legal notices) for the entire state.  You can search back for a 90-day time period.  You can filter by county or by newspaper. The search engine is not very robust, so you either need to scan through all the notices for a particular county and time span, or choose a distinctive word (such as subdivision name) on which to search.

Hi Trace, I will post a blog article about business entity choices in Alabama and pros and cons of each as relates to management, taxes, and asset protection. Please keep an eye out for it. The easiest way for you to acquire your first property is to get something like a converted house in a business area, that you can use as an office and perhaps split off into other offices to rent out. With a brand new law degree, you can probably get good financing terms.

The Governor of Alabama has before him a bill to shorten the post-foreclosure redemption time period from one year to six months, but only for properties that are (or were, until recently) owner-occupied residential properties.  The hidden peril is this--the lender must send out a specific notice at least 30 days before the foreclosure. If they don't send the notice, or the notice is defective, the redemption period can be as long as two years. What do you think about this?