All Forum Posts by: Denise Evans

In Alabama:

First, if the lease says it is between the PM as landlord and the tenant as tenant, that is completely wrong. YOU are the landlord, and have always been so. This is a common problem. The lease should say something like, "XYZ Property Management Company, as agent for the Landlord, and Joe Smith, Tenant, agree as follows..."

You must send notice to the tenant that you are now managing. The prior PM company should have done that, because it is as much for their protection as it is for the tenant to know where to send the rent.  If the notice does not go out, then the prior PM is on the hook for "all landlord responsibilities," whatever that means. No court guidance on that language. Very sloppy and not well thought out. But, it is scary if you are a third party property manager.

Do you know when the lease was terminated for the default?  You have 60 days after lease termination to give an itemized accounting of sums withheld from the security deposit. If you miss the deadline, the tenant can sue you for double the security deposit amount and attorneys fees EVEN IF they were clearly in rent payment default and are being evicted.

Only an Alabama licensed attorney can appear in court to represent another person or entity, unless it is small claims court. Evictions are handled in District Court, not small claims. If you own the property in your own name, you can prosecute your own eviction lawsuit. It's all done online. if you are the 100% owner of a legal entity that owns the property, and have conduit tax treatment, that is still two different entities--you the person and your LLC or corporation, so an attorney is required for court filings and appearances.

Be aware that even with a turn-out order, Jefferson County sheriff's department is running 3-4 months behind in serving them, so sometimes cash for keys is the only economically sensible solution if you have a saavy deadbeat tenant.

Only an Alabama licensed attorney can prepare documents that transfer title, such as a deed.

Virtually nothing else REQUIRES an attorney, just specialized knowledge and experience. That being said, it is often safer to go with an attorney who might have a higher likelihood of that knowledge and experience than the typical real estate broker.

Please send a PM if you want to talk on the phone. You have a pretty wide-reaching set of issues.

The heirs have rights of redemption. I have a free video on my website that explains who the heirs are, under Alabama law.

If the property is in any county EXCEPT Jefferson County (Birmingham or Bessemer Division) and the prior owners died before the tax auction, then the tax sale is void. That means the heirs can have it set aside, but by statute they must pay you taxes and interest in order to do that.  But, because it is not a true redemption, they do not have to pay you redemption-authorized charges such:

If property contains a residential structure, value of post-auction preservation improvements made by investor(s) plus cost of casualty insurance plus 8% interest on those items.

If property is located in an official urban renewal or urban redevelopment district, the value of post auction permanent improvements made by investor(s) plus cost of casualty insurance plus 8% interest on those items.

BTW, redemption costs, other than the above items, is only taxes plus annual interest. In some circumstances the overbid also earns interest, but that is probably not relevant here. If you paid more than the true redemption amount to acquire a property, you will lose some of your money if there is a redemption. If somebody told you that you could charge legal fees, due diligence, title searches and any number of other things, they gave you bad advice.

You need to be sure to put language in the lease saying they are "jointly and severally liable," otherwise they could argue that point even if all in one lease.

My pleasure. I hope it helps you with your decision.

I'm in Tuscaloosa.

Best way to protect self re student damage is to always require parents as guarantors.  You are limited to one month's rent as security deposit under Alabama law, but you can require guarantors to pay a deposit for their own liability, in my opinion. That idea is untested in the courts.  Frequent inspections and immediate repairs or cleaning and then immediately charged to tenants will help prevent a complete mess at lease end that exceeds deposit amount to repair. 

Legal age in Alabama is 19. If student is under 19, include a clause in guaranty agreement saying guarantor is liable for full term of the lease, even if the student disaffirms the contract upon reaching age 19.

You can require tenants obtain renters insurance with liability coverage in pre-determined amounts.  As long as you don't discriminate (such as, only foreign students or only students with disability animals) then it is legal.

Please clarify what you mean by recent restrictions on STR in area? There are some historic districts that limit number of unrelated persons residing on the premises, if that is what you mean.

Eviction is easy and fast, with service via posting lawsuit papers on the door, only 7 days to answer otherwise default judgment. If there is an answer the case gets priority setting on the docket for hearing. If the tenant loses and appeals it must post an appeal bond equal to all past due rent and continue paying rent each month to stay in the premises during the appeal. 

Judges here have heard it all and not fooled by sad stories.  Claims of landlord not meeting its responsibilities might allow tenant to cancel lease without penalty, but statute says it is not grounds to stay in premises rent free.  Cancelling lease for landlord failures requires written notice of default from tenant and 14 calendar days to cure, and the default remains uncured within that time. Of course, it must be a legitimate default. 

Unlike Jefferson County (Birmingham area) turnout orders in Tuscaloosa are executed fairly quickly.

Most student leases are signed in October for the coming August.  

Automatic renewal clauses are legal and enforceable.

Hope this helps.

My law license is in Texas, where I was a litigator many years ago. I am retired from that, but still active in consulting and similar services in Alabama. If you need an attorney for deed preparation or litigation, I can refer you to someone. Otherwise, people mostly need consulting.

Aside from normal due diligence regarding any property, you will need to find out:

1.  Are there still any outstanding redemption rights. Probably there are. They can extend beyond the 3 years from tax auction to tax deed, and often do extend that far. If the assessed owner or heirs redeem, you might get only taxes plus interest, and lose the excess over that paid to the wholesaler.

2. If the former owner gave a quitclaim deed for their rights, and the current owner sells or assigns the tax sale rights, did the correct person quitclaim? Did all of them quitclaim?  If the tax assessed owner died, it can be tricky figuring out the identity of the legal heirs.

3. Was the tax sale void?  Under the tax-certificate-to-tax-deed system used by all counties until very recently, a tax sale might be void if the owner died before the auction, or was foreclosed upon, or sold the property to someone else. In other words, the name called out at the auction was not the true owner.  Only Jefferson County has a special law that protects it in such circumstances.  If the tax sale is void, the owner(s) can get the property back by paying taxes and interest only. No payment due for improvements.

4. Has it been too long since the tax auction? If more than six years since the auction, and no investor has taken possession of the property legally and continuously and exclusively (more than just putting up a no trespassing sign) then the former owner can get the property back and pay nothing at all. There is some doubt about whether that six years is tolled (paused) while the property is on the state inventory, and no appellate guidance.

5. Was the most recent tax sale against another tax sale investor?  In other words, is there any even earlier owner who might still have redemption rights, even if the most recent owner gives you a quitclaim deed.  It is not uncommon for investors who want only interest income to simply stop paying the taxes and let the property go to auction again if nobody redeems.  It is not uncommon for investors to get in over their heads regarding rehab expenses and simply dump out of the investment by not paying taxes and  letting it go to auction, thereby cutting their losses.

There is a LOT of money to be made in Alabama tax sale properties, but you better know where the landmines are located so you can avoid them successfully.

You get the value.  Contact me in a PM and I'll send you the appellate decisions and statutes.

yes

@Benjamin Hedden, I am confused about the parties and the property. I think you are saying there was a subdivision that was platted but never developed. Is that right? Is there infrastructure--roads, sewer, etc?

At a minimum, something on the plat was described as a common area, right? Again, I'm guessing, but no homeowners association was ever organized, no HOA dues ever collected and no taxes paid, so the common area was sold at auction and someone bought it.

That investor is entitled to possession, may file an ejectment lawsuit, and may deny access to or possession of the common area to anyone else. This incudes the entrance and interior roads, if they were never dedicated to the government.

I am not sure what you mean by "someone forcing you to buy back your own tax deed." That sounds completely different, like you bought a tax sale property, then failed to pay the taxes and it went through auction again, and no someone forces you to redeem. That particular opening statement of yours is throwing me for a complete loop.