All Forum Posts by: Denise Evans

No, boundary line dispute means a dispute about the true location of the boundary line between two separate parcels.

You should be worried about the Rioprop v. BBVA Compass Bank decision. Same Short Statute of limitations, different context.  If tax sale investor fails to take exclusive and continuous possession of the property within 3 years after the tax deed date, the former owner can file a lawsuit, cancel out the tax sale, get their property back, and pay the  investor nothing at all. The investor does not need to possess for three years, it just needs to GAIN possession within that 3-year period. That means lawful and peaceable possession. So, if you take DIY possession but the property was not legally abandoned (owner departed and has no intention of ever returning or ever doing anything with the property) then DIY possession was not lawful and does not count. And yes, if the owner died they certainly are not coming back, but title must be in someone at all times. So, title automatically devolved to heirs, even if nobody knows the identity of those particular people.  If owner died, then heirs have no intention of ever doing anything with the property. That's a hard thing to prove when you are in court. That is why ejectment lawsuits are always best.

Under the legal concept of "tacking," the possession of each owner is tacked onto the possession of prior owners for purposes of determining the relevant time period.

In Alabama:

Adverse Possession (pure squatters) takes 20 years of possession.

Statute of limitations of 10 years requires color of title (a deed, a will, some reason to believe you own the property) plus possession or payment of taxes for ten years.  Boundary line disputes usually fall into this category. Also missing deeds in a chain of title.

Short statute of limitations is after a tax sale and requires a tax deed, possession, and the passage of three years. That is for things like "curing" a void tax sale. The law regarding burning off judicial redemption rights is currently in flux due to some complicated reasons, but historically most judges have thought it took three years of possession post-tax deed to burn off judicial redemption rights, also.

1. How do I identify short sales to go after? I don't have a formula or a plan. I look over the opportunities and evaluate. Every deal is different.

2. Redemptions--rarely does a borrower redeem. More often, not very common, is someone who purchases the borrower's rights and redeems. Often, the numbers don't work for that strategy because there are other liens against the property that are reinstated if there is a redemption.

Sadly, it is not uncommon for someone to buy the borrower's redemption rights, threaten to redeem, and then extort money from the current owner to just go away. That is why it is important to know what the redemption charges are, which includes the amount by which the property value has been increased due to the current owner's post-foreclosure permanent improvements and/or repairs.  Investors should always take immediate steps to make it too expensive to redeem.  There are other strategies to make it too expensive to redeem, or if someone DOES redeem, the investor does not care because it is making a killing in profits.

I'm sure there are some industry statistics somewhere. There are several government agencies that track residential lending and foreclosures.

Not C or lower. I just saw a foreclosure deed recorded a few days ago for a house appraised at $1.2M and the credit bid price was slightly north of $800,000. In Tuscaloosa, Alabama, that is a two-income professionals (doctor and lawyer) house or business owner.  Many people are foreclosed upon and can afford significant rent, but the loan was accelerated and they could not refinance.  Or, their COVID forbearance expired and the missed payments were capitalized and now they cannot afford the larger payments. Or their many reasons. Each situation must be evaluated on it own. Personally, I prefer to identify pre-foreclosure properties and negotiate short sales.  During the last crash I typically obtained short sale approval at 20% to 25% less than true then-market value. Plus the owner doesn't care if you have earnest money or not. Plus they will spill their guts about everything wrong, and you can use that info to drive down the lender's appraisal.  Plus the process generally takes 60 to 90 days, so plenty of time to round up investors if you need them. Plus no competition, such as you encounter at a foreclosure auction.

 I do not understand the advice from Cloud Willis that only the original owner can buy back their property. There is a list of parties entitled to redeem, including spouse, guarantor, lienholders, etc.  In addition, an Alabama Supreme Court case ruled that the statutory right of redemption is a personal right, not a real estate interest, and is transferred via an assignment, not a quitclaim deed.

One cannot sell redemption rights before the foreclosure because they do not come into existence until after the foreclosure.

You cannot back date a bankruptcy. Before the 2005 amendments to the bankruptcy code, a bankruptcy filing would allow a borrower to reverse a foreclosure that had already occurred, but that is no longer possible.

Foreclosure investing is very profitable and relatively safe in Alabama. You just need to  know what you are doing.

There are no preferred forms for the notice to vacate. I suggest posting it on the door and mailing by certified and regular mail. The time starts from receipt, so send as many ways as possible.  Something like, "I purchased your property at the foreclosure auction on ______, 2022. This is your notice to vacate the premises within ten calendar days. Failure to vacate in a timely manner will result in loss of any redemption rights and subject you to a lawsuit and a request for damages for unlawful possession."  Put your contact information at the bottom so if they want to redeem they can contact you. mostly, you don't want them LATER saying they would have contacted you to redeem but didn't know how to get hold of you.

You can buy them out rather than using courts. The going rate is $2,000 cash for keys if they vacate in three weeks, but they also have to release any redemption rights to you.

If there are no problems (e.g., a claim the foreclosure process was invalid for some reason) then an ejectment lawsuit will cost around $500 for the lawyer and $200 for the court filing fee and $50 for a default judgment. That will take 30 calendar days from when you obtain service. I recommend a private process server for the speed and the ability to instruct the process server to video themselves serving the papers. That way, the defendant cannot later claim they were not served and possibly get a default judgment set aside. Private process server will cost around $75.  if they file a generic answer and force you to prove your right to an ejectment order, your lawyer can file a motion for summary judgment. That usually costs a couple of hundred dollars extra. You can nail this stuff down when interviewing lawyers. The motion for summary judgment tells the court "There are no fact issues in dispute, maybe only questions of law. Because of that, there is no need for a trial so a trier of fact (judge or jury) can decide the correct facts.  So, here are the facts, they are undisputed, now please rule as a matter of law that we win." That usually takes about three to four weeks. Then the ejectment order has to be final and non-appealable, which takes 42 days. Assuming there is no appeal and no post-judgment motions, you can then get your turnout order. That takes a couple of days. In most counties, you can them make an appointment with the sheriff's department for a deputy to accompany you and keep the piece while your movers put everything out on the street and the owners are escorted out.  If they resist, then you go back to court and ask for them to be found in contempt of court. that takes about a week.  If you are in Jefferson County, then the turnout orders have a backlog of several months because of there being too many ejectments and evictions to administer, and not enough sheriff's deputies. All other counties it is pretty fast.

For the above reasons, it usually makes sense to negotiate cash for keys.

By the way, it is not usually the borrower you have to worry about redeeming. It is the borrower selling its redemption rights to another investor, who the redeems and snatches your deal away from you.

If there is a redemption, you are entitled to repayment of the auction bid price (not the price you paid the bank, if you bought it from them after the auction) plus casualty insurance premiums, plus the value of any permanent improvements or repairs made after the auction, all at 7.5% interest.

If you have to eject, you are also entitled to damages equal to the fair rental value of the property from date of demand until delivery of possession, but borrowers are usually judgment-proof, so don't pin a lot of hopes on that being collectible.

There are some risks associated with an occupied Alabama foreclosure property. You should give the 10-day notice to vacate immediately. If the borrower does not vacate in a timely manner, they lose their redemption rights. 

If you want to get them out using the courts, you file an ejectment lawsuit in circuit court. it can be timely and expensive, but most times you are able to get a summary judgment. 

Sometimes borrowers have grievances against their lender and wish to sue. Their lawyers tell them to wait until an ejectment lawsuit is filed in state court. that way they can add the lender as a party and keep the dispute in state courts, which are procedurally much more forgiving and friendly than federal court. if the borrower just sued the lender in a stand-alone lawsuit, the lender would remove them to federal court. Federal judges are very strict about rules of procedure and rules of evidence and deadlines and stuff like that. Most lawyers are uncomfortable practicing in federal court.

Lender liability law in Alabama is rather swift justice against the borrower, and most lawyers know that. It is rare for somebody to be able to successfully cause trouble. I'm just warning you that is a possibility, but a low-risk possibility.

Way too complicated for my poor fingers to type an answer. Please feel free to contact me.