All Forum Posts by: Denise Evans

Under the tax lien system, current law, the investor may file a foreclosure lawsuit when its been at least 3 years since the first auction but no more than 10 years. If nobody redeems, the judge forecloses the lien, quiets title, and orders the clerk to issue a deed to the investor.

Because of a May 2024 statute amendment, anyone who has not received a final order of judicial foreclosure by 10/1/24 will be under the new rules.

The new rules are the earliest you can foreclose your liens is 4 years after the first auction. If nobody redeems in the judicial foreclosure lawsuit, BUT somebody with redemption rights demands a public auction, then the judge will order an auction on the courthouse steps.  Investor makes the opening bid for the total owed to it--taxes, interest, legal expenses and auction expenses. Bidding goes up from there. The investor can bid also. Winning bid gets the property, the quiet title order and the clerk's deed. First money goes to the investor for its taxes, interest, etc. Next money is paid into court for the judge to decide how it should be distributed among the people claiming to have redemption rights.

@Julie Dawn tapia. Jefferson County switched types of tax sales. There are two different sets of laws, what we call the old system and the new system. Most counties now use the new system. A few still use the old system. Jefferson County changed to the new system for auctions starting in 2021 and afterwards.  Under the new system, you have only a lien on the property. You are not entitled to possession. You cannot rent it out. You cannot make improvements. All you can do is wait the required number of years and then file a lawsuit to foreclose your lien.

Hi @Tiarai Fields.

With tax lien certificates under the new system

1. There is no need to provide extra redemption protections for lienholders who might have been unaware of the tax auction. All people with potential redemption rights, including lienholders, must be named as defendants in the judicial foreclosure lawsuit. That is their opportunity to decide if they want to redeem or not.

2. There are NO possession rights with only a tax lien certificate. After you foreclose your lien and have the court order, you are entitled to possession. That is because at that point you are an owner, just like any other owner of real estate.

3. Redemptions are handled with the county, even if it has been more than 3 years. The tax lien certificate holder can wait up to 10 years after the auction before filing its lien foreclosure lawsuit. At any time before that lawsuit is filed, someone with redemption rights can redeem directly through the county.  After the lawsuit is filed, they file in the lawsuit itself. Nothing is done directly with the investor.

If you don't turn in your certificate and get a deed, the law assumes you have ownership, but it's not completely clear-cut. You can continue making the annual payments and preserve your interest. It is best to get the deed, though. The fee is only $5.  Then for sure you are the owner and there is no dispute with insurance companies if you suffer a loss.  If for some reason you need to rely on regular adverse possession instead of tax sale short statute of limitations, it requires ten years of possession after color of title. That tax deed is your color of title. Also, if you have to go to court for some reason and you have a tax deed, the probate judge's signature is prima facie evidence the tax sale was done correctly.  Someone can dispute that and then you'll have to prove it, but usually nobody disputes it. But, if all you have is a tax certificate, you MUST prove the tax sale was done properly, even if the other side does not raise that issue. That is only if you are in court, though.

@Diane Merrill, you can also bid against other people. If the total owed is $75,000 and someone bids $76,000, you can increase your bid to $77,000 and so on. The extra money over and above your payoff must be paid to your borrower, or to secondary lienholders if there are any. So, if there was a credit card judgment against your borrower, you would contact the lawyer who represented the credit card company (their name is on the certificate of judgment in the real estate records) and pay the money over to that lawyer.  The lawyer who helps you do the foreclosure will order up a title report and tell you what should be done under different scenarios. 

Just make sure you hire a lawyer who has LOTS of experience with foreclosures.  Ask a real estate agent in the area for a few closing companies.  Call those closing companies and ask to talk to the closing attorney. Ask that attorney for the names of a few attorneys who do a lot of foreclosures. The closing attorney will know the actors in that field.

A

There is always that chance. It is hard to say in the abstract. The foreclosing party places the opening bid.  If your opening bid is the amount owed, plus legal fees and foreclosure expenses, then any auction bidder with have to bid a higher price to get the real estate.  That way, nobody is able to grab the property for $100 or so, just because they are the only bidder.  If nobody bids, then YOU are the successful foreclosure bidder. You get the real estate and can then place it with an agent to try to sell in the regular manner.

The ADOR list is a good place to start. If you buy an owner's redemption rights, you will have to pay full taxes and accrued interest to redeem. But, with all the inventory at the State, you can find something that is worth it. Often, it is not simply a matter of the former owner being unable to redeem. If they DID redeem, what would they have--usually a house that is not habitable and cannot be made habitable without an infusion of $30,000 to $40,000 that the owner does not have and cannot borrow.  Just make sure there are no liens against the property. The tax sale "launders" off all liens except local government liens--sewer, grass cutting, demolition.  If the owner redeems, or if you buy out the owner's rights and then YOU redeem, all of those liens re-attach to the property.

BTW, do not count on buying vacant lots and building something on them. With construction costs today, and rental rates in the neighborhoods where most of the properties are location, you usually can't make the numbers work.

That is correct. But once they have been evicted from the lot, and not removed the mobile home (as they are required to do) then it is considered abandoned. If you get an eviction order and they do not get out, then they are in contempt of court and can be brought before the judge. He/she will give them additional time, but at some point they will be told they can go to jail for contempt of court.  You can, of course, pay Sheriff's deputies for the turnout order and you can pay someone to move the MH off the premises, but that is not your only remedy.   I recommend you join the local state trade association for mobile home park owners, and you will probably learn a lot and learn a lot of names of attorneys and others that can help you.

The remedy is eviction, not ejectment. Eviction is easier and faster. As far as the tenant owning their own mobile home, look at Alabama Code Sections 35-12A-1 through 35-12A-15, which provides the remedies for selling mobile homes that are abandoned. A mobile home is abandoned if the tenant has been evicted from the lot but does not remove their mobile home.

Contact Josh Anderson, Anderson Realty Group in Birmingham, AL. He wholesales tax deeds and also has a finance company for tax sale investors.