All Forum Posts by: Denise Evans

You are welcome:)

If you in fact purchased a tax lien under the new system (people bid down the interest rate) then you are not allowed to set foot on the property and you certainly cannot cut the timber until after a judge forecloses your liens, quiets title, and orders the clerk to issue a deed to you. That is, at a minimum, 4 years in the future.  You must file the lawsuit and then you must obtain the order.

If you purchased a tax certificate under the old system (people bid up the purchase price) you are not allowed to cut the timber while you have only a tax certificate, which is the time period up to three years after the auction. There is no appellate or statutory authority that allows to you cut the timber after the tax deed date, but while judicial redemption rights might still be outstanding. I personally think you can, and if the former owner redeems, they get cutover timber land. But, a court could rule differently. 

Let's connect and discuss details. At a minimum, if you want to shelter W2 income you need to know the IRS rules regarding passive activity losses and the exceptions, and also about the largest tax sheltering deduction, which is cost segregation and bonus depreciation. But  you also need to understand recapture income when you sell, which is basically a 25% tax on all the accumulated depreciation deductions you've take over the years. If you don't already know those concepts, start researching them, so you have a good basis for a conversation.

Most municipalities in Alabama require a business license for long term rentals, also. Call the Enterprise revenue department and ask them. They might not have a separate form, it might be just the regular business license form. Probably short term rentals have a separate form because of the lodging taxes.

Your attorney or anyone else can sign if they have a power of attorney, but the instrument has to recite WHO the principal is. Such as, "John Doe as attorney in fact for Jane Smith..."

I wouldn't worry. Not very many people are as diligent on the hunt or as resourceful as I am. On the ones I did find, most people would have given up long before I did.

You can register your Wyoming LLC as a foreign entity qualified to do business in Alabama. It is not necessary to create an Alabama LLC, unless that is part of your investment strategy. Registering as a foreign LLC is done via online forms at the Alabama Secretary of State's office. You will need an Alabama registered agent for service. While many will also create LLCs or other entities and perform other services, that is not their core function. Their core function is to act as your official registered agent for service so if you are sued, the lawsuit papers can be served on your registered agent. That is why all entities that do business in Alabama must have a registered agent for service. The Alabama Secretary of State has an online list of registered agent services.

You will also need a business license in the community where the rental property is located.

Do not be so confident you are truly anonymous. At a minimum, you will have to sign a mortgage for your LLC. Your name can be obtained from that. If someone connected with you has signing authority, you can be found via that connection. I have found "anonymous" investors in the past. It is not easy, but it is not impossible.

There has been some confusion on this point, and emails to me with questions.

If you have an Alabama tax lien you purchased through Govease.com (or you bought it from somebody who bought it through GovEase.com) you are NOT entitled possession. This is what we call "the new system."  You cannot cut locks, you cannot take possession, you cannot set foot on the property, you cannot make any improvements. There are some VERY specialized strategies that can get around the problem, but they require buying out the former owner or one of the heirs.  A few counties have in-person tax lien auctions, not through GovEase.com, but it is the same rules.

Alabama tax lien investors can only accumulate the correct number of tax liens for the correct number of years and then file a lien foreclosure lawsuit. If nobody redeems during that lawsuit, and nobody with redemption rights demands a public auction, then the judge will foreclose your liens, quiet title in you, order the clerk of the court to issue a deed to you, and you will own the property, free and clear of any liens or claims. At that point, and not one minute before, you can do anything you want. Well, technically, you have to wait until the order is final and non-appealable, 42 days after the judge's order.

The "older system" (still used by some counties) is the one that allows possession. Please make sure you know what you own, and what your rights are. If you have a tax lien and take possession, you can be arrested and you can be sued for actual and punitive damages for trespass.

Tax sales are a balancing act among (1) the need of government to collect property taxes and, if owners will not pay then, then to provide incentives for investors to purchase the tax rights and (2) investors, who need an attractive return for the risk they are taking, and (3) citizen taxpayers, who should not lose their property and all equity because of small debts and perhaps temporary or at least relatively short term financial difficulties. So, no one group is the primary focus of the laws.  Nobody is targeted for "protection" to the complete detriment of someone else.

Sometimes taxpayers, or their heirs, have moved away from the neighborhood. Nobody knows where they are. They do not receive notices about the tax sales. Their friends do not call them when the notices run in the newspaper.  Perhaps it is a person who has been overseas in the foreign service or the military or missionary or Peace Corps service. They intend to come home to "Mom and Dad's" old house, eventually, but it is not top of mind. They assume other family members are looking after things. It turns out nobody is looking after things.

The tax sale happens. An investor buys the liens, thinking he/she will end up with a property worth, in its current condition, perhaps $40,000.  That missing person, in all fairness, is entitled to the equity over and above the taxes, interest, legal expenses and auction expenses. That is because of the United States Constitution, and all state constitutions. Plus age-old notions of fairness.

If that missing person does not know about the tax lien foreclosure, they cannot appear and demand an auction.  Perhaps that missing person could not afford to fix the property up, and so they would not redeem, even if they knew, but they are certainly entitled to the equity.

It is the Guardian ad Litem's job, and ethical responsibility, to protect the rights of those people who cannot protect their own rights.  Historically that has been people like minor children, mental incompetents, and unknown people who do not even know that something bad is about to happen.

In my opinion, in order to protect the rights of the unknown defendants, the GAL must always demand an auction. The unknown people have that right, if only they knew about the lawsuit. It is the GAL's job to do what those unknown people would have done, if they could.

The auction is public, and advertised in the paper just like bank foreclosure auctions. Anybody can bid. The investor has the opening bid, in the amount of the taxes and other legal charges. If someone bids more than that, the investor can bid against them. The investor has an advantage because he/she has already spent the money and accrued the interest for the opening bid. Any other bidder has to write a check for that amount, PLUS the amount over that to reach their winning bid. If the opening bid is $8,000 and the bidding reaches $15,000, a 3rd party has to write a check for $15,000. The original bidder need write a check for only $7,000, making it easier than a $15,000 decision.

Investors should not get emotionally attached to their tax sale properties. No investor should get emotionally attached to real estate. Lose out to a 3rd party bidder on the property for which you bought the tax liens? Go to some other investor's public auction and bid on THEIR property. There will be plenty to go around.

@John Mocker, that might have been it. It was just a short story in passing by a client telling me something that had happened to him in the past, with a residential property.   It came up when I told him about fire suppression and alarm systems I was having inspected at one of his commercial properties that I manage.

No, but they would have awakened the occupants in time to call the fire department.

@Linda S., it is also important to have tenant orientation and perhaps refreshers on how to use the safety equipment. I find short videos are the best way.  Also for bed bug prevention and identification. Nobody much reads written materials anymore. A video of no more than 5 minutes, but preferable 3 minutes or less, will be watched.