All Forum Posts by: Denise Evans

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.

@Derek Bleam  It varies with jurisdiction. If you are inside a city limits or police jurisdiction, the inspection department can tell you what is required currently, what is triggered by property updates, and what the exceptions are. Fist confirm you are inside city limit or police jursidiction. I like to schedule a personal meeting, if at all possible, and bring a box of premium doughnts to thank people for their time.

@Ahmad H., Perhaps when questioned by the fire marshal, the tenant told the truth and said they had never replaced the batteries and thought it was the landlord's job to do that.

Good point, @Alan F. But, there is "should" and there is "required." Hardwired and interconnected vs. solely battery operated depends on what municipality or police jurisdiction the property is in, the date of the requirements, the grandfathering rules, and the last time a permit was pulled, which would have probably eliminated grandfathering. Also it depends on insurance company requirements, even if local code does not require. Cheaper rates usually translate to more stringent requirements for safety standards. Which is how they are able to keep their losses, and their rates, down.

@Alan F.

Good point, @Karl B., but we've all had the experience of tenants who won't change HVAC filters even when you leave several with them.  I think landlords are better off taking on this responsibility themselves.  If too much trouble, then at least make sure the tenants have renters insurance with at least $500,000 of liability coverage, and landlord is named to receive notices if policy in danger of cancellation for non-payment. That way, at least if the tenant does not replace their batteries and the landlord's insurance denies coverage, you can sue the tenant and collect from their renters insurance.

An Alabama client of mine had this experience, but I think it is relevant nationwide. He had smoke detectors in all rental houses. It was the tenant's responsibility to test the batteries periodically and replace them.  In at least one house, a tenant of many years had not done that. There was a fire and the house burned to the ground. The insurance company denied coverage because the smoke detector was not operational at the time of the fire. My brother-in-law, a fire marshal, told me that even if the smoke detector is a melted lump of plastic and metal, they can easily determine if it was operational at the time of fire.  He said if operational, they will find evidence of soot inside the detector. No soot, not operational, no insurance coverage.

The lesson--the landlord should check all smoke detectors at least annually, and replace all batteries at that time, and invoice the tenant for the expense.