All Forum Posts by: Denise Evans

@Kristine Ann, even under the "older" system in Alabama, winning bidders do not get a quitclaim deed. They get a tax certificate and ONE of the "sticks" in the "bundle of rights" that belongs to the owner. The winning bidder gets the right to possession, but usually cannot exercise DIY possession. Instead, it usually requires voluntary surrender by the owner, or a successful ejectment lawsuit suit. Three years later the investor will surrender their certificate to the Probate Judge, pay a $5 fee, and obtain a tax deed. Even after that, there might still be redemption rights in former owners (or heirs) and lien holders.

PS--DO NOT ask county personnel for legal advice. They are not allowed to give it. Often they do it anyway, but are usually wrong. Rely on industry acknowledged experts for advice. In Alabama, the rules are complicated and subtle.

Most people will not go pro se into a lawsuit. So, to demand a sale, they'd have to hire a lawyer to make an appearance, appear at a hearing to prove redemption rights, have a mini-trial on the issue, and then demand an auction. Usually not worth the money to be just a troublemaker.

I agree about Huntsville and also Madison. Prices are getting really high. You might want to explore Athens or Decatur, still within commuting distance to Huntsville government jobs, but real estate prices not so high.  Florence is a University town, plus a strong military retiree component.  It is a beautiful area. Just across the bridge, in Colbert County, is more modest housing, also. That would be Sheffield, Tuscumbia and Muscle Shoals.

A few Alabama counties are still on the old system. They are some of the rural counties plus Lee County (Auburn University) and Houston County (Dothan--VERY large agribusiness area).  Alabama has already changed in response to Tyler v. Hennepin County, for the new system. Now, if someone has redemption rights they can demand a public auction at conclusion of the lien foreclosure lawsuit. If it brings enough to cover taxes, interest, legal fees and auction expenses, plus some extra, the people with redemption rights share the "extra."  If nobody demands a public auction, the tax sale investor gets the property, free and clear.

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.