All Forum Posts by: Denise Evans

@Michael Watts, It is my opinion that if there are unknown persons with redemption rights, the guardian ad litem's ethical responsibility will always be to request an auction. That protects the rights of the unknowns. If the investor's opening bid is the only bid, then that is the market speaking regarding the value of the house being no more than the liens. So, there has been no equity stripping. If it brings a higher price, then the money will go to the State's unclaimed funds to await possible claims by the unknowns at some future point.

You were wise to invest in abandoned houses under the old system. I think vacant houses might be a good investment under the new tax lien auction rules.  Some of them will not be redeemed, either. Often, owners or heirs will have to ask themselves, "If I spend $2,000 (or whatever) to redeem this property, is it reasonably forseeable that I will be able to fix it up and either sell it or turn it into rental revenue? Where will the money come from to be able to do that?"  Sometimes it's better to just dump out and not redeem and be relieved you don't have to stress about it any more.

Largely the problems have been satisfying judges that all the due process requirements have been met to protect the rights of defendants. It requires RIGOROUS adherence to the statutory requirements and also erring on the side of caution when in doubt.  By that last statement, I mean that if a plaintiff THINKS someone  MIGHT have redemption rights (such as an adverse possessor) they should be included in the lawsuit as defendants. Then, such persons can prove to the judge they have redemption rights, or not, as the case might be. But, at least they are before the court from the very beginning. 

Some of the problems have been sloppy drafting.  Alabama has had a "notice pleading" system for many years. In other words, if a defendant can sort of figure out why they are being sued, from reading the complaint, that is enough.  The Alabama Supreme Court has been looking for a test case so they can pivot to more rigorous pleading standards.  I think many circuit court judges know that, and they are already tightening up on pleadings requirements, especially in judicial foreclosure lawsuits. From a due process standpoint, it is essential that defendants truly understand why they are being sued and what their rights are.  If I crash into your car with my car, and you sue me, I know why you are doing that.  With judicial foreclosures, it is not so clear.

Sometimes, the guardian ad litem appointed by the court must continuously ask the plaintiff's lawyer for information required by law but not voluntarily included in the initial pleadings package. It causes delays.

I am preparing a Complaint package and checklists for the new system that will go into effect on October 1, 2024.  I think it will help speed things up.

Yes, Jocelyn, if you bid down the interest rate, then that is the newer tax lien system.  If you have already filed your judicial foreclosure lawsuit, and if there are unknown heirs who have to be represented by a guardian ad litem, that is what might take so long. We should talk so I can figure out what exactly is going on.  You need to beat that 10/1/24 deadline before the laws change, and not a good way for you.

Christine, if you bought three tax liens today and it has been more than three years since the first one, it is highly unlikely you will get a final order of judgment by 10/1/24.  Greg Stanley got one done quickly in Baldwin County. To my knowledge, that is the only one that has sailed through so far.

Lien certificates to not turn into deeds. Tax certificates turn into deeds. Did you buy it at auction? Was the auction online or at the courthouse. Did you have the highest bid above the opening amount of taxes + interest, or did you bid down your interest rate starting at 12% down to something else? That will help me understand exactly what you bought and what the rules are.

The law changed it to 4 years after the first auction, or the first sale by the tax collecting official. So, if the lien does not sell in Year 1, and you buy Year 1 and Year 2 liens in the Year 2 auction, then the 4 years starts on the date of the Year 2 auction.  

You must still own all of the sold tax liens up until the date you bring your foreclosure lawsuit.

Anyone with redemption rights can ask for a public auction. That seems like a bad thing for investors, but it actually creates a lot of opportunities AND makes it much less like the foreclosure lawsuit will be attached on constitutional grounds and run up huge legal fees while your lawyer fights those issues.

Everybody, the law has changed dramatically about tax lien foreclosures in Alabama. It does into effect on 10/1/24 and applies to any liens for which a final order of foreclosure has not been entered by that date.

I think Jocelyn's question was about tax deeds from the state. That related to older system of tax certificate sales that turned into tax deeds without any judicial action taking place. If someone has paid the price quoted by ADOR (Alabama Department of Revenue) and not yet received their tax deed, there are usually two explanations:

1. The governor does not sign those deeds every day.  So, still awaiting governor's signature. Or

2. Someone with redemption rights can redeem up until the deed is signed and delivered to the buyer.  It might have been signed, but not yet put in the mail for delivery, and the former owner or a lienholder asked for a redemption price. 

You should call ADOR Land Division and ask why the delay.

Jocylyn, you have complicated questions that cannot be answered in a simple forum post.  I can't send you an email until you accept my request to connect.

Denise

Jocelyn, when you say you are "in the process of foreclosing" do you mean you have filed a judicial foreclosure lawsuit to foreclose tax liens you own?  Or, do you mean you are waiting for your tax certificate to turn into a tax deed? It makes a huge difference to my answer.

R/S on the tax assessor's records usually means Right of Survivorship.  As, title is held in husband and wife's name with right of survivorship, but only the husband's name is on the tax assessor's record. The R/S indicates another person's name is also on the title.