All Forum Posts by: Michael Watts

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, I know some attorneys who have been successful in foreclosing tax liens in Alabama.  You must have all of them to foreclose. No gaps.

If you own three consecutive years of tax liens, you can foreclose.  You will then redeem from any earlier tax liens. The wording of the statute is a bit unclear about who you have to name as defendants in the lien foreclosure lawsuit. It seems to refer to liens arising from debts, but it might also refer to prior tax liens.  The safest course of action is to name prior lienholders as defendants, but specifically state in your lawsuit you are not naming them as parties with redemption rights, but only as parties from whom you will redeem so the court can quiet title in you.

Alabama has now implemented the new tax lien system and  many are left wondering how it really works, especially with the OTC tax liens.  When multiple liens have been issued on a property, we now see multiple lienholders for the same property. This fractional interested ownership is truly a turn off. Now what happens when one of the lienholders want to file a foreclosure action after the three mandatory year period? 

1) Does this lienholder have to buy the liens purchased from previous lienholders, before filing the foreclosure action? If so, what is the process or worse, what if the other lienholder refuse to sell? 

OR

2) Can the lienholder who wants to proceed with the foreclosure action proceed and then pay the previous lienholders back, their investment + 12%?

It is so unbelievable to see that there is little to no information on the subject. Even calling the Counties is to no avail because they all say the same thing: we do not know.  I keep hearing that no one has yet foreclosed on a tax lien yet since the system is so new in Alabama, however, investors need to know what is the proper way to do it, especially when there are multiple lienholders for the same property. 

I've spoken to some people who said they went smoothly with no surprises.