I recently received the following questions from a reader:

“I read article regarding the case where the tax investor was asking for payments for insurance and preservation but courts denied. I also read case regarding void tax deed. My question to you is how as investors do we verify that owners have been properly notified so that deeds will not be void? Any clarification in this would be very helpful. Regarding the insurance are most investors purchasing home or renters insurance on the property? “

I think you are asking how can you know that the county has given sufficient notice of tax sale to the owner so that the tax deed will not eventually be declared invalid.  Answer:  I don’t know of any way to know for sure but I have two thoughts:

(1) Once you the investor get the tax deed, you can verify owners by having a title search done and then notifying all parties on the record of title via certified mail, return receipt requested.  This should force something to happen pretty fast IF there is a problem with the validity of the sale.

(2)  There is some degree of responsibility on the State and the County to accurately advertise and properly sell the tax certificate.  If the amount of monetary damage incurred as the result of an invalid sale/tax deed is significant, you can always consider litigation against the appropriate governmental office.

Regarding  insurance–my observation has been that once a tax deed is acquired, at least some insurance companies will issue a “tenant-fire” insurance policy for a nominal premium with a moderate deductible.

According to a recent Alabama Supreme Court ruling in  FIRST UNION v LEE COUNTY, Alabama may NOT be a “title state” after all when it comes to refunds of excess bids from tax sales.

The term “title state” means that in the State of Alabama, the holder of a mortgage (mortgagee) is for all practical purposes, the owner of the property.

When a property is sold at tax sale for non-payment of property taxes, any amount bid in that exceeds the amount of taxes and fees is referred to as the “excess bid”.  Alabama Code Section 40-10-28 provides for the disposition of the excess bid.

For those that have dealt with excess bid refund issues in this state, you know that a major concern of all parties has been adequate notification/protection of mortgagees.

To demonstrate the issue, let me give you a hypothetical situation:

John Smith has a home valued at $200,000.  He paid $250,000 for it three years ago but the bottom fell out.  USA Mortgage holds a mortgage on his property for $200,000.  The 2010 property taxes came due on 10/1/2010 and for whatever reason,were not paid.   John Smith’s property is then sold at tax sale in May of 2011—-for the amount of taxes and fees due—–plus a $30,000 excess bid.

Code Section 40-10-28 basically states that the “owner” is entitled to the excess bid.  If we interpret that simply and literally (which is by the way very close to what happened in FIRST UNION v. LEE COUNTY), then John Smith could walk in, pick up his $30,000 and go on a decent vacation.  If he is facing foreclosure anyway, why not have a little fun with the deal?  The obvious big loser, USA Mortgage, is now stuck with a $30,000-plus tax bill for 2010 in addition to foreclosure expenses in a “bear” real estate market..

Read the case to see alternatives that the Alabama Supreme Court suggested.

Sorry for the delay in updating website and lists.  We had an interruption on April 27th.  It was the Shoal Creek Valley tornado.  We were very fortunate in that (1) no family members were injured and (2) we still have a house, although significantly damaged.  We had dear neighbors who were not so fortunate.  We are thankful to the Lord for his provision and protection.  Go here if you want to know more about what happened in our valley. 

NOTE:  The Boyd Family needs only your prayers.  If you would like to help, please donate to the Lee and Crawford Families.  Thank you.

I apologize for not having been responsive to questions.  I will try to get caught up on those.

We do have some properties available.   Let us know if you have interest.

God bless,

Gary Boyd

In our effort to build business relationships based on trust and integrity, it occurred to me that it might be helpful to let folks know our terms  for selling tax certificates and tax deeds.

1) Tax Certificates-Our commission is 3% of the State price or a minimum of $100.00.  For example: if the State amount is $4,832.95 the total amount would be $4,977.94.  Our fee in this case would be $144.99.

2) Tax Deeds-Our commission on tax deeds is 10% of the State price.

You may be asking “What do I get for the commission that I pay?”  Fair question:

1)  You get to “buy it now” instead of waiting in line just to see if you even have a chance to buy it from the State yourself.

2)  You get the benefit of having us shuffle all the paperwork which includes getting a cashier’s check, mailing it certified mail to the State, and doing it within the time constraints required.  Oh yeah, did I say everything has to be accurate as well?

3)  You get the benefit of having someone with over 27 years experience dealing with the State to oversee the process.

Can you do this yourself?  Absolutely.

But we would be glad to do it for you and let you do what you do best.

Let us know if you have questions.

4 ways (more…)

On December 14, 2010, National Public Radio aired this piece. It is about 20 minutes long but gives what I think is a pretty good interesting national perspective on investing in property tax certificates.
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