Alabama Tax Properties
New Legislation Reduces Interest Rate from 12% to 8%
April 4, 2018 by Gary Boyd
My sources tell me that Alabama SB257 was 
signed into law by the Governor today. It reduces the interest rate paid on the redemption of properties from tax sale from 12% to 8%. You can read the act HERE.
How long does it take to “quiet the title” in Alabama?
February 2, 2016 by Gary Boyd
A reader has asked a good question: “Generally how long does quiet title process take in the State of Alabama?”

My answer: As most of you know I am not an attorney but I have observed a few “quiet title actions” up close. My layman’s opinion is that several factors can effect how long it takes to get a quiet title order. I am speaking of the process as it relates to tax deed properties only.

Is your attorney knowledgeable and reasonably aggressive regarding a quiet title action on tax deed property? Be sure to choose the right attorney.
Have you complied with the statutory provision of adversely possessing your tax deed property for at least 3 years? If not, you may get not get to “first base” legally.
What does the title look like? Are there lots of other liens, mortgages, judgments, heirs, etc.? The more players–the longer the timeline.
How accessible are the parties in #2 above? Are they alive, local, cooperative, responsive——these factors will determine how soon legal notice can be served. If you have to revert to advertising, that can add time (and costs) to the process.
How “backed up” is the circuit court system in your jurisdiction? In more populous counties, it can generally take longer to schedule a hearing than in the more rural counties.
I have not known of one to take less than 3 months and I had one that lasted over 2 years.

I am sure that some of our Attorney friends could provide additional information but these are factors that I have observed based on the few quiet title processes that I have witnessed.
Taking Possession of Tax Certificate Properties
 September 23, 2015 by Gary Boyd
Denise Evans has recently produced a very informative video on the subject of taking possession of tax certificate properties. There is very little information available about how to do this effectively. Denise is very thorough and I find her information to be very reliable. Download her free video HERE. (UPDATED 1/19/2016–The video was free at the time of this original post. Apparently she is now charging $7.99 for the 18 minute video.)
Does a Tax Sale Wipe Out Mortgages and Liens?
July 11, 2014 by Gary Boyd
Here is a question that I recently received:

“We keep hearing from folks that if a property is sold for taxes, all the mortgages and other liens are wiped out. Is that true? Do you know where the law is on that? We want to buy tax certificates but want to make sure we aren’t buying a bunch of old mortgages to go along with it.” (edited)

First, a disclaimer: I am not an attorney or a real estate agent. The below answer is strictly my personal opinion based on my personal observation and experience.

Short Answer: Mortgages and liens are NOT automatically wiped out as a result of a tax sale and I don’t know what Alabama code section applies to this subject. You won’t be “buying” mortgages per se but you may be obligating yourself to deal with residual mortgages, liens and judgments as you navigate the tax property investment process.

Long Answer: When a parcel of property is sold at tax sale, it can have practically any kind of lien, mortgage or judgment attached. In fact, if the property taxes have not been paid, it is VERY likely that other obligations related to the property are also unresolved.

I am only aware of the following ways that a mortgage, lien or judgment can be removed:

The obligation is satisfied (paid) or otherwise expires.
The lien is voluntarily abandoned or removed by the lien holder.
The lien holder exercises what may be a right to redeem the tax deed by paying the tax deed holder.
The lien is negated or removed as a result of a “quiet title” order or some other type of court action.
I don’t recall ever hearing of a ruling that diminished the position of the tax deed holder, as long as the tax deed holder didn’t do something foolish. Normally, the other parties that once held an ownership, mortgage, lien, or judgment interest in the property, will have the opportunity to “redeem out” the tax deed holder at some point in the “quiet title” process. They seldom do—even if it is the IRS.

In my opinion, functionally, there is no property interest that has a higher priority or carries more potential “weight” than an Alabama ad valorem property tax lien. That does not mean that you will always be 100% satisfied with the outcome but your tax deed interest will receive “first place” attention in the process.
How To Purchase Tax Lien Certificates in Alabama
March 8, 2011 by Jane Boyd 
4 ways

1. Go to a
tax sale

2. Purchase from the state

3. Purchase from us – make sure you read this

and finally a new opportunity we are excited about

4. Purchase from our portfolio of “premium properties”

Now, obviously each of these have many variables depending on each individual investor’s need. Find what works for you.
How Does A Tax Sale Work?
November 16, 2010 by Gary Boyd
How Does an Alabama Tax Sale Work?

Property taxes become due in Alabama, every October 1st and are delinquent after December 31st. Taxes are collected by the individual counties. After a series of required notifications, any unpaid parcels must be offered at a public outcry auction, usually in the month of May or June. Each county will set their own tax sale date. Tax sales are normally conducted by the tax collection official for the particular county (usually the Revenue Commissioner or Tax Collector).

Anyone may attend a tax sale and bid on tax certificates#. You will need to check with the individual county to learn their particular rules for participation. Every county conducts its tax sale a little differently than the next.

Certificates are sold to the highest bidder. Your winning bid will earn 12%, annual, simple interest with one exception. The amount of your bid that exceeds the tax due is called the excess bid. Any part of your excess bid that exceeds 15% of the value of the property will earn no interest.

Property owners have three years from the date of the original tax sale in which they can come to the county tax collection official and redeem their property (which means to pay the delinquent amount due plus interest). When that occurs, you will receive the money you have paid plus 12%interest. Each county will have their own procedure for paying redemption proceeds, with which you must comply.

If at the end of three years the property has not been redeemed, the purchaser at tax sale then qualifies to receive a tax deed, if all taxes have been paid since the original sale (Act #2009-508 #) Again, check with the individual county for their administrative procedures on this.

Once a purchaser has secured and recorded their tax deed, they are entitled to the use and possession of the property. NOTE: IF THE PROPERTY IS OCCUPIED, IT IS MY RECOMMENDATION THAT YOU ENGAGE AN ATTORNEY TO INITIATE EVICTION PROCEEDINGS BEFORE YOU ATTEMPT TO ACTUALLY TAKE POSSESSION.

A tax deed may be redeemed by the owner, directly with the purchaser, within three years from the date of issuance of the tax deed, or indefinitely if the owner has maintained possession.
Comments on ROSS v. ROSEN-RAGER
September 15, 2010 by Gary Boyd
My observations regarding this case are as follows:

1. Evidence in this case shows that Mr. Ross was not a routine investor that just happened to get “snagged” on a misunderstanding of Alabama statute, but was in fact was attempting to execute a premeditated serial mission to postulate that his right of possession (on all the properties he had purchased) was not extinguished until he was reimbursed for non-tax expenses. This according to his interpretation of Code Section 40-10-122. The judicial system felt differently.

2. Thankfully, the courts showed their disdain for Mr. Ross’s antics by initially awarding punitive damages of $350,000. Later the Alabama Supreme Court reduced that to $120,000. I hope he got the message. You shouldn’t be able to simply IGNORE multiple court orders and get away with it.

3. I would not recommend that ANY property tax investor attempt to take possession on a CERTIFICATE interest except in the most unusual circumstances. Even then, Code Section 40-10-122 should be followed to the most minute detail.
Intriguing Article Regarding the Implications of Property Values
August 25, 2016 by Gary Boyd
“I have a price quote from the State that I don’t want to buy.”
January 27, 2016 by Gary Boyd
If you have an active price quote (“option”) 
from the State Department of Revenue, and 
you don’t want to buy the lien yourself, we 
may be able to help. If you let us know soon 
enough, we can advertise the tax lien on our 
website and possibly get it sold for you. We 
normally charge our regular fee to the buyer but then split that fee with the person that got the price quote. 
 Call or e-mail for details. 205-
281-1587 or [email protected]
How long to hear back from the State?
November 25, 2015 by Gary Boyd
I received the following question from a reader today:

“I’m new to the lien and deed investment game. I have applied for many properties in Jefferson county and now am waiting for a response. How long do we generally have to wait to hear back from the State about a deed/lien? I know they say 2-3 months but I want to know what others have experienced.”

That is a very relevant question. Based on my experience, there are at least two key factors that determine how soon you might receive a reply from the State after you have applied for a tax certificate or tax deed:

Calendar Cycle – The time of year in which you apply can be a factor. I have observed a “slow down” around the typical business slow periods—such as around the holidays at the end of the year. Another “dead time” would be in the September to October time frame. Property taxes for the next tax year become due on October 1st. Typically the State would not want to send out a quote in September that did not include the next year’s tax. Many times they are waiting for the particular county to send them that information—so sometimes the county is the reason for the slow down. October can be slow for the same reasons and also because of the backlog created in September.
Demand – The State receives applications on a “first come, first served” basis. So if you have applied for a property and there are 15 applicants “in line” ahead of you. It may be a very long time before you hear anything from the State. Remember, each applicant has a 20-day “option” period. If 15 people take the full 20-day period, you are looking at possibly 10 months before you have a chance at it—and that doesn’t take into consideration any lag time between applications.
The office that handles these has I think four employees. They processes THOUSANDS of applications every year. I have found them to be remarkably efficient considering the number of items they handle.
Tax Deeds 101
March 6, 2014 by Gary Boyd
Let me just take a moment to give a short “primer” on what one might do in the event they find themselves with a tax deed. Let’s use as an example property, a tax deed property located at 6255 Crest Green Rd, Birmingham, AL 35212.

DISCLAIMER: I am not an attorney and nothing that I say should be construed to be legal advice.

Here’s what I would do if I purchased a tax deed on the subject property (which happens to be a townhouse condominium):

1. Record the tax deed with the Jefferson County Probate Judge. This will probably cost less than $50.00.

2. Take the recorded tax deed to the Jefferson County Tax Assessor’s Office and have the property assessed in my name (so I will get future tax notices).

3. Call my insurance agent and get the property insured as a “rental” property.

4. Order a title search, so I can find out (a) if there is a mortgage, (b) if there are other liens, such as condo association, sewer liens, etc and (c) find out what other “players” may be involved in the title history.

5. Determine if the property is occupied by putting a letter on the front door or an obvious sign on the front making it easy for someone to call me if they have an issue. If I don’t get any phone calls from tenants or owners, I go to #6 below. If I do get a call from someone “claiming” to be a tenant or an owner, I engage my favorite attorney for help and do what he or she advises me to do.

6. Contact the condo/homeowner’s association and let them know what I am doing in terms of attempting to take possession of the property and that I intend to pay up any legitimate liens.

7. As the owner of a tax deed on this property, I have the legal right to the use and possession of the property. I am going to take possession of the property (assuming no one is occupying the property). I would change the door locks and secure the property, leaving my signage up the whole time. I want to be very “public” and “visable” about what I am doing.

8. Determine a budget to get the unit “rent-able”.

9. Execute clean up and rehab efforts, being sure not to do anything other than what is absolutely necessary for repairs and restoration.

10. Engage a local real estate management company to manage the rental property for me (of course I can do this myself if I want to).

11. I am going to include in my lease agreement, a phrase that reads: “This property is a tax sale property (tax deed) and may be subject to redemption at any time. In the event of a redemption, you may be required to move out. You will be given as much notice as possible.”

12. Take my rent checks to the bank!

Every situation is at least a little bit unique, but from my experience, the above scenario would not be unusual.
Here’s A Really Good Question
November 16, 2010 by Gary Boyd
“Why should someone pay a fee to you for something they can do for free on their own?”

1. The fact is you can’t do these on your own, at least not today. We have the exclusive option on these certificates for 20 days. If we do not execute the option, it goes to the next person in line. If you buy it through us, you get it today. If not, you play “Russian Roulette” with the State.

2. Sure, you can do this on your own assuming you (a) have the time (b) have the knowledge of how the system works and can execute, and (c) have the price quote option in your hand. You may have (a) & (b) but you don’t have (c) at this time.

3. Nothing is free. If you do it yourself you at least must spend the time. Time is the most valuable, non-renewable asset that we all have.

4. Our service allows you to buy it TODAY. It also provides some recent data with which to make a decision. We have (or will have) physically looked at EVERY property listed here.
Comments on MITCHELL v. CURRY
September 30, 2010 by Gary Boyd
This is a most interesting Alabama property tax case for the following reasons:

1. Notice was challenged AFTER the tax deed had been issued but before the purchaser held possession for three years.

Property in question Sold to State at local tax sale in May 2004. The State issued a tax deed in July 2007. Complaint was filed June 2008.

My non-legal mind makes me think that had the validity of the tax sale challenge (insufficient notice in this case) come after the purchaser had maintained possession for three years, he might have been in the clear.

2. The purchaser (CURRY) appears to have acted in good faith.

From reading the case, there does not appear to be any malice or intent to deceive on the part of the purchaser. This tells me that (a) there is a big problem with the system or (b) the mishap was the fault of another party, THUS……

3. Collection officials beware!

As pointed out above, the purchaser seems to have “followed all the rules”, yet still incurred significant financial loss ($16,646.00). If the court ruled that the tax sale was invalid because of insufficient or improper notice, that liability falls squarely on the shoulders of the official charged with sending out the notices or advertising—-normally the collection official. Code Section 40-10-75 seems to make it clear that there is some liability on the part of the official.

The purchaser (CURRY) can obviously pursue at least a couple of remedies: (a) take this to the Alabama Supreme Court or (b) take action against the official charged with noticing.

For potential investors, the challenge here is how to protect any rents received during an interim period before a successful quiet title action.

For collection officials, the challenge is how to maximize the legality of notice without exceeding budgetary constraints.
Alabama Department of Revenue no longer allows assignment of property to third party
June 24, 2016 by Gary Boyd
As of May 19, 2016, the Alabama Department of Revenue will no longer allow me (or anyone else) to change the name on an assignment purchased from them.

That means the State will not allow anyone to apply for a parcel in one name, then actually purchase it in another name.

There is a contractual solution to this between the non-State parties. I will plan to update this later.

UPDATED July 15, 2016 *************************************************

This means two things:

 Because of this added complication, we will no longer be able to market “price quotes” that are owned by third parties.
 We intend to continue to market “price quotes” that we own by utilizing the following contractual statement that will be on all our invoices going forward:
“NOTICE: As of 5/19/2016, the State Department of Revenue will no longer allow the application for property in one name and the execution of the purchase transaction in another name. This property will be purchased from the State in the name of the applying entity (either Dominion Legacy Inc or Dominion Resources LLC). Once we receive the certificate from the State, we will execute an assignment (affidavit) of the property to the entity of your choice. Your payment of this invoice acknowledges your understanding and acceptance of this policy.”
“Who Wins in the Battle of the Liens”
 November 4, 2014 by Gary Boyd 
Have you ever been reluctant to pursue a tax lien or tax deed because you knew there were other outstanding liens?

Warning to Tax Lien Investors – Don’t get too crazy!
November 1, 2014 by Gary Boyd
Go HERE to read an article about what can happen if a tax lien/deed investor gets too aggressive. Note to file: When all else fails, use common sense!

Questions From a Reader
September 19, 2011 by Gary Boyd
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.
Is Alabama Really a Title State?
July 11, 2011 by Gary Boyd 
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.
What is a Tax Certificate?
October 25, 2010 by Gary Boyd
A tax certificate has the following characteristics:

1. It is a legal, marketable, document initially issued by a county.
2. It represents an interest in a parcel of real property (real estate).
3. The property it represents is usually referred to in the document by some combination of a legal description, parcel ID number, PPIN, unit number, and assessee name.
4. It’s origin is based on an unpaid lien placed against the property by the State of Alabama but originally administered by the County.

The “process” begins when the county holds it’s annual tax sale as required by law. These certificates are sold at public outcry auction to the highest bidder. If there is no bidder for a particular certificate/parcel, that certificate is “struck off to the State” or “sold to State”. The State then has possession of the tax certificate until it is either (a) redeemed at the county or (b) sold directly by the State to an investor (sometimes called a “State re-sale”).

A certificate is marketable because it can be “assigned” or transferred between parties according to the procedures of the particular county. As long as a certificate is LESS than three years old, it is eligible for redemption through the county. If a redemption occurs, any purchaser is entitled to receive what they have paid for taxes plus 12% simple interest.

There are some technical exceptions to the above but we will address those in a later post.
September 15, 2010 by Gary Boyd 
Another recent interesting case for Alabama tax property investors (AKA “tax sale nerds”).

September 10, 2010 by Gary Boyd
This one got a little carried away with the process. Interesting (but long) reading for all you tax sale “nerds” out there.

Disappearing Mortgages?
August 24, 2010 by Gary Boyd
See this article about disappearing mortgages. Wonder how many have sold at tax sale?
East Lake Trend
August 22, 2010 by Gary Boyd
Here is an interesting article regarding the Eastlake area of Birmingham as it relates to investment properties.
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