With adverse possession, a third party must publicly occupy and maintain a property for a significant period of time (usually two to five years or more) including paying property taxes. That is when someone can quiet the title. Welcome to FindLaw's online manual on Alabama property and real estate laws, written specifically to help non-attorneys make sense of the law. As of the 2019 auctions, all counties except Baldwin, Calhoun, Cherokee, Cullman, Emore and Shelby sold tax certificates. Buying a property through a tax sale requires due diligence but attend enough auctions and do enough research and you may find a diamond-in-the-rough. Tax Delinquent Property and Land Sales About. The property needs a lot of work and the owner had $100,000 of IRS liens against him before the auction. If a Tax Purchaser (not the State) bought the property at the tax sale, the Owner may redeem the property from the Tax Purchaser “at any time within three years from the date of the sale.” This is known as “administrative redemption.” The Owner may administratively redeem the Property by paying to the probate court in the county in which the Property is located the purchase price plus (1) 12% interest per year from the date of the sale, (2) any insurance premiums paid by the Tax Purchaser, and (3) the value of all “preservation improvements” made by the Tax Purchaser (also with 12% interest from the date of such premium payments or improvements). If the property contains a residential structure, you can make "preservation improvements" (repairs, mostly) and must be paid for the increased value of the property if the owner redeems. Every year ad valorem taxes (the “Taxes”) are due to the state, county, and city (if applicable) based on the value of the Property. Judge signs order maybe 5 days later. The best solution is to either get that owner to tell you in advance the property is abandoned, or file an ejectment lawsuit against them. Some other lawyers disagree with me. Eye-opening information. An ejectment action normally requires a showing by the plaintiff that he has either legal title to, or possession of, the property, and that the defendant has either unlawfully entered upon or detained the property. Connect with 1,000,000+ real estate investors! Receive a free digital download of The Ultimate Beginner's Guide to Real Estate Investing. You can withdraw your consent at any time. The three-year limitations period for judicial redemption can also cut the other way. Where and how it works. If you signed up for BiggerPockets via Facebook, you can log in with just one click! The tax deed will “vest in the [Tax Purchaser] all the right, title, interest and estate of the person whose duty it was to pay the taxes on such real estate [i.e., the Owner] and the lien and claim of the state and county thereto.”. Alabama, unlike some other states, generally holds tax sales once a year, commonly in April and May, though it may vary. Those counties sold tax liens. Tax Sale List: Use Alabama Tax Sale Lists to search for Alabama tax lien certificates to buy or bid on. It ranges from six months to three years. Every situation is different, but you get the idea. Denise's book and classes are invaluable. Related Resources for Alabama Adverse Possession Laws Real estate laws can be confusing, especially where concepts like adverse possession are involved. Ala. 2016). The Tax Purchaser is entitled to possession of the Property when he purchases the Property at the tax sale (or from the State). Order becomes final and non-appealable 42 days later. The Alabama Code regarding tax sales provides the Tax Purchaser a statutory exception to the requirement of the legal title when pursuing an ejectment action against the Owner. Leave a Comment Filed under: Properties . The highest bid on the property is $49,000. You can contact an Alabama real estate attorney if you would like legal assistance with a real estate case or adverse possession matter, or if you want to understand your rights and responsibilities as a landowner. Nada. Because the three-year period for the Owner to judicially redeem the Property does not begin to run against the Owner unless the Tax Purchaser adversely possesses the land, the right of judicial redemption remains in the Owner “without a time limit if the owner of the land seeking to redeem has retained possession.” So, for example, if the Owner remains in his home though it was purchased for taxes and the Tax Purchaser obtained a tax deed, the Owner retains his right to judicial redemption for so long as he remains in the home. Notice of the Tax Sale Before the sale, the tax collector must first get a court decree from the probate court, authorizing a sale. Gregory S. Stanley, Esq.Alabama Tax Lien Association. I have a tax sale home and the side door was wide-open and the wall it was attached to was falling down. You MUST understand the rules if you are going to be able to take advantage of this and also stay out of trouble. Cost to Redeem the Property. M.D. Any remaining overage belongs to the owner of record immediately before the end of the redemption period to be claimed or assigned according to law. I always intended to fix the property up myself. Been tried by others and doesn't work according to the Alabama Supreme Court. Use at least 8 characters. The information on this website is for general information purposes only. Not one red cent. The Alabama Code regarding tax sales provides the Tax Purchaser a statutory exception to the requirement of the legal title when pursuing an ejectment action against the Owner. With the roll-out of the Goods and Services Tax (GST), several taxes previously applicable on real estate purchase (VAT, service tax, etc.) I agree Denise, Tax Lien investment in Alabama, esp. All properties on the state inventory are tax certificate properties, no matter what county. The Small Business Reorganization Act of 2019, Direct and Derivative Shareholder Claims into the 21st Century, Case Study: Member Dispute and Buy-Sell Provisions, LLC Member Duties: The New Implied Covenant of Good Faith and Fair Dealing, Part 2. Let's suppose you go to the owner and say, "I bought this property at a tax auction. An ejectment action normally requires a showing by the plaintiff that he has either legal title to, or possession of, the property, and that the defendant has either unlawfully entered upon or detained the property. Suppose, instead, you spend a lot of money fixing up the property and it looks really great. That is not your out-of-pocket expenses, but the amount you increased the value. Can I just take self-help possession without the ejectment order?" My goal is for you to understand your risk in this situation, so you can then make an informed decision about whether to risk it or not. Would this be considered "peaceable'? It is less than one mile from the University of North Alabama. Which Bankruptcy Chapter is Right for Me. But the Owner retains a right of “judicial redemption.” Judicial redemption requires the filing of a lawsuit against the Tax Purchaser (or the filing of a counterclaim in an ejectment action brought by that Tax Purchaser) and the payment of specified sums into the court in which that action or counterclaim is pending. You MUST understand the rules if you are going to be able to take advantage of this and also stay out of trouble. As provided by Code Sections 40-10-21 and 40-10-132, the State of Alabama RevenueDepartment offers for sale tax certificates and tax deeds, which are currently in the possession … Using a phrase of random words (like: paper Dog team blue) is secure and easy to remember. As real estate investors, we all take risks. (For details on the tax sale process in Louisiana, see What Happens If I Don't Pay Property Taxes in Louisiana .) The IRS can redeem and then seize the property afterwards, but that never happens! You are not entitled to possession with a tax lien. "Sold to State" properties are parcels that were offered at a past annual tax sale, and were not purchased at that time. That is what you need, in this example, to know the property is abandoned. If some other party does something (other than merely isolated acts) which indicates that the other party claims to be in possession of the property, the possession ceases to be peaceable and becomes “disputed” or “scrambling.” Scrambling possession requires that the party disputing the right of possession “do something indicating that he claims to be in possession himself” of the Property. Property Tax sets the standards and procedures for equalization of property values in the counties, and ensures property is taxed uniformly throughout the state. 2100 1st Ave NSte 600 Often, they just throw the lawsuit papers in the garbage. schedule your consultation. have been subsumed under this single unified tax system. A tax sale certificate transfers "tax sale title" only, which means the purchaser’s interest in the property is subject to the right of redemption. Jefferson and Shelby Counties, has become very profitable and lots of new investors are getting involved from across the country. The theory behind the rule is that the person putting the property to productive use and paying for the taxes and maintenance of the property should become the owner of the property after a certain amount of time expires. The original owner has (3) three years to redeem his or her interest in the property. If it's turning into a tax deed this year, that probably means May, right? The overall costs involved in buying a property are broadly divided into two components – the first being the one paid to the builder/seller and other, the statutory and legal costs, to the government. Going into a vacant property and changing the locks is almost never peaceable. See In re Washington, 551 B.R. So, beginning to end, 77 days. Nothing on this site should be taken as legal advice for any individual case or situation. Many counties are suspending property tax sales and tax foreclosures due to the COVID-19 emergency. Your message has failed. Unlike many states, delinquent taxes are sold every year in Alabama. If you asked the owner at that time if they wanted the property back, they would (of course) say, "You betcha. Alabama tax sale investors are entitled to possession of the property even though they might not get a deed for another three years. ... adverse possession, quieting title, partition, If the Property has not been redeemed after five years, the State may sell the Property to any purchaser for cash at the best price obtainable, irrespective of the amount of taxes due. PasswordUse at least 8 characters. As a result, there's really no down-side to ejectment. Would I still have to file an ejectment lawsuit and wait 90 days before I can do anything to the property? @Denise Evans. Under Alabama law, if you occupy the property, you might be able to redeem even after the redemption period expires, though you'll probably have to ask a court to approve the redemption. Call your county treasurer’s office or tax collector's office, or look online, to find out if your area has a moratorium in place. Let’s assume the value of a property in a tax deed sale is assessed to be $100,000 and has $5,700 in back taxes. How to Buy a Home by Paying Back Taxes Owed. You are given twenty calendar days from the date on … Once there is a tax lien on your home, the taxing authority may hold a tax lien sale. The Owner loses his right of administrative redemption to the Property once the tax deed is delivered to the Tax Purchaser (whether the Tax Purchaser originally purchased the property at the tax sale or purchased the tax deed from the State). So, let's say you have a tax certificate. Find local real estate meetups and events in your area. The valuation of a case depends on the facts, the damages, the jurisdiction, the venue, the witnesses, the parties, and the testimony, among other factors. We just need a few details to get you set up and ready to go! You may request a price quote for State held tax delinquent property by submitting an electronic application. Foreclosure Investors Beware: Existing Tenants Cannot be Evicted. So, let’s start with that. transcript of tax delinquent land available for sale 2753 shelby state of alabama-department of revenue-property tax divisionpage no:1 date:12/22/2020 You put a tenant in there, who is a good tenant and pays their rent on time. Nothing. If the Owner has not surrendered possession of the Property to the Tax Purchaser within six months after the Tax Purchaser demands possession, the Tax Purchaser may sue the Owner for “ejectment.” An “ejectment” action is a lawsuit brought by one party to remove another from the property. Written by financial journalists and data scientists, get 60+ pages of newsworthy content, expert-driven advice, and data-backed research written in a clear way to help you navigate your tough investment decisions in an ever-changing financial climate! If you think you'll get a default judgment, then the times are as follows:  File lawsuit; maximum time before can take a default judgment: 30 days. Do you have any plans for it?" There is an initial three-year redemption period which is extended as long as the borrower remains in possession of the property. To redeem, the original owner must tender the amount the investor paid to purchase the Alabama tax lien certificate plus 12% per annum on the minimum and the overbid (see notes on bidding). As soon as you receive a tax certificate, whether at the auction, from the state inventory, or from another investor, you are entitled to possession of the property. The only exception is if the property is legally abandoned. 644 (Bankr. Anything less than that is only vacant and neglected. If a tax lien has a higher priority than another lien, the other lien is wiped out at the time of sale. Using a phrase of random words (like: By signing up, you indicate that you agree to the. On the other hand, technically the fastest you are allowed to drive on the Interstate is 70 miles per hour. Property Tax Sales Pages 416 and 424. Furthermore, no representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers. To obtain “quiet title” relief, the Tax Purchaser must prove either (1) that he has “actual, peaceable possession of the lands,” or (2) that no other person has actual possession of the land and either (2a) that he has held color of title to and paid taxes on the land for 10 or more consecutive years, or (2b) that he has paid taxes on the land for 10 consecutive years and no other person has paid taxes on the land during that time. The IRS lien goes off the property unless the owner redeems. Our purpose is to supervise and control the valuation, equalization, assessment of property, and collection of all Ad Valorem taxes. In essence, “adverse possession” requires the Tax Purchaser to control the Property openly, exclusively, and continuously from all other persons for a specified period of time. After the three-year period has run, the Tax Purchaser may quiet title to the property by suing all persons claiming an interest in the Property. This is a single-family, brick house in a great location. When can the Owner “redeem” his Property from the Tax Purchaser? If they redeem when you file the ejectment lawsuit, they were always going to redeem anyway. Foreclosing against the property may also be done through a tax deed sale. Every case is different, and each case must be evaluated on its own facts and circumstances as they apply to the law. Property Tax Sale and Tax Foreclosure Moratorium in Many Places Due to Coronavirus. If the Owner has at least constructive or scrambling possession of the Property (i.e., the Tax Purchaser does not adversely possess the Property), then notwithstanding the tax deed the Owner has a right to redeem the Property for as long as the Owner retains possession of the Property. If a homeowner is unable to pay his property taxes, the county tax collector forecloses the home. If the Owner fails to pay those taxes, then the Property could be sold to a potential purchaser (the “Tax Purchaser”). Devin Daniels, did you ever get your question answered? When Property is sold under Alabama law due to non-payment of Taxes, the Owner has three years (or more) to redeem his interest in the Property without losing the legal title to the Property — known as administrative redemption. If you are an Alabama tax certificate investor, and you have had any county redemptions in the past year or so, you have probably received a “REDEMPTION AFFIDAVIT” which you have to fill out, sign, have notarized and return to the appropriate party. 35203. By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions. What happens then? If the Tax Purchaser obtains a tax deed and maintains adverse possession of the Property, the Owner has three years to redeem the Property by filing suit — known as judicial redemption. If the Tax Purchaser has a tax deed and is in adverse possession of the property, then the Owner has only three years to file an action for judicial redemption. Technically, the answer is "No, unless that owner tells you the property is abandoned." If property is vacant, can the investor change the locks and take over the property? Sales are generally held in April and May, and these delinquent taxes can be purchased by the state or a third- party. If a tax sale is void, it can be “cured” by 3 years of adverse possession after the tax deed date. If they did redeem, they would have to pay you all the same charges as the owner. Thanks for all of the free work, because this property was not abandoned and you were never entitled to possession.". However, in 2016, Judge Sawyer of the United States Bankruptcy Court for the Middle District of Alabama undertook a detailed examination of the tax sale procedure and redemption rights. If the Owner fails to pay the Taxes, the probate court of the county in which the Property is located may order the sale of the Property. They don't understand why you filed a lawsuit to get them out of a property they are not currently using anyway. Would you like to buy the property back? This section covers some of the more common legal issues facing homeowners and tenants, such as the state's rules and regulations governing leases and rental agreements. I suspect this boom will hit the other Alabama Counties soon and knowing the basic principles will save investors a lot of time and make them more money. Birmingham, (2) When processing a redemption of a tax sale that occurred after January 1, 2020, the Redemption Official is not required to verify that costs or expenses provided in §§40-10-122(b) through 40-10-122(e), Code of Ala. 1975 have been paid for the proposed redemptioner to take possession of the property. The big surprise is that they often DO NOT redeem if the property is vacant and neglected. Any citations to authority supporting the statements may be found by reviewing In re Washington. Legally abandoned means the owner told you they have no intention of ever doing anything with the property and have turned their backs on it forever. In a tax deed sale, a property with unpaid taxes is sold in its entirety, at auction. The owner has sent an affidavit and I signed it with void date. Generally most Alabama tax sale lists will identify the property owner, parcel number, legal description and the amount due. Any Tax Purchaser must be certain to either obtain peaceable possession of the Property or file an action for ejectment within three years of the time the Tax Purchaser was entitled to demand a tax deed for the Property. AL Subscribe today and get the Oct/Nov issue delivered to your door! That is in the statutes, at Ala. Code Section 40-10-74. Usually, increased value is larger than reimbursement for expenses. Adverse possession is a law that governs the ownership of real property in that it allows someone who is in possession of the land that belongs to another person for certain period of time to claim that property as their own and gain legal title to it. The Tax Purchaser is immediately entitled to possession of the Property and may demand possession from the Owner. Also, you will not be paid anything for your preservation improvements. These recoveries and testimonials are not an indication of future results. While the Tax Purchaser must have “peaceable possession,” the Owner’s possession of the Property “may be constructive or scrambling.”. If the Owner fails to redeem his interest in the Property within three years after the tax foreclosure/sale, the Tax Purchaser may demand a tax deed (or the State may sell one) that extinguishes the Owner’s legal interest in the Property. If the Tax Purchaser holds a tax deed and the Owner remains in possession of the Property, the three-year limitation period will bar the Tax Purchaser’s ejectment action against the Owner and will also “re-vest” legal title to the Property in the Owner. The answers can be confusing. If the property is occupied, you will have to take a few more steps in order to obtain possession. Possession must be "peaceable." Hopefully, that will cause some conversation in which, hopefully, the owner will say he does not want the property and the IRS can just go jump in the lake. Tax sale investors are entitled to possession of property as soon as they obtain their tax certificate. Tax sales have a special and different rule. Attorneys Insurance Mutual of the South® ... ALABAMA PROPERTY RIGHTS AND REMEDIES has long been known as one of the leading works on Alabama Real Property law. If it is not peaceable, the owner can sue you for money damages. Tax Delinquent Properties for Sale Search. If there is no bidder, the State of Alabama buys the land at the amount of the tax lien. I would like to take possession legally. If Property purchased at a tax sale by a Tax Purchaser has not been redeemed within three years from the purchase, the Tax Purchaser may demand a tax deed from the probate court. A tax lien sale is a method many states use to force an owner to pay unpaid taxes. I see it has a big IRS lien against it. Tax Lien Foreclosure vs. Tax Deed Sale . If Property sold to the State has not been redeemed after three years, the State is authorized to sell it to any purchaser for all taxes due plus 12% interest, or to the municipality or county in which the land is located at the best price offered, irrespective of the amount of taxes and interest due. I have a tax lien turning into a tax deed this year. Less than 90 days later, you can have a final and non-appealable court order that gives you legal possession and completely protects you for a WIDE variety of things too extensive for this one blog post. We're Alabama Tax Deed Investor's Group and we are Tax Certificate and Deed Professionals who specialize in Birmingham and Surrounding-areas Deeded Properties. If the State purchased the property at the tax sale, the Owner may redeem the property at any time before title passes out of the State. Then you buy at the auction. When the Owner has paid the required redemption amount to the court, “the court shall enter judgment for the [Owner] for the land, and all title and interest in the land shall by such judgment be divested out of the [Tax Purchaser].”. Finally, if the Tax Purchaser obtains a tax deed but the Owner remains in adverse possession of the Property, title to the Property will revert back to the Owner unless the Tax Purchaser files an ejectment action within three years from the date the Tax Purchaser was entitled to demand a tax deed. (A tax sale certificate in Louisiana is basically the same as a tax deed, as mentioned in the Louisiana Constitution.) In some cases, the tax sale list may include the tax collectors assessed value of the property. But, what does that mean? Just wait it out, lay low, and after it turns into a deed file your ejectment lawsuit. If they redeem after you file, then they also have to pay your legal fees. I think the answer is no. The Owner has three years “from the date when the [Tax P]urchaser became entitled to demand a deed therefor.” However, this three-year period does not begin to run until the Tax Purchaser is “in adverse possession” of the Property and is entitled to demand a deed to the Property. @Tamika Rue, by sending you the affidavit, the taxpayer has indicated the property is not abandoned. The probate court must sell the property at the tax sale for at least the amount of the tax lien (i.e., the amount of Taxes owed plus late fees and any other fees due). I literally walked in and changed the locks. One thing you can do with your final non-appealable ejectment order is start making your preservation improvements, and be confident you will be paid for the increased value if the owner redeems. Judge Sawyer’s excellent description is summarized a bit further here to give you a better idea of what rights the Owner and Tax Purchaser may have and when they can exercise those rights. That is a very simple and inexpensive lawsuit. Talk to a lawyer to learn more about the laws that cover possession of the property following a tax lien sale and the effect they might have on your redemption rights. A person is in “peaceable possession” as opposed to “scrambling possession” when at the time of the lawsuit no other party is denying that the person is in possession of the Property. People always ask me, "What if nobody has been there for years and all the neighbors say the owner moved away to another state? You may search for transcripts of properties currently available by County, CS Number, Parcel Number, or by the person’s name in which the property was assessed when it sold to the State. If this is a nuisance to you, consider letting Alabama Tax Properties handle this process for you. If a private party purchases the property at the tax sale (a “Tax Purchaser”), the Tax Purchaser is entitled to a certificate of purchase containing a description of the Property and the Taxes owed. The redemption period for a property tax lien is the amount of time the homeowner has to pay off the lien and avoid foreclosure. Litigation was required to force their removal from the Property." Once your price quote is processed it will be emailed to you. If the State purchased the property at the tax sale and later sells the property to a private party (also a “Tax Purchaser”), the Tax Purchaser is entitled to a tax deed granting him “all the right, title, and interest of the state in and to such lands” and providing him “all the rights, liens, powers, and remedies, whether as a plaintiff or defendant, respecting said lands as an individual purchaser at the tax collector’s sale would have in similar circumstances.” Delivery of a tax deed to the Tax Purchaser extinguishes the Owner’s “legal title” in the Property. Fill out this form to Does this apply to a tax deed? (Ala. Code § 40-10-82). Adverse possession is a historical legal doctrine that allows one person to adversely take title and possession of property previously owned by another person. Maybe it was not such a good purchase for me. To you lawyers reading this: Not even in equity. If you ever broke that speed limit, you knowingly accepted some risk, thinking it would probably be okay and you would not be ticketed or lose control of your vehicle and crash. It is called the Short Statute of Limitations, because it is only 3 years. Of adverse possession, quieting title, partition, Unlike many states, taxes! Are not currently using anyway to drive on the other way are suspending property lien. Larger than reimbursement for expenses the county tax collector forecloses the home is legally abandoned. many due. Is $ 49,000, that probably means may, and after it turns into a deed file your lawsuit. Be Evicted analyze a property through a tax auction is vacant, can the investor change locks. Your out-of-pocket expenses, but you get the idea indicate that you agree to BiggerPocket... Is $ 49,000 wall it was not such a good purchase for me analyze... 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