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Tax Sale Redemptions and Improvements

Posted by 15789465 on

The recent Alabama Supreme Court case on tax sale redemption, payment for improvements, and entitlement to possession is currently in front of the Court again on a Motion for Rehearing.  I hope the Court reverses itself. In their original decision, they held that a redeeming owner was entitled to possession as soon as he/she received the Certificate of Redemption. This is despite the fact that the Probate Judge does not collect any amounts for insurance premiums or improvements, but only the taxes due or paid, plus surplus funds, plus interest.

As an aside, the Alabama Supreme Court affirmed a trial court finding that the tax sale investor, Mr. Ross, was guilty of wanton misconduct when he refused to surrender possession upon being presented with a redemption certificate, but without payment to him for the insurance and improvements.  "Mr. Ross should have known that his actions were illegal, so his refusal amounted to wanton misconduct," is the gist of what the Supreme Court said.  Yet, on the same date as the Supreme Court decision, in another case involving Mr. Ross, the Alabama Court of Civil Appeals held that a tax sale investor DOES NOT have to surrender possession when presented with only a redemption certificate!  That's right, the Alabama Court of Civil Appeals said redemption was not complete until the investor received payment for the additional charges. How could Mr. Ross have known his conduct was wrongful if another appellate court basically said they would have done the same thing as him if they faced with the same circumstances?

How is the tax sale investor supposed to obtain their money for the other charges?  The Alabama Supreme Court glibly recommended use of one of the "extraordinary writs" such as mandamus, prohibition or certiorari.  I'm no legal scholar, but I've checked into these writs, and none of them seem to be appropriate!  In fact, if a tax sale investor filed a petition for mandamus, or prohibition, or statutory certiorari, or common law certiorari, he/she would probably be kicked out of court on technicalities!  And, as I mentioned in an earlier post, an appeal is not the correct remedy either.

For you lawyers who like reading this stuff: Statutory certiorari under 12-17-28 extends only to District and Municipal courts. The case of Jefferson County v. Berkshire Development, 277 Ala. 170, 168 So.2d 13 (1964) says statutory certiorari is not available for Probate Court matters.  Common law certiorari is intended only to obtain a record from a lower court, and then review the record to see if the higher court would reach a different decision. But, there is no "record" when an owner pays the probate court and obtains a redemption certificate.  Mandamus is available to order an official to take an action they are otherwise required to do, but failed to do.  The probate judge is under no statutory obligation to make any inquiries as to additional charges and, in fact, must issue the redemption certificate as soon as the owner pays the past taxes plus interest.  Prohibition is very similar, but orders an official not to take actions, in the future, for which they have no authority.  In the case of tax sales, the probate judge has specific statutory authority to issue the redemption certificate. Quo Warranto, the fourth extraordinary writ, questions someone's authority to hold a particular office, and clearly does not apply. The last of the five traditional extraordinary writs, habeas corpus, commands someone to "deliver the body" of somebody being wrongfully held in custody. Clearly it does not apply. So, I would ask the Alabama Supreme Court:  Exactly what extraordinary writ do you recommend?

To recap, according to the Alabama Supreme Court, tax sale investors are entitled to the additional charges, but it turns out they have no absolutely no remedy to collect those charges!  Back when I was in law school, we all learned Ubi jus ibi remedium--there can be no right without a remedy. It's been suggested to me that the tax sale investor file an original suit in Circuit Court invoking equity jurisdiction for an order staying the right of possession and then a determination of addition charges.  This would be insanity--hiring lawyers and filing lawsuits every time there's a demand for additional redemption charges.  Besides, there is a perfectly good statutory mechanism for determining and contesting those additional charges.  All we are lacking is the part in the middle--the statutes are silent about when redemption takes place. The closest they come is saying that the "proposed redemption" must also pay the additional charges. As Rush Limbaugh famously said in one of his books, "Words mean things."  If the PROPOSED redemptioner must pay additional charges, then he/she is not YET a redemptioner, and not entitled to possession! If you are faced with this issue and don't know what to do, join the club.  We are all waiting with the proverbial "bated breath" for the Alabama Supreme Court to clarify its ruling or reverse its decision.

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7 comments

  • “an original suit in Circuit Court invoking equity jurisdiction for an order staying the right of possession” sounds to me to be an injunction.

    Aside from the costs, you seem to imply, of maintaining this action everytime property is redeemed, I question whether an injunction would be issued, considering that the supreme ct ruling holds that the proposed redemptioner is entitled to possession (and the purchaser I presume only has a naked right to monetary relief). Even if the injunction were available, it might still be denied if the purchaser can’t show that possession by the p. redemptioner is imminent.

    This also shows some of my concerns of the lack of an adequate remedy if the taxpayer/owner retakes possession of the property without any legal process (even without having been issued a certificate of redemption). Since this is a civil and not a criminal issue, I assume the only remedy available is to make a demand for posssession and then wait 6 months to file for ejectment pursuant to alacode 40-10-74 if the taxpayer/owner fails to redeem within that period (while the property is depreciated). If I take possession by this ejectment, can the taxpayer/owner still redeem the property and regain possession. If so, how can I prove the value of the improvements I previously made if they were destroyed by the taxpayer/owner. Does this statute also authorize recovery of mesne profits/rent (ie. is recovery of monetary damages a part of the definition of ejectment or do they have to be statutorily authorized just as 40-10-74 authorizes ejectment, or is it part of common law. If I get a judgment against the taxpayer/owner for damages, do they have to be paid before the taxpayer/owner redeems pursuant to 40-10-76, especially if is redeemed by someone entitled to redeem besides the taxpayer/owner?

    I even have had some taxpayer/owners convince some of my tenants to pay rent to them instead of me. Local trial judges seem to think this is acceptable, even though I filed unlawful detainer against a tenant in this situation and had to file an appeal to reverse the trial court (howard ross v cherika lewis, et al.). Of course while I regained possession, the recovery of monetary damages from the defaulting tenant (with a right of exemption)is slim. I doubt if any of the local trial judges would entertain any suit aganst the taxpayer/owner for money had and received, unjust enrichment, lost rent, etc. I have no idea how to stop this from happening again and again.

    In the mean time I have to go to circuit criminal court becuse when I purchased a property at tax sale 8 years ago and didn’t make improvements to the unoccupied property to correct violations of huntsville city code, the city of huntville community development agency filed criminal charges against me. The city of huntsville maintains that a tax sale purchaser is responsible for maintaining his property, even if there is no or limited ability of the purchaser for reimbursement upon redemption. Because of this situation with tax sale properties for which the circuit court has has yet to issue a ruling for 8 years, the city of huntsville has classified me as a repeat offender and requests jail time every time I have a violation on a property that was not purchased at a tax sale. Apparently if I cannot show the court that this is a violation of due process, you may have to communicate with me in prison in a few weeks.

    howard ross on
  • Who elected these guys? :)

    Steve Payne on
  • don’t wish to add another long winded comment, but:

    Two recent Alabama supreme court rulings with opinions that upheld trial court judgment for plaintiff/appellee claims for trespassing with punitive damages against defendant/appellant who continued to rent out property for which a certificate of redemption was issued after purchase at tax sale, but the purchaser was not reimbursed for insurance and improvements pursuant to AlaCode 40-10-122 ©. In Espinoza the Supreme Court held that because the tax-sale purchaser did not purchase insurance and made no improvements of value (“Because this case was tried ore tenus, this Court will assume that the trial court made the findings that were necessary to support its judgment․”) the redemptioner complied with the requirements of 40-10-122 ©. Note that the S. Court said that the findings were “necessary” to support the trial court judgment. In Ross v. Rosen-Rager there were no findings of fact that Ross didn’t purchase insurance or that Ross didn’t make improvements of value. The Supreme Court didn’t say that those facts would have been necessary to support the trial court judgment. Instead, this time the S.Ct. held that compliance with AlaCode 40-10-122 ( c ) is irrelevant because the probate judge issued a certificate of redemption!

    Below are excerpts from each slip opinion

    ESPINOZA v. RUDOLPH
    Alabama Supreme Court #1080999 (March 19, 2010)


    Analysis …

    III. Validity of Redemption of Property

    Jabez argues that the redemption of Rudolph’s property was invalid because, according to Jabez, Rudolph did not redeem her property in strict conformance with § 40-10-122, Ala.Code 1975, which governs the manner of redemption when land is sold at a tax sale to a party other than the State. Section 40-10-122(a) requires the redemptioner to “deposit with the judge of probate ․ the amount of money for which the lands were sold, with interest payable at the rate of 12 percent per annum from date of sale․” It is undisputed that Rudolph satisfied the redemption requirements of § 40-10-122(a).

    Section 40-10-122© provides that, with respect to “property [that] contains a residential structure at the time of the [tax] sale,” the redemptioner must pay the purchaser the amounts of “[a]ll insurance premiums paid or owed by the purchaser for casualty loss coverage on the residential structure[,] with interest,” and “the value of all preservation improvements made on the property determined in accordance with this section with interest on the value at 12 percent per annum.” Jabez did not pay insurance premiums on the property. Further, we infer that the trial court determined either that Jabez made no “preservation improvements” or that any such improvements had no value. Fitzner Pontiac-Buick-Cadillac, Inc., 578 So.2d at 1063 (“Because this case was tried ore tenus, this Court will assume that the trial court made the findings that were necessary to support its judgment․”). Such a finding is amply supported by the record. Clark v. Albertville Nursing Home, Inc., 545 So.2d 9, 13 (Ala.1989) (“The trial court’s judgment in [an ore tenus] case will be affirmed, if, under any reasonable aspect of the testimony, there is credible evidence to support the judgment.”). Therefore, Rudolph is not required to pay Jabez anything to satisfy the requirements of § 40-10-122©.

    For these reasons, we will not reverse the trial court’s judgment on the basis of Jabez’s contention that Rudolph failed to comply with § 40-10-122 in redeeming the property.

    ROSS v. ROSEN-RAGER
    Alabama Supreme Court #1080721 (August 27, 2010)


    II. Discussion

    A. Partial Summary Judgment …

    According to Ross, redemption does not occur until the redemption complies fully with section 40-10-122 (a) and © (1) – (2) …

    We need not decide whether the failure of the redemption to make the payments set forth in subsection ©, standing alone, affects the tax-sale purchaser’s right to possession, because, in any case, a tax-sale purchaser may not simply ignore a certificate of redemption as Ross did in this case.

    howard ross on
  • thanx

    i forgot to invoke the notice of comments via email – i now have done so!

    howard ross on
  • I’ll see if I can find an attorney who is willing to help you.

    deniselevans on

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