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Alabama Tax Sale Warning

Posted by 15789465 on

Just a reminder to be very careful if you plan to invest in Alabama tax sale properties this Spring.  The recent case of Mitchell v. Curry (Alabama Court of Civil Appeals, September 10, 2010) could cost you tens of thousands of dollars.  Mitchell lost his property at a tax sale in 2004. There were no bidders, so the property went to the State. Curry purchased from the State, and received a tax deed in 2007. Curry made improvements, paid insurance premiums, and put a tenant in the property and collected rents. In 2008, Mitchell filed a lawsuit asking for the right to redeem. He claimed he did not receive proper notice of the sale from the state to Curry.  The court agreed, and held the tax sale was void.  The court also decided that because the tax sale was void, Curry was not entitled to keep the rents he collected in the meantime.  Mitchell was allowed to redeem by paying the taxes due from 2004 to the present, plus costs of improvements and insurance premiums. BUT, Curry had to pay Mitchell the rents he'd collected, approximately $16,000!

As a procedural note, Mitchell claimed Curry had collected over $16,000 in rents.  Curry did not contest the amount, but simply his right to keep the rents. After Curry lost on the issue of whether he had to pay the rents over to Mitchell, he THEN alleged that he'd collected only $6,000. The court said Curry raised that issue too late, and he was stuck with the $16,000 figure.

Read the entire decision HERE.  When targeting tax sale purchases, make sure the newspaper notices for that property were accurate. Also check to see if the person on the tax sale advertisement is still the owner of the property. An intervening sale, or foreclosure, could make the tax sale void.  If buying from the State of Alabama, make sure that last notice was in fact sent, to the proper address.  If you don't engage in this due diligence, there could be seriously bad consequences for you.

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13 comments

  • there are also some cases that semm to indicated that a tax sale is void if the taxpayer is dead – so check with death certificates, the cemeteries, morgues, hospitals, or anything else you can suggest to see if they are alive.

    what happens if the taxpayer stops owning after the taxes become delinquent, or the probate court orders the sale, or the notices are advertised, or the sale is held, but before the sale confirmed

    Madison County has over 2000 properties advertised. it would be difficult to check them all out and still keep a ful time job

    howard ross on
  • huh?
    I thought gambling wasn’t allowed here.

    Lauri Pine on
  • I am confused about what happened. If the property was auctioned 20 years ago for unpaid taxes, then it’s been on the state rolls ever since then. The state does not “allow” someone to live there. They simply do not take any action to kick out owners in possession. Only tax sale purchasers kick people out, never the state. With that background, I’m wondering WHO conducted the silent bid auction? Did you apply to buy this property, or did you find it on an auction site? How did this come about?
    The condo association is probably entitled to collect the past due sums or they can foreclose. Condos are not my area of expertise, though. I suggest you contact an attorney who is familiar with condo law. That is the expertise you need, not tax sale law. Please stay in touch, answer my questions, and let me know what happens. Denise

    Denise L. Evans on
  • i just bought a condo from an alabama tax sale auction. The owner died in March, and the state of alabama took the property. The tax property was auctioned 20 years ago and never bought, so state took it, but let the owner stay until her death. It was a silent bid auction which I won. I am waiting for Al governor to sign paper and get the deed. Am I liable for past due condo fees, or do they end with sale? The State officials told my condo management company that I will have to pay fees oweing since her death, but the auction paper I submitted with a bid was silent of this point. DO you know the answer ?

    Verna on
  • not wanting to seem as unscrupulous as most judges in madison county and montgomery believe i am, and not trying to get unlawful advice from an attorney, but i ask in the spirit of Gary’s comment -

    what about purchasing tax sale property in some unused (tombstone) name and then somehow getting a notarized assignment of the certificate of purchase that you don’t record but keep in a safety deposit box (along with any collected rent) until needed? who would the department of community development cite? (in huntsville they can also cite agents in charge or anyone they consider controls the property)

    howard ross on

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