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Indemnity Agreement Signed Before Tax Deed Issued

Posted by 15789465 on

Not everybody gets notified when someone posts a "comment" and then I "reply." Some of you receive notices only when I upload a new "post." For that reason, I'm reprinting my answer to someone's comment about a practice in Mobile County.  It's an important issue, and I think all of you should know about it. That person said Mobile County now requires that investors sign an Indemnity Agreement before the Probate Judge will issue a tax deed. The indemnity agreement basically says that if Mobile County did anything wrong related to issuing the deed (which means something wrong with the tax sale, usually) and gets sued, the investor will pay all of their legal fees and any judgment against them. That's plain WRONG!!!!  Are any other counties doing this to you people? Alabama Code Section 40-10-29 says they MUST give you a deed. It doesn’t place any restrictions on them giving you the deed, except the ones specifically outlined in the statute. In other words, you do everything the statute says, and they HAVE TO GIVE YOU THE DEED. They are not allowed to place additional demands on you. This is what the statute says:

“Deeds – Delivered to purchaser. After the expiration of three years from the date of the sale of any real estate for taxes, the judge of probate then in office must execute and deliver to the purchaser, other than the state, or person to whom the certificate of purchase has been assigned, upon the return of the certificate, proof that all ad valorem taxes have been paid, and payment of a fee of five dollars ($5) to the judge of probate, a deed to each lot or parcel of real estate sold to the purchaser and remaining unredeemed, including therein, if desired by the purchaser, any number of parcels, or lots purchased by him at such sale; and such deed shall convey to and vest in the grantee all the right, title, interest and estate of the person whose duty it was to pay the taxes on such real estate and the lien and claim of the state and county thereto, but it shall not convey the right, title or interest of any reversioner or remainderman therein.”

In addition, it seems that Mobile County wants you to indemnify them against their own negligence. The only way they can successfully be sued is if THEY messed up. Alabama Code Section 40-10-75 makes THEM liable if they mess up. It says:

“Right where sale proceedings were defective. If, in any action brought for the possession of land sold for taxes, the title of the purchaser at the tax sale shall be defeated on account of any defect in the proceedings under which the sale is had, or on account of any defect in or insufficiency of the process by which the owner of the land was brought before the probate court, as is provided, or in the service of the process, or by reason of the failure of the judge of probate on account of any negligence or refusal on his or her part to produce when called upon, sufficient evidence of the proper issuance and service of the notice or process, or by reason of any other defect or insufficiency in any of the proceedings for the condemnation and sale of the property, or of the certificate or deed to the purchaser or any two or more of the causes, the officer or officers on account of whose omission or error the defect or insufficiency or defects or insufficiencies shall have arisen, together with the sureties on the official bond, shall be liable to the purchaser whose title shall be thus defeated and to his or her assignees for the full sum of the purchase money paid by him or her at the tax sale for the property, the cost of the action in which the title failed, which the purchaser shall have incurred in attempting to maintain title under the tax sale, together with the interest upon each of these amounts, at the rate of 12 percent per annum, subject to the limitations set forth in Section 40-10-122(a); provided that except as to the state, actions under this section shall be commenced within five years from the sale.”

I would refuse to sign the indemnification agreement, and ask them what statutory or court authority gives them the right to demand it, since the statute quoted at the first part of this reply says they MUST issue the deed. Let me know if you've encountered this issue in Mobile, or any other, county. How did it turn out?

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5 comments

  • Go get ’em tiger@

    billevans@premiercos.com on
  • Looks good to me, Chuck, except the reference to 40-10-75. That was part of my explanation about why they are liable for their own mistakes, and should not be able to shift that to you with an indemnity agreement. But, it really doesn’t say they can’t demand an indemnity agreement. It’s just a side issue, is all. I expect they’ll just ignore you. Don’t worry about it. Once you signed the agreement you can’t get rid of the liability by getting rid of the property. So, there’s no point in trying to figure out something along those lines. As I said, probably nothing at all will go wrong. Your letter is “just in case.” You are an investor. Risk is part of your life, and why you make money when other people are too fearful to risk anything at all. In my opinion, the risk of liability under the indemnity agreement is extremely small and should not cause you any loss of sleep. If you had to do it all over, you should not sign it. But, having signed it, do the best you can to minimize your risk (by writing the letter) and then just move forward.

    Denise L. Evans on
  • Below is the letter I plan on sending. Should I give them tens day to send me notice that they acknowledge the Indemnity Agreements are null and void or should I frame that sentence to state that they have 10 days to send me an explanation of their actions and if I do not receive that from them that they have agreed that the Indemnity Agreements are null and void and their actions are indefensible and egregious?

    XXXXXXXXX
    XXXXXXXXX
    XXXXXXXXX
    July 30, 2014

    Marilyn E. Wood
    Revenue Commissioner
    P.O. Box 1169
    Mobile, AL 36633-1169

    RE: Indemnity Agreements for parcel XXXX and parcel XXXXX

    Dear Ms. Wood:

    On June XX 2014 I appeared with the tax certificates for parcel XXXX and parcel XXXXX

    I was told if I did not sign the Indemnity Agreements I would not be given the tax deeds.

    Your office illegally extracted indemnification agreements from me by fraud and duress.

    The Indemnity Agreements I was forced to sign are contrary to Alabama Code Section 40-10-29 and Alabama Code Section 40-10-75 your office has no legal standing to requires this. The tax deeds should have been issues without additional requirements from your office.

    As a result these Indemnity Agreements are null and void and I reject them completely.

    Your office has ten days upon receipt of this letter to send me notice that you acknowledge that these agreements are null and void.

    I look forward to your cooperation in resolving this issue.

    Best regards,
    XXXXXX

    Chuck Yoo on
  • Hi Chuck, it wasn’t stupid. We all tend to believe that our own government officials would not demand something they just totally made up. It’s completely outside our experiences and our cultural expectations. I would write them a strongly worded letter telling them that they were obligated to give you the deed without any strings attached, they illegally extracted an indemnification agreement by duress, and as a result it is null and void and you reject it completely. Alabama recognizes that upon a showing of duress or undue influence, you can void a contract.

    In all likelihood, nothing bad will happen. But, send the letter anyway, just to protect yourself. Of course, I might be wrong and there might be some obscure law that says they CAN do it. I can’t find it, but I’ll sure write a letter, myself, to find out how they justify it.

    Denise L. Evans on
  • Unfortunately I did sign it and I received the tax deed. Yes it was very stupid of me. What would be the best way to nullify this? Such as not paying this year’s taxes and letting the property go back to tax sale? Delivering a quit claim deed to the original owner making the tax deed moot?

    Chuck Yoo on

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