You buy a tax sale or foreclosure property. The lawn is a jungle, or maybe everything is dead. Either way, you restore it to something attractive, and then maintain it with twice-monthly mowing, plus other landscaping maintenance as needed. Can you recover this expense if the owner redeems?
Yes! Certainly "yes" after a foreclosure, but I think also "yes" after a tax sale.
My answer is based on the case of Godfrey v. Black, 240 Ala. 151, 197 So. 892 (1940) which was a foreclosure redemption case. After a foreclosure, the redeeming party must pay, in addition to other charges, the value of "permanent improvements." In Godfrey, the investor included an item for "clearing, reclaiming and preparing lands" as a permanent improvement. The former owner claimed that was not allowed.
The court said, "permanent improvements...means anything that enhances the value of the land, including such as restores the property after injury or decay, and so preserves it against the day of redemption, and includes repairs which are permanent, but not necessarily of an everlasting character, and includes every form of expenditure of labor or capital conforming to the general notion. ... Restoring waste land is as much so as restoring a house wasted by decay."
In other words, post-foreclosure redemption charges include the value of additions to the property (new house, garage, bathroom, etc) AND repairs, which includes repairs to the land itself.
After a tax sale, the investor is limited to the value of preservation improvements. I could find no case discussing lawn care as a preservation improvement. BUT, I think the Godfrey case supports a conclusion that you can collect them after a tax sale. Here is my reasoning:
- Post-foreclosure permanent improvements also include things like restoring land from decay or preventing it from decaying in the future.
- In other words, post-foreclosure permanent improvements ALSO includes things we normally think of as preservation improvements.
- Clearing, reclaiming and restoring land is similar to "restoring a house wasted by decay."
- Restoring a house wasted by decay is clearly one of the allowed "preservation improvements" after a tax sale.
- If restoring land is similar to restoring a house, then restoring land must also be a preservation improvement.
- Lawn care is similar to restoring land. Therefore, lawn care is a preservation improvement.
- This is further supported by the tax sale statute at 40-10-122(d) which says preservation improvements are "improvements made to preserve the property by properly keeping it in repair for its proper and reasonable use." When you think about it, this must also include lawn care.
- Putting Godfrey and the tax sale statute together, I think that lawn care is something that preserves the property by keeping it in repair for its proper and reasonable use. Therefore, it is an allowed redemption expense.
The final question is, what is the value of the lawn care? It cannot be just the difference between the before-and-after value of the property, because lawn care is ongoing and must be maintained. As a result, the value must be the cost, or the reasonable market cost if you do it yourself.
Those are my thoughts. What do you think? Is this helpful?
To read the Godfrey case, click HERE
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