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Alabama Law for You

  • Writer's pictureGregory Stanley

Judicial Support of Tax Sale Investors Renovating Blight

Updated: Apr 21

A telling statement of judicial support for tax sale investors renovating blight in Alabama neighborhoods sends legislature message about new tax lien certificate law: “In re Anderson Realty Group, LLC v. J.C. King III


If you have not already read the landmark decision by the Alabama Supreme Court on 19 May 2023, you should read it now and enjoy the good news.  Click the link above, then come back here for my thoughts on this important public policy statement made by the Alabama judiciary and what current Alabama legislators could take from it.

“The 2002 amendment, therefore, was designed to alleviate risks inherent in a tax-sale purchaser's improvement of a property…”[1]

 

I read this new decision as an indictment of the 2019 tax lien certificate law, in that the ruling focuses so intently on the differences between the new 2019 system and the old 2002 system.  There are thousands of tax liens still under the 2002 system, but almost all counties have adopted the flawed 2019 tax collector online system for new property tax sales:  The new tax lien certificate system serves only the people that pushed this bill through the legislature.  The 2019 system is bad for Alabama homeowners, neighbors, neighborhoods, Alabama investors, police, county schools and budgets, and is a monstrosity that takes the worst parts of other state laws including Florida, Georgia, and Arizona, but leaves out the good parts of those state laws. – The new Alabama law is having a blighting effect on neighborhoods, it reduces revenues, and has created a whole new class of criminals in Alabama: Local Investors that buy tax lien certificates. 


I received a letter from Birmingham telling me that if I don’t cut the grass, they will charge me with a crime!  -- Local Alabama Tax-Sale Investor


Investors across the state have been receiving threatening letters from municipalities including Birmingham and Jefferson County informing them they have must remove “junk and debris” from the properties for which they bought tax lien certificates in 2021.  Similar letters warn that investors must abate the “noxious weeds” on tax lien certificate property, and these letters come with threats of criminal prosecution and fines.  But tax lien certificate investors have no possession rights under the new system so it seems they would be trespassing if they go on the property, and stealing if they remove any of the items the municipalities are calling “junk and debris.”   

 

The tax lien investor faces either criminal prosecution by the municipality or by the owner. Under the new “Frankenstein tax lien system” now used in Alabama, investors are facing a “crime if you do, crime if you don’t” situation.  A long-time member of the Alabama Tax Lien Association (ATLASS) Facebook page recently posted. “I don't understand why anyone would participate in the lien system at all…[2]  Why indeed.  The previous system (2002) was well-thought-out public policy legislation designed to encourage people to pay property tax, and if the property was abandoned, it encouraged investors to renovate and rejuvenate these dilapidated properties.


“…The legislative intent of the 2002 amendment is … reducing urban blight, which, according to legislative findings, "impair economic values and tax revenues, cause an increase in and spread of disease and crime and constitute a menace to the health, safety, morals, and welfare of residents of the state." …”[3] 

         

The new code, 2019 Ala Code 40-10-180[4] et seq., is the law that is in effect now and it took away tax-sale purchasers’ right to take lawful possession.  (Investors were required to give notice of the tax sale and wait 6 months, then file legal action.)  Without the right to possession, abandoned property due to, e.g., death, or moving to a permanent care facility, is laying fallow, unrepaired and creating blight in Alabama cities and towns.  Investors cannot take possession and have no requirement to give notice of the tax lien certificate to the homeowner under the new system.


The 2002 law required 6 years of due process (including three years of physical notice) to the homeowner before their property is lost.  Now, it is entirely probable that the first time a homeowner will discover they are about to lose their house is when they are served a foreclosure or ejectment lawsuit.  For the first time in Alabama history, no adverse possession notice is required, and owners do not have the FDCPA and other similar protections which are required for all other types of foreclosures in Alabama. 

 

The vast majority of Alabama tax-sale investors I deal with do not want to cheat anyone out of their house.  I believe this is why the majority of current tax lien certificate sales are going to large out-of-state corporate investors who are immune to threats of criminal charges for failing to maintain the property. One of these companies publicly stated their Alabama tax-sale strategy “pivoted” with the new law; now their objective is to take the houses from Alabama homeowners.  This is counter to the old system, but lines right up with the new system.  The stated legislative intent of the new law follows:

                           

The Legislature declares that the purpose of this article is to provide counties with an alternative remedy for collecting delinquent property taxes by the sale of a tax lien. The tax collecting official or each county shall have the sole authority …  [5]

         

On Friday 19 May 2023 The Alabama Supreme Court upheld the intended public policy of the 2002 law regarding tax sale investors revitalizing blight in Alabama neighborhoods, but it also sent a message by pointing out the value of the 2002 system over the 2019 law that we are suffering under now.

        

Talk to an Alabama Lawyer if your property was subject to a tax sale under the new law and protect your rights.   If you are a tax lien investor, contact a lawyer to protect yourself from the criminal traps inherent in the new law.


(205) 451-4196



[1] Ex parte J.C. King III   PETITION FOR WRIT OF CERTIORARI TO THE COURT OF CIVIL APPEALS, Page 9.

[3] Ex parte J.C. King III   PETITION FOR WRIT OF CERTIORARI TO THE COURT OF CIVIL APPEALS, Page 8.

[5] AL Code § 40-10-180 (2019) et seq.

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