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Question of Week: Sale to Former Owner

This question comes from Mona Lisa Zimmerman.

“I have just received a tax deed on yesterday for a property in Jefferson County, Bessemer, AL. I am in the process of sending a certified letter to the previous owner, who still has possession of the property (is living there), asking them to vacate the property. I am willing to sell the house back to them. Can I sell it back to them at a fair market value or can I only sell it to them for the taxes I’ve paid plus interest? Also, please verify that these are the correct steps for me to take:
1. Send a certified letter letting the previous owner know that I have purchased the property via a tax deed and ask them to vacate.
2. If they don’t vacate by the specified date (I’m giving them 2 months), start the ejectment process.
3. Alternatively, I will rent to them if they want to stay.
Thank you! “

My answer: Many people sell properties back to the owners at fair market value after they’ve received a tax deed. Technically, the owner can redeem by paying only the taxes plus interest. Many owners do not know that. I am not sure if it is fraud or not to tell someone they must pay fair market value. I am not condemning the people who do that, because I’m truly not sure in my own mind. I would not do that, because it would make me nervous and uncomfortable and it would feel wrong. But that’s just me. It doesn’t mean that is the only correct response.

Yes, Lisa, your outlined steps are correct. If you have only a tax certificate, you must give six months notice before you file your ejectment lawsuit. If you have a tax deed, you do not have to wait out any notice period at all.

There is currently a case pending in the Court of Civil Appeals about the ability to recover “mesne profits” when you sue for ejectment after you have a tax deed.

“Mesne profits” is a very very old Anglo-French word dating back to the time of King Henry II of England, who was the father of Richard the Lionhearted and King John of Magna Carta fame. It is a little bit earlier than Robin Hood. The concept is VERY old. Some people pronounced it as “main profits” because that is the French pronunciation. At the time, all English royalty was basically French by heritage. Some people pronounce the word “mez-knee”. Either one is acceptable.

It means that if you sue for ejectment after you have a deed, you are also entitled to money damages equal to the reasonable rental value of the property for the entire time of the unlawful occupancy by the defendant. The pending case will decide if that applies to a tax deed situation. As soon as there is a decision, I will let everybody know. You should always ask for mesne profits, if you have a tax deed, just in case the court allows it.

What do you think?