This question comes from an investor who wants to buy a tax sale property that has a sewer lien on it. He’s willing to do that, and pay off the lien, because the property is worth it. But, he’s concerned that if the taxpayer redeems, will be be repaid for the money he spends to clear the sewer lien?
The answer is, YES., according to the Alabama Supreme Court decision in Morris v. Card, 223 Ala. 254, 135 So. 340 (1931). It is an old case, involving a 1919 tax sale, but it is still valid law. The investor paid off some sidewalk and street improvement assessments. The court said those amounts should have been included in the redemption calculations. For you lawyers out there, the actual quote from the court is at the end of this article.
What other things might this apply to? I think paying off HOA liens would use the same logic. What about paying HOA dues to avoid liens, or cutting the grass to avoid a nuisance lien? There is no statutory or court guidance on those issues, but I think it is logical that you should be paid to do things that prevent liens, just the same as you are entitled to payment for clearing liens.
Properties with local government liens usually do not get redeemed because the price tag is just too high. People usually have truly abandoned the property, because of the liens and the fear of foreclosure. That makes them good properties to target. To learn about other tax sale strategies, many of which are VERY profitable with almost no competition, come to one of our Advanced Tax Sale Strategies classes, or purchase the video. For more information, click HERE.
The actual quote from Morris (223 Ala. 258, 135 So. 343) is “The decree fixes the amount necessary to redeem and takes no account of the sidewalk and street improvement assessments paid by Morris to clear the property of said liens. These amounts should have been included in the amounts necessary to redeem. Wartensleben v. Haithcock, 80 Ala. 565, 570, 1 So. 38; Cobb v. Vary, 120 Ala. 263, 24 So. 442; Turner v. White, 97 Ala. 545, 551, 12 So. 601; Acts 1915, § 240, p. 475. For the failure to allow such municipal taxes and assessments amounting to approximately $ 322.27 and lawfully paid by respondent in the original bill and complainant in the cross-bill, the decree is reversed, and the cause is remanded for proper calculations of the amounts of due redemption charges and interest.”