Acquiring Tax Delinquent Property
Acquisition of tax delinquent property is growing in popularity. Historically, investors have utilized the tax sale process to passively speculate on tax liens throughout the city. They have acquired interests in properties to buy and hold until someone else either redeems the property or wants to buy the property as-is from the initial investor.
Before we go any further, please understand that the Birmingham Land Bank Authority(BLBA) is here to encourage investment in tax delinquent PROPERTY, not tax liens. When you acquire through BLBA programming, the terms of the purchase agreement and deed restrictions are put in place to make sure you invest in the property and adhere to completing the improvements that you commit to do during our application process.
Many individuals acquire interests in tax delinquent property through different avenues. These include the Jefferson County Tax Sale, Alabama Department of Revenue and the private market.
Jefferson County Tax Sale
For the purposes of passive speculation, the aforementioned routes may be the way to go. The BLBA aims to interrupt the passive speculation market. Individuals and entities interested in revitalizing their neighborhoods often are met with problems after purchasing an interest in a tax delinquent property that does not have clear insurable title. Absent a large amount of capital, the average purchaser likely needs some sort of financing product to improve these problem properties. Financial institutions generally require a property to have clear insurable title before they offer any construction or renovation products that attach to the property.
On the Alabama Department of Revenue’s Tax Delinquent Property Page, they specifically state that “…neither an assignment nor a tax deed gives the holder clear title to the parcel.” Furthermore, they state that “It is advisable to consult a competent attorney regarding your contemplated purchase of tax delinquent property.” This is important to note as many people are eager to jump in and purchase a tax interest in a property without fully being aware of the restrictions.
It is possible to get clear title after acquiring a tax interest from the state, tax sale or private market. It is often much more costly than the value of the property.
- 3 year adverse possession holding period after obtaining tax deed
- Indefinite “judicial right of redemption” – now codified = uncertain title
- Quiet title cases are costly, time consuming, subject to time restraints
During the process, purchasers can be responsible for back taxes, municipal liens and assessments and a variety of other items in addition to attorney’s fees.
The Birmingham Land Bank Authority has the ability to clear these back taxes, municipal liens and assessments and the authority to institute quiet title actions on properties that are at least five years tax delinquent. We aim to make development and investment in these problem properties financially feasible.
Each conveyance from the BLBA through its Quiet Title Program is through a Warranty Deed. This guarantees clear and insurable title to the property.