Indemnity Agreement Signed Before Tax Deed Issued


Not everybody gets notified when someone posts a “comment” and then I “reply.” Some of you receive notices only when I upload a new “post.” For that reason, I’m reprinting my answer to someone’s comment about a practice in Mobile County.  It’s an important issue, and I think all of you should know about it.

That person said Mobile County now requires that investors sign an Indemnity Agreement before the Probate Judge will issue a tax deed. The indemnity agreement basically says that if Mobile County did anything wrong related to issuing the deed (which means something wrong with the tax sale, usually) and gets sued, the investor will pay all of their legal fees and any judgment against them. That’s plain WRONG!!!!  Are any other counties doing this to you people?

Alabama Code Section 40-10-29 says they MUST give you a deed. It doesn’t place any restrictions on them giving you the deed, except the ones specifically outlined in the statute. In other words, you do everything the statute says, and they HAVE TO GIVE YOU THE DEED. They are not allowed to place additional demands on you. This is what the statute says:

“Deeds – Delivered to purchaser. After the expiration of three years from the date of the sale of any real estate for taxes, the judge of probate then in office must execute and deliver to the purchaser, other than the state, or person to whom the certificate of purchase has been assigned, upon the return of the certificate, proof that all ad valorem taxes have been paid, and payment of a fee of five dollars ($5) to the judge of probate, a deed to each lot or parcel of real estate sold to the purchaser and remaining unredeemed, including therein, if desired by the purchaser, any number of parcels, or lots purchased by him at such sale; and such deed shall convey to and vest in the grantee all the right, title, interest and estate of the person whose duty it was to pay the taxes on such real estate and the lien and claim of the state and county thereto, but it shall not convey the right, title or interest of any reversioner or remainderman therein.”

In addition, it seems that Mobile County wants you to indemnify them against their own negligence. The only way they can successfully be sued is if THEY messed up. Alabama Code Section 40-10-75 makes THEM liable if they mess up. It says:

“Right where sale proceedings were defective. If, in any action brought for the possession of land sold for taxes, the title of the purchaser at the tax sale shall be defeated on account of any defect in the proceedings under which the sale is had, or on account of any defect in or insufficiency of the process by which the owner of the land was brought before the probate court, as is provided, or in the service of the process, or by reason of the failure of the judge of probate on account of any negligence or refusal on his or her part to produce when called upon, sufficient evidence of the proper issuance and service of the notice or process, or by reason of any other defect or insufficiency in any of the proceedings for the condemnation and sale of the property, or of the certificate or deed to the purchaser or any two or more of the causes, the officer or officers on account of whose omission or error the defect or insufficiency or defects or insufficiencies shall have arisen, together with the sureties on the official bond, shall be liable to the purchaser whose title shall be thus defeated and to his or her assignees for the full sum of the purchase money paid by him or her at the tax sale for the property, the cost of the action in which the title failed, which the purchaser shall have incurred in attempting to maintain title under the tax sale, together with the interest upon each of these amounts, at the rate of 12 percent per annum, subject to the limitations set forth in Section 40-10-122(a); provided that except as to the state, actions under this section shall be commenced within five years from the sale.”

I would refuse to sign the indemnification agreement, and ask them what statutory or court authority gives them the right to demand it, since the statute quoted at the first part of this reply says they MUST issue the deed.

Let me know if you’ve encountered this issue in Mobile, or any other, county. How did it turn out?