Some of you might have seen this STORY about a Jefferson County court imposing more than $1 million of damages against a tax sale investor. Don’t let the headlines frighten you. The case was basically a replay of Ross v. Rosen-Rager.
In the Hi Tech Industries v. Harris case that was the subject of the story, Hi Tech Industries bought the property, not knowing the taxes had not been paid. Hi Tech planned to use the property to convert vans for use by disabled people. Harris purchased the tax certificate from the state, planning to open a day care center. Hi Tech learned of the delinquent taxes and paid them, administratively, at the Probate Judge’s office. Shortly afterwards, Hi Tech’s principals drove by the property and saw Harris in possession.
Hi Tech showed Harris the redemption certificate. Harris refused to surrender possession, and then proceed with extensive demolition work in order to remodel the property for use as a day care center. Harris also disposed of personal property, including a number of vans and RVs awaiting conversion. Harris claimed the demolition work was in the nature of “improvements” and compensable if there were a redemption. Judge Annetta Verin properly pointed out that only “preservation improvements,” and then only for a property that “contains a residential structure” were due upon redemption. I am sure she also mentioned Alabama Supreme Court authority holding the land passes in the tax sale, NOT the personal property.
If there is a lesson for you here, it is that when an owner says they have redeemed, STOP EVERYTHING, contact your lawyer, and investigate. I would be stunned if a little General Business Liability policy (which most people don’t have, anyway) covered a $1 million judgment in a case like this one.