Cutting Timber from Tax Sale Property


timberMy theory that you can cut timber from property after you receive a tax deed is just my theory.

I KNOW the statute says that if you cut the timber before the tax deed, a redeeming owner gets a credit for that. I’m fairly certain that once you have a tax deed, you are the owner of the property for all purposes–except that somebody can take it away from you through extended redemption rights.  I’m fairly certain from law school classes that once you sign a contract to sell timber, you sever it from the real estate and convert it to personal property.

When you put those things together, you get my theory that you can cut timber once you have the tax deed. BUT, no court has addressed this issue. I might be wrong. I might be right, but a court might rule differently and be wrong, but once they say it, that’s the law. I might be right, but it might cost you tens of thousands of dollars in legal fees to get this point to the Alabama Supreme Court and find out I’m right.

You don’t want to risk any of that.

Warning: If the tax sale is void, then you can’t cut the timber until after you’ve quieted title. Everybody agrees on that point.

So, my advice is:

  1. Get the tax deed.
  2. Set up a separate LLC
  3. Sell the timber to the separate LLC, and give it five years to harvest the timber. That is a typical timber contract.
  4. DO NOT CUT ANY TREES!!!!!
  5. Go about  your possessory acts for three years.  Flag trees. Put survey stakes in the ground. Visit the property regularly. Put up “no trespassing” or “for sale” signs. Talk to the neighbors and tell them you own the property.
  6. If the owner attempts to redeem, tell him he can redeem the dirt, but the timber has already been sold and he can’t un-do that.
  7. If he argues and threatens a lawsuit, you can negotiate. Nobody knows, for sure, what the law is in this situation.  At least you haven’t painted yourself into a corner by physically cutting the trees.
  8. If nothing bad happens, then that’s perfect. File your quiet title lawsuit and harvest the timber.

It is VERY inexpensive to sell the timber to your LLC but not cut it. As far as I can tell, there is no downside risk. Why not give it a try?