Tax Sale Preservation Improvements That Add NO Value

Tax sale investors, beware!

The February 3, 2017 Court of Civil Appeals decision of Surginer v. Roberts (no cite available yet) involved a tax sale investor who said his preservation improvements had a value of $81,458.72. The taxpayer, and the taxpayer’s appraiser, said the value was $0.

The trial judge appointed an independent appraiser, who testified:  “After careful review of all the facts, inspecting the above referenced property, … having licensed contractors review the quality of work and quality of improvements, weighing the current and potential fire and safety hazards, and reviewing the sales of similar properties in the market, it is my opinion that the current improvements negatively impact the subject property’s value due to the poor craftsmanship, inferior materials used, poor design, potential fire and safety hazards, and significant water damage the new improvements have caused and continue to cause to the property; therefore the contributory value of the improvements made to the above reference property is $0.00.”

And that number, folks, is what the judge awarded for the value of the preservation improvements. $0.00  His decision was affirmed on appeal.  It might go to the Alabama Supreme Court, but I doubt the result will be any different. When a trial judge makes a decision based on facts heard or seen at trial, an appellate court will almost never overturn the case.  Mistakes of law are overturned.  Grossly wrong factual findings are overturned. (example: The court finds that Smith punched Jones in the face on a certain date, even though the undisputed evidence showed Smith in Tokyo and Jones in Birmingham for that entire month.)  Almost nothing else is overturned.

So, when you make your preservation improvements, don’t just slap up anything with scavenged materials and  unskilled labor. You could be in for a shock.