Shelby County Alabama New Tax Lien Auction Procedure

[Denise Evans]

I attended the Shelby County tax lien auction on April 2. It was the first one in the state under the new procedure. This year, the following counties will have similar tax lien auctions instead of the traditional tax certificate auctions: Baldwin, Calhoun, Cherokee, Cullman, DeKalb and Elmore. Next year there might be a lot more. There were more tax officials in attendance, observing, than bidders!

If the taxpayer does not redeem within 3 years, the investor can foreclose the lien and get clean title. This is not like a tax deed, with possible continuing redemption rights. Once the investor forecloses on the tax lien, it's all over for the former owner. The investor can get title insurance and sell with a warranty deed.

Here is my report from Shelby County. This was for tax liens only, bidding down the interest rate from 12% downward in 1% increments.  If there was a bidding tie, they had a drawing to see who won the bid.

Approximately 30 people registered to vote. There were 20 active bidders.  None of the institutional investors were present.  As you can see from the numbers below, the volume was not large enough for them to spend the money they need to spend. This is GREAT news for local investors.

278 properties were on the sale list with a total due of $269,320.80 Six people paid their taxes the day of the auction (total $6,750.91) Thirty-one property liens had no bidders and went to the county (total $9,477.17)

Of the remaining properties, winning interest rate bids were as follows. No, I don't know why anyone would bid 0% interest, unless they were fairly certain they were going to be able to foreclose on the real estate. Some of the 0% properties had multiple people at that rate.

Interest Rate %	# of Properties	Total $ Volume
0	18	9,263.23
1	4	4,116.92
2	1	2,884.53
3	2	2,734.21
4	17	20,652.40
5	45	105,746.40
6	46	48,283.25
7	34	21,789.46
8	15	6,372.17
9	6	3,761.07
10	6	3,000.77
11	0	0
12	47	24,488.32

One bidder spent $76,687.98 on 46 properties.

Another spent $68,613.40 on 27 properties.

The next largest buyer spent $23,973.11, and the one after that spent $22,592.39

[Denise Evans]

@Jerry K., I was at the auction, took notes, and then transferred it all to a spreadsheet. The information is not publicly available.

I was familiar with the Florida model at one time, but had not revisited it in several years. Thank you for explaining about different states.  That will all go into my "general info" file in my brain. Nothing is ever wasted!

Alabama counties are thinking about online auctions, but the infrastructure is expensive.  For small counties, it might not be worth the expense. Also, it is not practical to introduce sweeping legislative changes all in one year. I think that for the 2018 legislative session, the issues of the overbids and the preservation improvements inherent in the current system were a top priority.  Just crystal ball gazing, but I don't think we will see legislation passed for online auctions for maybe 3 or 4 years. Many counties were present as observers at the Shelby County lien auction. I see other counties implementing that change next year. After a couple of years of experience doing that, then I think they will start looking towards online auctions.

Denise