Tax Liens & Mortgage Notes
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Alabama Tax Sale Redemption Rights
There are four different tax sale redemption periods in Alabama. At the time of the tax sale, the investor receives a Certificate, which entitles it to possession of the property. Three years after the tax sale, the investor may demand a tax deed. Before the tax deed, the person who did not pay his taxes is still technically the owner. Despite that, I always refer to the defaulting taxpayer as the "former owner" because it makes things easier.
1. The "administrative redemption period" continues for three years after the date of the tax sale. Redemption is accomplished through local county offices. The investor is allowed to keep all rents collected before redemption.
2. The "judicial redemption period" is called that for historic reasons. It does not require a lawsuit. If the investor has not taken possession of the property, then the former owner has three years, from the date the investor takes possession, to redeem. If nobody is in possession of the property, the law assumes the former owner is still in possession. For tax sale properties owned by the State, the law assumes the former owner is still in possession. If the investor takes possession on the earliest possible date--the date it receives the tax certificate, five days after the auction--then the administrative redemption period and the judicial redemption period will both burn off at the same time. If the administrative redemption period has expired, the judicial redemption is negotiated directly with the investor, or resolved by the courts. The investor is allowed to keep all rents collected before redemption.
3. The "defective tax sale redemption period" arises when the tax sale was void for some reason. The former owner can contest the tax sale, reclaim the property, and pay only the taxes and 12% redemption interest, but will not be required to pay for preservation improvements or insurance premiums. In order to defeat this type of redemption, the investor must adversely possess the property for three years, starting on or after the tax deed date. This is called the "short statute of limitations" if you want to research it further. The investor must disgorge all collected rents if the owner redeems.
4. The "lienholder redemption period" is for one year, and applies to all recorded liens as of the date of the tax sale. Mortgage lenders, judgment creditors, IRS--they all have redemption rights they can exercise in order to protect their liens. Their redemption rights are during the "administrative redemption period" or the "lienholder redemption period," whichever is longer. The investor must send certified mail, return receipt requested, notice to all lienholders regarding the tax sale. There is no requirement for WHEN the notice must be sent. On the date the notice is received by the lienholder, that starts the one-year lienholder redemption period. If the notice is not sent until ten years after the sale (as an example) then the lienholder's redemption rights start on that date. If a lienholder redeems under this rule, the investor is allowed to keep all rents collected before redemption.
As for possession and clearing the short statue of limitations, can the official three year possession period begin while I'm holding only a tax certificate (still in the administrative redemption period), OR does it begin when the judicial period begins, OR does it begin when the tax DEED is issued? Thanks!
@Account Closed, your question is matter of hot debate. I and several other experts I respect say you can burn off judicial redemption rights, so they never come into existence, if you take and hold continuous possession during the first three years. If you know the history of judicial redemption rights, going back to the early 1900's, this is the only answer that makes sense. Other people say there will always be 6 years of redemption rights, three years of administrative and another three years (minimum) of judicial after the tax deed. I disagree. The Alabama Supreme Court has not yet ruled. They've had some rulings in the past that truly surprised me (and the other experts), so we don't know what they will say.
Thank you @Denise Evans !
So at what point can I convey (sell) property to a buyer with clear title?
@Account Closed, when you have quieted title, or gotten quitclaim from prior owner, or had the property rented out for three years after the tax deed date (just to be absolutely safe) or had an ejectment order at least three years ago.
@Diane Evans Sorry I keep asking similar questions, but I think I have finally figured out how to best ask this question: At what point can I attempt to get a quieted title? When I get the tax deed, or after I have the tax deed PLUS three years possession. (In other words, is it an automatic "no" until I have the tax deed plus three years possession?) Thank you for sharing your knowledge. I can tell that you are the most informed on this subject.
Hey All!
I've been reading through these threads trying to get some information specifically related to purchasing Tax Delinquent Properties from the Alabama Department of Revenue website.
I've received a price from the state and I am interested in one of the properties. The property was sold to the state in 2011 and appears to be occupied. I would be purchasing the Tax Deed.
Once the purchase is complete, what are my next steps? Is step 1 the ejection notice?
I'm looking forward to attending your class later this month @Denise Evans!
@Darrell Nance, Since you will have the tax deed, give notice to vacate, wait about two weeks, and then file ejectment.
@Darrell Nance After you follow @Denise Evans instructions above, if you intend to sell the property, you need to file a quiet title action. If you are just renting this out then no need for that. Be sure to check that the property is listed in your name so the new tax bills are mailed to you. Best of luck
@Darrell Nance, you will not be able to file a quiet title lawsuit until 3 years after you have your tax deed and take possession. There are some strategies where you can do it more quickly, but not the kind of thing to take as general advice.
I have purchased a piece of property from the state of Alabama. The state acquired the property for delinquent taxes back in 2003. The former owners are deceased. The property is vacant except for a carport that the neighbors have put on it. They have been using this property as their own for several years. Can we take possession of carport or do we tell them to move it? Can we fence in this property? Does the 3 year period begin when we get it or when the State got it?
@Teresa Nelson, The state has owned the tax lien since 2003. People cannot adversely possess against the state, but in this instance they might have adversely possessed against the former owner and heirs. You cannot take DIY possession of the carport. You can demand they remove it and, if they don't, then you can file an ejectment lawsuit against them. The three years to burn off judicial redemption rights begins when you take possession of the property. Where are the heirs? Did the owners die before or after the tax auction?
I'm not sure when the owners died but I think it was before the State got it. The city had tore the houses down that were there . Not sure about heirs. Will I need to record tax deed or does the state usually do that. And can I put a fence up
I have the Alabama tax deed (filed in probate) have had continuous possession since I acquired the tax certificate. I am about one year away from the the six year point. What are the steps the former owner must follow if he wants to redeem?
@Gail Daparma, the former owner must either contact you and ask for the amount necessary to redeem or file a redemption lawsuit. If it were me, I would make him file the lawsuit. I think that if you've been in continuous possession since the certificate issued, then judicial redemption rights never came into existence. A few lawyers disagree with me. EVERY appellate decision that gives a taxpayer an automatic three years after the tax deed within which to redeem is a void tax sale case. That's not a true redemption, but it is what the courts call it.
Originally posted by @Denise Evans:
@Gail Daparma, the former owner must either contact you and ask for the amount necessary to redeem or file a redemption lawsuit. If it were me, I would make him file the lawsuit. I think that if you've been in continuous possession since the certificate issued, then judicial redemption rights never came into existence. A few lawyers disagree with me. EVERY appellate decision that gives a taxpayer an automatic three years after the tax deed within which to redeem is a void tax sale case. That's not a true redemption, but it is what the courts call it.
I purchased a tax certificate, started fixing the property because it was not occupied. The previous tax investor who defaulted came today after months broke in and changed the locks. I found out because one neighbor called me. They have not tried to redeem or anything. What action should I take at this point. The neighborhood knows I have been working on this property and have had possession.
Originally posted by @Denise Evans:
@Gail Daparma, the former owner must either contact you and ask for the amount necessary to redeem or file a redemption lawsuit. If it were me, I would make him file the lawsuit. I think that if you've been in continuous possession since the certificate issued, then judicial redemption rights never came into existence. A few lawyers disagree with me. EVERY appellate decision that gives a taxpayer an automatic three years after the tax deed within which to redeem is a void tax sale case. That's not a true redemption, but it is what the courts call it.
Can you recommend an attorney that agrees with your take to begin a quiet title for me? I'm holding a tax deed from the state for a vacant lot. The previous owner stopped paying taxes in 2009, the tax sale occurred in 2010, the state took possession in 2011, and then the former owner died in 2013. So the tax sale was valid.
@David Henson, the state never takes possession, not since the early 1940s. If you bought from the state, the EARLIEST possession can start is when you get your certificate or deed.
@Andrew Ling, I have a number of forum posts and blog articles about possession. You must be very careful in this area. Please read my material and I think you'll have a better picture of this.
Originally posted by @Denise Evans:
@David Henson, the state never takes possession, not since the early 1940s. If you bought from the state, the EARLIEST possession can start is when you get your certificate or deed.
I meant it went to the state after not selling at the county level. The usual process. Then I purchased the tax deed from the state.
You said that possession / judicial redemption has only come into play IF the tax sale was invalid, but that most attorneys (including mine) still think you have to hold the deed for three years to establish possession, no matter what. I agree with your assessment and would like to find an attorney that is willing to file for quite title NOW since my tax sale was 100% valid.
@David Henson, I know that Henry Walker in agrees with me. I'm pretty sure Mark Pickens and Lee Johnsey agree with me. I know that Greg Stanley disagrees with me.
To be clear, I think the law about judicial redemption rights is a remedial measure intended to fix the problem of investors buying tax sale properties, laying low until they have a tax deed and the administrative redemption rights have expired, and then filing ejectment lawsuits to have (often surprised) owners thrown off the land. This was VERY common in the early 1900s because of how the taxes were assessed and collected. People could legitimately think they had paid all of their taxes and find out they'd paid only a portion, and their property had been sold.
Because judicial redemption rights are remedial, it is my position they never come into existence of the investor tax and holds exclusive possession of the property for three years, even if that is the 3 years during the administrative redemption time period. If that happens, there are NO SURPRISES to the taxpayer. So, judicial redemption rights never come into existence.
Well informed, studious, logical and intelligent lawyers can come to a different conclusion. This is a matter of legal theory and legislative history, and people can come to different opinions on those things. As I tell everybody, if I were ALWAYS right, then the state could save a ton of money by shutting down the appellate court system and, instead, let me open up the equivalent of a Dear Abbey column to resolve disputes. Sadly for me, that is not the case:(
Originally posted by @Denise Evans:
@David Henson, I know that Henry Walker in agrees with me. I'm pretty sure Mark Pickens and Lee Johnsey agree with me. I know that Greg Stanley disagrees with me.
To be clear, I think the law about judicial redemption rights is a remedial measure intended to fix the problem of investors buying tax sale properties, laying low until they have a tax deed and the administrative redemption rights have expired, and then filing ejectment lawsuits to have (often surprised) owners thrown off the land. This was VERY common in the early 1900s because of how the taxes were assessed and collected. People could legitimately think they had paid all of their taxes and find out they'd paid only a portion, and their property had been sold.
Because judicial redemption rights are remedial, it is my position they never come into existence of the investor tax and holds exclusive possession of the property for three years, even if that is the 3 years during the administrative redemption time period. If that happens, there are NO SURPRISES to the taxpayer. So, judicial redemption rights never come into existence.
Well informed, studious, logical and intelligent lawyers can come to a different conclusion. This is a matter of legal theory and legislative history, and people can come to different opinions on those things. As I tell everybody, if I were ALWAYS right, then the state could save a ton of money by shutting down the appellate court system and, instead, let me open up the equivalent of a Dear Abbey column to resolve disputes. Sadly for me, that is not the case:(
Thank you very much for your awesome reply! Your knowledge of the law's history and likely intent is unmatched. Common sense should dictate that the law never intended to tie up properties for up six years as the rule and not as the exception. In Nevada, there is no redemption period and only a two year judicial-like period where the county holds delinquent properties in case of legal challenges. After that two years is up, the county flat out sells the delinquent properties with no restrictions. Dormant properties are rehabilitated three-times faster and local economies don't stagnate. That should be the intent of the law in Alabama, if it's not already the intent!
@David Henson, biggest newbie mistakes:
Thinking vacant property = abandoned property and not taking possession lawfully
Not documenting the need for, and extent of, preservation improvements