I personally haven't used lease options for many years though, I use the standard OREA purchase and sale agreement because that's what everyone (buyers, sellers, realtors, attorneys, lenders etc.) are used to seeing.To turn the PSA into a long-term agreement all you have to do is add a possession date on schedule A that's different from the closing date.

Is it true the IRS, in the 120 day period after the property tax lien foreclosure, can still redeem the property from the lien holder, who now has taken possession via the foreclosure?

If not go to the clerk of court and ask for a "Writ of Possession."

If they do, I'll be giving houses away and selling art work in every house and I'll finance the art work!

Alabama redemptions allow for an investor to recover the value of the improvements they made while in possession of tax lien property. 

The foreclosure process here is a little slow because the bank doesn't take possession before having a buyer.

As I started marketing the property, I received numerous rental applications, many of which are from individuals with Section 8 vouchers.After doing some research, I learned that it's not permissible to reject applicants solely based on their possession of a Section 8 voucher.

@Edward KaniveThat's absolutely fantastic that you make so much money i would love to have that kind of tools to use. my first thought when reading your post was that you kinda see the homes as a personal possession, not as a tool to make you money.

@Arnold Finkelstein, if you want to eventually end up with the real estate, contact the taxpayer by regular and certified mail, advise of the tax sale, demand they either vacate the property or redeem or surrender possession to you or sign a lease with you. 

Fourthly, while many people possess expertise in many areas be wary of:Advice from strangers on the internetConstruction estimates from your agentARV's from your contractorLegal advice from your accountantTax advice from your lenderand finally but not least,Insurance advice from your hot tub manufacturer's rep :)