Alabama Tax Lien Certificates

Alabama tax lien certificates are sold at County Tax Sales during the month of May each year. The bidding begins at just the back taxes owed. The winning bidder at an Alabama tax sale is the bidder with the greatest bid.

The original owner has (3) three years to redeem his or her interest in the property. To redeem, the original owner must tender the amount the investor paid to purchase the Alabama tax lien certificateplus 12% per annum on the minimum and the overbid (see notes on bidding).

If the property is not redeemed within the (3) three year redemption period the purchaser of the Alabama tax lien certificate can apply for a tax deed to the property.

Tax Sale Type: Tax Lien Certificates (Sec. 40-10-19 )

Contact: Tax Collector (Sec. 40-10-12 )

Interest Rate: 12% per annum (Sec. 40-10-122 )

Penalty Rate: Not Applicable Not Applicable

Bid Procedure: Premium Bid (Sec. 40-10-16 )

Redemption Period: (3) three years (Sec. 40-10-29 )

Law: Code of Alabama, Title 40, Chapter 10, "Sale of Land." 

Additional Notes:

Important. According to (Sec. 40-10-29  and Sec. 40-10-30 ) after the 3 year redemption period has expired the judge of probate must execute and deliver to the purchaser...a deed to each lot or parcel of real estate sold to the purchaser and remaining unredeemed...and such deed conveyed upon expiration of the redemption period is not sufficient.

As the purchaser of an Alabama tax lien certificate you need to be aware that you will need to consult a legal professional for assistance with a quiet title action.

Left-over liens. Tax lien certificates not sold at the county level can be purchased from the Alabama State Commissioner of Revenue (Sec. 40-10-21  and 40-10-132 )

Alabama Department of Revenue
Property Tax Division
50 North Ripley
Montgomery, AL 36132
(334) 242-1170
Visit Alabama Department of Revenue Website

Caution on bidding. According to (Sec. 40-10-122 ) the bidder will only earn interest at the rate of 12 percent per annum on the amount of all taxes and any excess bid that is less than or equal to 15 percent of the market value as established by the county board of equalization which can be determined by reviewing the tax collector records.

Therefore, should the investor enter into competitive bidding, he or she should never place a bid in excess of 15 percent of the value as determined by the county board of equalization.

Disposition of excess arising from sale. According to (Sec. 40-10-28 ) the proceeds or excess funds generated from the sale of real estate remaining after satisfying the amount of the decree of sale, costs, fees, subsequently accruing, are to be paid to the owner, or his agent, or to the person legally representing such owner, or into the county treasury.

Tax sale overages. According to (Sec. 40-10-28 ) if such tax sale proceeds, tax sale overages, or excess funds are not requested within three years after the sale of the property such money shall thereafter be treated as part of the general fund of the county. In addition, any time within 10 years after the funds have been deemed as part of the general fund of the county, on proof made by any person that he is the rightful owner of such excess money order the payment thereof to such owner, his heir or legal representative else such excess funds shall become the property of the county.

Agreement to locate property. According to (Sec. 35-12-93 ) "(a) An agreement by an owner, the primary purpose of which is to locate, deliver, recover, or assist in the recovery of property that is presumed abandoned is void and unenforceable if it was entered into during the period commencing on the date the property was presumed abandoned and extending to a time that is 24 months after the date the property is paid or delivered to the Treasurer. ..." and "(e) An owner who has agreed to pay compensation that is unconscionable, may maintain an action to reduce the compensation to a conscionable amount. ..."

Presumption of abandonment. In addition (Sec. 35-12-72 ) says "(a) Property is presumed abandoned if it is unclaimed by the apparent owner during the time set forth below for the particular property: (13) Property held by a court, government, governmental subdivision, agency, or instrumentality, one year after the property becomes distributable.