Getting Your Home Back After a Property Tax Sale in Alabama

You can get your home back after an Alabama property tax sale by redeeming it. Here's how.

If you don’t pay your property taxes in Alabama, the delinquent amount—including the past-due taxes, interest, penalties, and costs—becomes a lien on your home. If you don’t pay the amount of the lien, you could eventually lose your home through a tax lien sale process. If this happens to you in Alabama, you might be able to get your home back by reclaiming or “redeeming” it after the tax lien sale.

How Alabama Tax Sales Work

In Alabama, the tax lien sale consists of a public auction. The winning bidder at the auction doesn’t actually get title to your home. Instead, he or she gets a “tax lien certificate.” This gives the auction winner the right to collect the tax debt and eventually obtain title to the home if you don’t pay up. (To get details on the tax sale process in Alabama, see What Happens If I Don't Pay Property Taxes in Alabama.)

How Long You Get to Redeem After a Tax Lien Sale in Alabama

In Alabama, property purchased by the state may be redeemed at any time before the title passes out of the state or, if purchased by any other purchaser, it may be redeemed at any time within three years from the date of the sale. (Ala. Code § 40-10-120.)

How Much You'll Have to Pay to Redeem

The amount you’ll have to pay to redeem depends on who is the purchaser at the sale: the state or another party.

When someone other than the state is the purchaser. Effective until January 1, 2020, if someone other than the state is the winning bidder, you’ll have to pay the following amounts.

  • The amount that the bidder paid at the sale (which will be at least the amount of delinquent taxes plus any fees and costs that the tax collector incurred).
  • Interest at the rate of 12% per year from the sale date on the unpaid tax debt.
  • Interest at the rate of 12% per year on any amount bid over the unpaid tax debt, up to 15% of the property’s market value. (For example, say your home is worth $250,000 and your unpaid taxes are $3,000. The winning bid at the auction is $83,000. This means the “overbid” amount is $80,000. You would have to pay 12% interest on $37,500, which is 15% of the home’s market value of $250,000.)
  • The amount of all taxes that the purchaser paid plus 12% interest.
  • Any taxes due that the purchaser has not yet paid.
  • The amount of certain costs and fees. (Ala. Code § 40-10-122.)

When the state is the purchaser. Effective until January 1, 2020, to redeem, you must pay:

  • the purchase price
  • interest at the rate of 12% per year from the sale date
  • the amount of all taxes due on the property since the sale date plus 12%, and
  • costs and fees. (Ala. Code § 40-10-121.)

Changes to the Law in 2020

On and after January 1, 2020, the interest rate a redemptioner pays under § 40-10-121 and § 40-10-122 is reduced from 12% to 8%. As of this date, the law will also allow a redemptioner to take possession of the property while reimbursement for allowable improvements and insurance premiums remain unpaid, as long as those costs are paid prior to January 1 of the subsequent tax year. If the redemptioner fails to do so, his or her right in the property shall be forfeited.

Take Steps to Save Your Home Before the Tax Lien Sale

Even though Alabama gives you time after the tax lien sale to redeem your home, in most cases, it is better to take action before you become delinquent on your taxes to try to make them more affordable. For example, you could:

Finding Alabama’s Tax Lien Sale Laws

To find the statutes governing tax lien sales in Alabama, go to Title 40, Chapter 10, §§ 40-10-1 through 40-10-198 of the Alabama Code.

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