If you are delinquent on your property taxes in Alabama, you could eventually lose your home through the tax lien sale process. In the alternative, the Land Commissioner might foreclose on your home. Below you can learn what notice you’ll get before an Alabama tax lien sale, how the tax lien sale process works, whether you can get your home back after the sale, and how a Land Commissioner foreclosure works.
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. Once there is a tax lien on your home, the taxing authority may hold a tax lien sale. (If you are struggling to pay your property taxes, learn about your options to avoid a tax sale.)
In order to hold a tax lien sale, the tax collector must first get a “court decree” from the probate court, authorizing it to hold a sale. You’ll receive two notices before the sale, one before and one after this court proceeding.
Notice before the probate court proceeding. Ten days before the probate court proceeding, the tax collector must serve you with a notice by:
If the tax collector cannot get notice to you in any of these ways, it can publish the notice in a newspaper or post it at the county courthouse (Ala. Code § 40-10-4).
The notice will tell you to show up at the hearing and demonstrate, if you can, why the court shouldn’t allow the tax lien sale (Ala. Code § 40-10-4).
Notice prior to the tax sale. If the court authorizes the sale, the tax collector must give notice of the sale (including the time of sale) at least 30 days before the sale by:
You have 30 days after the court authorizes the sale to appeal the decision to the county circuit court. If you lose, the lender's costs of fighting the appeal will be added to the tax lien (Ala. Code § 40-10-25).
In Alabama, the high bidder at the sale doesn’t actually get title to the property. Instead, he or she gets something called a tax lien certificate. This gives the high bidder the right to collect the tax debt. But first, the sale must be confirmed.
The holder of the certificate of sale is entitled to possession of the home.
Right of the state to possession of the home. If the State of Alabama is the high bidder at the sale, it is entitled to possession of the home as soon as the judge signs the certificate. To actually obtain possession, the state must first demand possession of the home from you. If you don’t move out within six months after the sale date, the state can start an eviction action against you (Ala. Code § 40-10-73).
Right of a purchaser (other than the state) to possession of the home. If another party is the high bidder at the sale, that party is entitled to possession of the home as soon as he or she receives the certificate. To obtain possession, it must first make a demand that you give up possession of the home. If you don’t move out within six months of the demand, that party can start an eviction action against you (Ala. Code § 40-10-74).
Even if the high bidder from the sale takes possession of the home, you can still get it back by redeeming it.
Under Alabama law, you can generally get your home back within three years after the tax lien sale by reimbursing the holder of the certificate of purchase for the full amount he or she paid at the sale, plus interest and certain costs (Ala. Code § 40-10-120). This is called redeeming the home. (An owner who retains possession may redeem without a time limit.) (Ala. Code § 40-10-82).
If you don’t redeem, the holder of the certificate of purchase gets title to the home (Ala. Code § 40-10-29). (Learn more in Getting Your Home Back After a Property Tax Sale in Alabama.)
If you fall behind in your property taxes, you might face foreclosure instead of a tax lien sale. This is because in Alabama, the Land Commissioner (the official that has control over all property acquired by the state through tax sales and tax foreclosures) may declare the delinquent tax amounts due and payable and file a foreclosure lawsuit on behalf of Alabama (Ala. Code § 40-10-141).
If this happens, the foreclosure will proceed just as if your mortgage lender is foreclosing judicially. The court will determine the total amount you owe, enter a judgment, and order the home sold. (You can find more detailed articles on various aspects of Alabama foreclosure law in Nolo’s Alabama Foreclosure Law Center.)
If no one bids a sufficient amount for the home at the sale (that is, enough to cover the full amount of the judgment), the state of Alabama gets a deed to the home (Ala. Code § 40-10-141).
The citations to Alabama’s tax sale statutes are: Alabama Code § § 40-10-1 to 40-10-198.
You can find the Alabama Code on the Alabama legislature’s website at http://alisondb.legislature.state.al.us/acas/ACASLoginfire.asp. (If you need help finding the statutes, see Nolo’s Legal Research FAQs & Basic Info area.)