William Hereford, an attorney at the Burr & Forman law firm, is exceptionally knowledgeable about the workings of tax sales in Alabama. He started developing his expertise in that area of the law back in the 1990s. He’s written extensive white paper about the state’s land sales and lien sales, and has also published one that focuses on how to invest in parcels held by the Alabama Department of Revenue (DOR). He explained all about it during a podcast interview with Tax Sales Resources' CEO, Brian Seidensticker.
Why So Many Tax-Delinquent Properties?
In Alabama, tax delinquent properties are sold for auction at the county level, and those that don’t sell for the minimum bid become the property of the state, managed by the Department of Revenue. But Alabama’s redemption period is three years, and until 2018, Alabama counties offered no tax lien sales. That meant there was little incentive for investors to buy tax deeds they couldn’t start a foreclosure action on for at least three years. So the inventory at the DOR kept growing, as more unsold properties accrued from Alabama’s 67 counties. As of 2021, there were more than 38,000 of these DOR over-the-counter parcels available for sale.
Where to Find Alabama Over the Counter Properties
To find a DOR property, go to the Alabama Department of Revenue website. There you can do an online search for tax delinquent properties, and find the parcel numbers. If you are interested in purchasing, there is an application you fill out and submit electronically to the DOR. They’ll reply to you with a price quote, giving you the opportunity to purchase a tax certificate. But keep in mind that it’s first-come, first-serve, so if others have submitted applications before you submitted yours, their requests to purchase will take priority over yours. Sometimes, especially for higher-value parcels, the waiting line ahead of you may be long.
How to Purchase an Over the Counter Tax Lien in Alabama
Once you get a price quote from the DOR, you are given 10 calendar days from the date on the price quote to remit your payment. Your remittance must be postmarked no later than the 10th calendar day. But what you receive depends on how long the property has been delinquent, because of Alabama’s 3-year redemption period. If the 3-year period has already passed, you’ll receive a tax deed that represents legal title. If three years haven’t yet passed, you’ll get an assignment – basically a certificate showing your interest in the property – but it won’t be a deed or title certificate. To get that you have to wait until the 3-year redemption period has expired.
How to Take Insurable Title in Alabama
Whether you got your tax deed right away by purchasing a property that’s already been delinquent for three years, or you bought one and then waited three years to apply for the tax deed, your tax deed is still subject to redemption. To gain full rights of possession and make the title insurable, you can either pursue a quiet tile or go to court and request what’s called an ejectment action. When you initiate an ejectment lawsuit, other claimants can redeem. But if they don’t, the judge enters an order of ejectment that essentially removes all other claims of possession except yours, so that you can qualify for title insurance.
Learn More about the Alabama Over the Counter Sales
For investors, the DOR-held properties can be an excellent opportunity, especially since there are so many to choose from and you don’t have to go to an auction and bid against competitors. You just have to be first in line to receive a quote you can then accept or ignore. For more information on Alabama DOR tax sales, check out Hereford’s white paper, or listen to the full podcast interview with Brian Seidensticker, CEO of Tax Sale Resources.
