How Over-the-Counter (OTC) Tax Liens Work in Alabama

Understanding the Over-the-Counter (OTC) tax lien process can open up new opportunities for investors interested in Alabama’s tax lien market. OTC tax liens in Alabama allow you to purchase tax liens that were not sold during the initial auction. Allowing you to invest without the competitive bidding process.

What Are OTC Tax Liens?

In Alabama, when property owners fail to pay their property taxes, the county tax collector may offer the delinquent tax liens at a public auction. However, not all tax liens are sold during these auctions. Those that remain unsold become available for purchase Over-the-Counter (OTC). This means you can buy these tax liens directly from the county at a set price, typically the amount of the unpaid taxes plus interest.

Finding Available Alabama OTC Tax Liens

To locate available OTC tax liens, you’ll need to contact the county tax collector’s office in Alabama. Many counties maintain a list of unsold tax liens that can be purchased OTC. These lists are often available online through the county’s official website, or you may need to request them directly from the tax collector’s office.

The list will typically include details such as:

• Parcel Number
• Property address
• Amount due (including taxes, interest, and fees)

How to Purchase OTC Tax Liens in Alabama

Once you’ve identified a tax lien you want to purchase, follow these steps:

1. Confirm Availability: Contact the county tax collector’s office to verify that the OTC tax lien is still available for purchase. The information on the list may not always be up-to-date, so it’s essential to confirm.
2. Payment: Prepare to make the payment for the OTC tax lien. Most counties in Alabama accept payment via cashier’s check, money order, or another approved method. The total payment will include the amount of unpaid taxes, interest, and any applicable fees.
3. Receive the Certificate: After payment, you will receive a tax lien certificate. Which grants you the right to collect the unpaid taxes plus interest from the property owner. The interest rate is set by Alabama law and can be an attractive return on investment.

The Redemption Period

In Alabama, the property owner has a redemption period—typically three years—during which they can pay the outstanding taxes plus interest to reclaim their property. If the property owner redeems the property, you, as the investor, will receive the amount you paid plus the interest earned.

Acquiring the Property Through Alabama OTC Tax Liens

If the property owner does not redeem the property within the redemption period, you may have the opportunity to acquire the property. This process can involve legal steps such as obtaining a tax deed or initiating a quiet title action to clear any remaining claims on the property.

Why Invest in Alabama OTC Tax Liens?

Investing in OTC tax liens in Alabama can be an excellent way to enter the tax lien market without facing the competition of a public auction. Since these liens are unsold, you can often find opportunities that others may have overlooked. However, it’s essential to perform due diligence before purchasing any OTC tax lien, including researching the property and understanding any potential risks.

Conclusion

Alabama’s OTC tax liens offer a unique investment opportunity for those looking to invest in real estate and tax liens without the hassle of competitive bidding. By understanding the process and conducting thorough research, you can make informed decisions and potentially achieve significant returns on your investment.