How to Join Alabama Tax Sales?

Sale Details

Alabama Tax Lien
Yearly in April-June

Redemption

3 Years

Over the Counter

Yes

Bid Procedure

Liens – bid Down method sold to the lowest bidder

Number of Counties: 67

Useful Links

Mobile County Revenue Commission
Jefferson County Alabama

Alabama is a lien state, which means when property taxes go unpaid, the state can sell a lien on the property rather than the property itself.
This allows investors to purchase the lien and potentially earn interest on the amount owed until the property owner redeems the lien or it goes into foreclosure. If the property owner fails to redeem the lien within a certain period, the lienholder can initiate foreclosure proceedings and potentially acquire the property.

In Alabama, there are two main types of tax sales: Tax Lien Sales and Tax Land Sales. Each offers unique opportunities and challenges for investors.

What are Alabama Tax Lien Sales?

Alabama introduced Tax Lien Certificate Sales in 2019, a strategic move that focuses on auctioning off tax liens instead of the properties themselves. This approach is designed to boost tax recovery efforts by enabling investors to participate in bidding for the interest rates they find acceptable, starting from as high as 12%. Investors who win these bids are awarded tax lien certificates. If the property owners do not clear these liens within three years, the certificate holder has the right to initiate foreclosure proceedings.

As of 2023, about half of Alabama’s counties have adopted this method. The process generally takes place online through platforms like GovEase, making it more accessible to remote investors. (Mobile County Revenue Commission)​ (Jefferson County Alabama).

What are Alabama Tax Land Sales?

In a land sale, the county auctions off the land of delinquent taxpayers to recover unpaid taxes. These auctions are conducted in a bid-up style. If bids exceed the starting amount, the excess funds are typically held by the county, although occasionally, they may be given to the party who later redeems the property. After completing the purchase, the buyer gains immediate rights to the property but must first submit a ‘demand for possession’ to formalize this right. If there are no bidders, the state steps in to purchase the land at the minimum price, at which point it becomes ‘sold to state’ property.

Why Invest in Alabama Tax Sales?

Investing in Alabama tax sales can be appealing for several reasons:

Interest Earnings: Whether through land or lien sales, investors can earn a substantial return, especially if the property is redeemed.

Potential to Acquire Property: If the lien is not redeemed, you may acquire the property at a fraction of its market value.

Diverse Opportunities: The dual system allows investors to choose between buying liens with potentially high returns or acquiring land directly.

Long Redemption Period: The extended redemption period (up to three years) gives investors more opportunities to earn interest and secure the property if not redeemed.

How Alabama Tax Lien Sale Works?

For beginners, navigating the Alabama tax sale system can be confusing. It requires thorough research, an understanding of the legal processes involved, and careful consideration of the risks. If you’re ready to start buying tax liens in Alabama, follow these steps:

1. Research the Counties:
   • Each of Alabama’s 67 counties may conduct tax sales differently. It’s often best to contact the county Revenue Commission Department directly for the most accurate information or use platforms like GovEase, which centralizes auction details​ (Mobile County Revenue Commission).
2. Register for the Auction:
   • Online platforms like GovEase require registration, which is typically free.
3. Place Your Bid:
   • During the auction, bid on the interest rate you’re willing to accept, starting at 12%.
4. Winning the Bid:
   • The investor with the lowest interest rate wins the tax lien certificate.
5. Wait for Redemption:
   • The property owner has up to three years to redeem the lien. If they do, you collect the interest; if not, you can initiate foreclosure.

Investing in tax sales in Alabama, whether through land or lien sales, offers a unique way to build wealth.

Pro Tips for Investing in Alabama Tax Lien Sales

1. Understand Land vs. Lien Sales

Tax lien sales offer high-interest returns while tax deed sales grant immediate property rights. Lien sales require patience as the redemption period lasts up to three years but can be less legally complex than deed sales.

2. Conduct Thorough Due Diligence

Research each property’s location, market value, and existing encumbrances before placing bids. Use resources like county tax websites or platforms such as GovEase to gather critical details and reduce risk.

3. Start with Lien Sales for Beginners

If you’re new to tax lien investing, start with tax lien certificates. They offer a lower-cost entry point with the potential to earn a fixed return upon redemption, making them a safer bet for beginners.

4. Stay Updated on Local Regulations

Alabama’s 67 counties have different rules for tax lien sales. Stay informed by contacting the local Revenue Commission Department for specific guidelines.

5. Leverage Online Auctions

Many counties offer online tax lien auctions via platforms like GovEase, giving investors easy access to bid remotely. This increases convenience and expands investment options.

6. Prepare for Long-Term Investment

Tax lien investing requires patience, as the redemption period can last up to three years. Plan your finances accordingly and be ready for long-term commitment.

7. Consult Legal Experts

Seek legal advice to navigate the complexities of tax lien certificates and foreclosure processes to avoid potential pitfalls.

What You Need to Know About Alabama Tax Lien Sales?

What happens if no one bids on a property during a tax land sale?

If no one places a bid during the auction, the state typically acquires the property, marking it as a “sold to state” property. The state may hold onto the property until the original owner redeems it or sells it.

Can I transfer or sell my tax lien certificate to someone else?

Yes, you can transfer or assign tax lien certificates in Alabama to another party. It’s important to review Alabama Code § 40-10-187(e) for specific details on transferring certificates​ (Mobile County Revenue Commission).

What interest rate should I expect when bidding on a tax lien in Alabama?

Bidding starts at 12% interest per annum and can go as low as 0%. The winner is the bidder offering the lowest interest rate, meaning you may have to accept a lower rate to win the auction​ (Jefferson County, Alabama).

How long does the property owner have to redeem their property after a tax sale?

Alabama offers a lengthy redemption period, with the right to redeem lasting at least three years. In some cases, this can extend up to ten years if the lienholder does not initiate foreclosure proceedings​.

Why is my First Rights claim not showing in my account?

Some counties manage First Rights claims in their office, requiring you to contact them directly. For counties handling First Rights online, ensure you’re registered and approved before claims appear in your account​ (Mobile County Revenue Commission).

Ready to dive into Alabama tax lien investing? Connect with us today for expert guidance and take your first step toward a rewarding investment opportunity!