In all 67 Alabama counties, property taxes are due October 1 and come to be delinquent on January 1 the following year. Once property taxes come to be delinquent for a property, a tax lien is settled on the property until the taxes are paid in full by the property owner. All Alabama tax lien sales take place in late April or early May. In Jefferson County alone, Alabama's largest county, over 4000 tax lien certificates worth over million are sold. In the State of Alabama, the guaranteed interest earned on a tax lien certificate is 12 percent per annum, beginning the day of the tax lien sale.
Generally, the tax lien sales are held on the county courthouse steps and the prime bidding recipe is used. In a prime bidding method, each property is started at the minimum bid, which is normally the sum of property taxes, the accumulated interest on those taxes, and any sale administrative fees, such as advertising the tax lien on the property in the local newspaper. beginning at the minimum bid, investors take turns bidding up the tax lien certificates until there is only one investor remaining who is willing to pay the highest "premium" on the tax lien certificate. Most Alabama county tax auctions start on a Monday and they will continue on consecutive days until all land parcels have been publicly offered.
County Property Tax
The purchaser of a tax lien certificate has the right, but not the obligation, to pay subsequent property taxes on the property each October 1. If the investor allows the subsequent taxes on the property to come to be delinquent, the tax lien certificate (in the number of that year's taxes) will be offered again in the April or May sale. If the purchaser holds on to the tax lien certificate, pays all subsequent property taxes for a full three years following the preliminary tax sale, and the property owner (or other curious party) does not redeem the property (pay all accumulated taxes), the tax lien certificate owner has a right to the tax deed on the property.
All tax lien certificates that did not receive any bids at a county tax sale are assigned to the State of Alabama. These tax lien certificates are often referred to as Over-the-Counter (Otc) or Assignment Purchasing liens. The same "redemption period" is used for these tax lien certificates, which means any tax lien certificates that have been in State list for over three years will be offered as tax deeds. Both tax liens and tax deeds in Alabama's state list are available for buy by any inexpressive investor. For an Otc tax lien/tax deed list from every Alabama county, go to the Alabama branch of earnings property Tax page.
An investor must submit an application to the State for each property for which they have an interest. An investor may submit as many as 20 applications. Instructions and application forms are on the page referenced above. The lists are updated at least once a week. Like any investment, it is foremost that any investor does their study and due diligence on each property. If a land parcel stays in the State's list for more than five years, it is a possibility that an investor can obtain the tax deed to this property for less than the number of taxes due.
Unlike some other lien states in the United States, tax lien certificates change into tax deeds after the three-year redemption duration without the tax lien certificate owner having to start the foreclosure process on the property. Instead, this tax deed received pursuant to the Alabama process is the corollary of an administrative foreclosure and does not warrant a marketable title. So, a quiet title operation may be required to gain an insurable title.
To give you an idea of some counties you may want to invest in, I will give you the five most populated Alabama counties below: Jefferson County - 656,700 Mobile County - 404,157 Madison - 304,307 Montgomery - 223, 571 Shelby - 178,182
There is undoubtedly a lot of chance when it comes to tax lien and tax deed investing in Alabama.
Investing in Alabama Tax Liens and Tax Deeds
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