State Held Tax Delinquent Property in Alabama

Mobile, Alabama
Tax Liens & Mortgage Notes
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State Held Tax Delinquent Property in Alabama

Shea Prior
Member since 2025 · 5 posts · 1 vote

Just wanted to know if anyone has any experience with this in the Alabama (Mobile) market? 

We have a 3 year right of redemption here, so I can go on our revenue commissioner website and look up parcels and apply to buy the property for an amount they email me, and if the state has owned that property for 3 or more years, they would issue me a tax deed. 

I've done a little research on it and understand that I would have to either take open possession for 3 years, which could be a bit risky, or I could pay around 3k - 5k and file a quietclaim deed through the courts after I receive the tax deed. Then it would be mine I understand.

What am I missing here? This sounds too good to be true? Is this something you have done successfully in Alabama? What have you learned in the process, or what should I watch out for? What kind of attorney should I look for to do the quietclaim deed? Am I skipping steps?

I have all the questions! Insight on this is so appreciated.

Thanks, Shea

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Denise Evans
JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
10mo

@Shea Prior, Thanks for shout out, @Bruce Lynn  

Not too good to be true. Might not have sold in original auction because there was too much inventory going through and the local investors that wanted real estate already bought everything they wanted. It might have been a low-chance of redemption, which made it undesirable to the institutional investors. Sometimes it has gone through two auctions. The original buyer might have been an institutional investor. When nobody redeemed, they just cut their losses and quit paying the taxes and it went through a second auction. When it goes through a second auction, the other institutional investors know not to buy it. But, the local investors are scared because they wonder what was wrong, that the first investor just gave up. So, nobody buys is and it goes on the state inventory.

You MUST take possession within three years after the tax deed or the former owner can get it back and pay you nothing.  You CAN take possession immediately because the statute says you can.  You can take DIY possession if the property is legally abandoned, which is different from "vacant and in bad shape."  You can file an ejectment lawsuit if you can find somebody on whom to serve lawsuit papers.

Even though you have a tax deed, former owner or heirs or lienholders can still redeem. A tax deed and three years of continuous possession lets you file a Quiet Title lawsuit and get a court order that you have free and clear title.  Or, if the former owner is still alive and there were no liens against the property, you can pay them a little bit of  money (less than a QT lawsuit would cost) and just pay them to sign a quitclaim deed. Then you have free and clear title. The liens get wiped out by the tax sale, but they still have redemption rights. If there were liens, just getting a quitclaim from the owner does not solve your problems.

It can get complicated, but there are huge rewards at the end of that muddy rainbow.  You can DM me if you want.

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  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    10mo

    Check with @deniselevans Alabama Tax Sale Attorney.  She also has a book and some YT videos I expect.  She is the resident expert here on Alabama Tax Sales.  She has also made numerous posts here so I would try to research those first to see if any of those answer your questions.

    One question you have to ask is: Why did not one buy them the first time around?  Are they in the flood zone?  Are the buildable?  Sometimes they can be small lots, that cities won't allow structures on.  Is there water, electric, sewer available.  What is the minimum size lot for septic and water wells.  Will the ground allow septic.

    Good luck.  

    1Reply
  • Denise Evans
    JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
    10mo

    @Shea Prior, Thanks for shout out, @Bruce Lynn  

    Not too good to be true. Might not have sold in original auction because there was too much inventory going through and the local investors that wanted real estate already bought everything they wanted. It might have been a low-chance of redemption, which made it undesirable to the institutional investors. Sometimes it has gone through two auctions. The original buyer might have been an institutional investor. When nobody redeemed, they just cut their losses and quit paying the taxes and it went through a second auction. When it goes through a second auction, the other institutional investors know not to buy it. But, the local investors are scared because they wonder what was wrong, that the first investor just gave up. So, nobody buys is and it goes on the state inventory.

    You MUST take possession within three years after the tax deed or the former owner can get it back and pay you nothing.  You CAN take possession immediately because the statute says you can.  You can take DIY possession if the property is legally abandoned, which is different from "vacant and in bad shape."  You can file an ejectment lawsuit if you can find somebody on whom to serve lawsuit papers.

    Even though you have a tax deed, former owner or heirs or lienholders can still redeem. A tax deed and three years of continuous possession lets you file a Quiet Title lawsuit and get a court order that you have free and clear title.  Or, if the former owner is still alive and there were no liens against the property, you can pay them a little bit of  money (less than a QT lawsuit would cost) and just pay them to sign a quitclaim deed. Then you have free and clear title. The liens get wiped out by the tax sale, but they still have redemption rights. If there were liens, just getting a quitclaim from the owner does not solve your problems.

    It can get complicated, but there are huge rewards at the end of that muddy rainbow.  You can DM me if you want.

    2Reply
  • Corey Key
    Member since 2024 · 1 post · 0 votes
    10mo

    @Denise Evans Previous owners or heirs can take it back with out paying anything by what means? I i bought a property and possess the deed from the state how can it be legal that someone who lost it can take it back without paying me anything? Granted I got it for pennies on the dollar, but I should at least be due back what I paid the state correct? If they redeem do they owe what the larger amount that was due to the state or the reduced amount I offered the state? 

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  • Denise Evans
    JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
    10mo

    @Corey Key They can get it back because of the Short Statute of Limitations, as explained in the Alabama Court of Civil Appeals Case of Rioprop v. BBVA Compass. You can search on the case name and read it.  If the investor does not take and hold exclusive possession of the property within three years after the tax deed date, then the statute of limitations expires for any remedies. The former owner can file a lawsuit to quiet title  or to remove a cloud on title and get the property back. Because it is not a redemption, but merely a loss of the investor's rights due to the statute of limitations, no money is owed. The Rioprop decision at the trial level included around $5,000 worth of damages to the investor, but that was a tactical move by the trial judge and not related to anything real.

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