Alabama Tax Sale Redemption Amounts

[Denise Evans]

One of my earlier forum discussions addressed the issue of excess bids in Alabama tax sales. I will not duplicate that information here.

A redeeming owner must pay the following charges:

1. Taxes due at time of auction, plus 12% per annum interest
2. An additional 12% per annum interest on the qualifying portion of the excess bid
3. All taxes paid or currently due since the auction, plus 12% per annum interest.

If the property contains a residential structure, the redeeming owner must also pay:

1. The value (not the cost!) of preservation improvements
2. The cost of casualty insurance premiums, plus 12% per annum interest.

If the property is in an urban renewal or urban redevelopment district (as designated by local city government on their official maps), the redeeming owner must also pay:

1. The value (not the cost!) of ALL improvements (whether preservation or otherwise)
2. The cost of casualty insurance premiums, plus 12% per annum interest

Any improvements made after the redemption demand are not recoverable by the investor.

All rents collected or earned before the redemption demand may be retained by the investor.

Knowing this, especially the information about preservation improvements, should make you feel more comfortable about making tax sale homes habitable and rentable, even though there are still outstanding redemption rights.  Document all repairs and improvements with plenty of photos, notes, and receipts. The receipts will help you remember all of your improvements.

The statute says a preservation improvement is "made to preserve the property by properly keeping it in repair for its proper and reasonable use, having due regard for the kind and character of the property at the time of sale."

Go out and invest!