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Tax Sale Redemptions Explained by Alabama Supreme Court

Posted by 15789465 on

On Friday, September 27, 2013, the Alabama Supreme Court clarified the tax sale redemption process.

To understand the decision, you need to understand there are two types of redemption: Administrative (sometimes also called "statutory") and Judicial.

  • Administrative redemption occurs during the three years after the tax sale.
  • Judicial redemption occurs after that three years has passed, but the redeeming party believes he is still entitled to redeem for some reason. One such reason might be that the tax sale purchaser never took possession of the property, so the right of redemption would still exist. At that point, the former owner cannot simply go down to the probate court and redeem. He must file a lawsuit in circuit court, ask the court to examine the facts and then make a finding that he is still entitled to redeem, plus settle all issues regarding the price of redemption.
  • Judicial redemption might occur during the original three years if the tax sale purchaser files an ejectment suit against the owner, and the owner counterclaims and asks for redemption.

With that background, the Alabama Supreme Court said that when there is an administrative redemption:

  1. The probate court has exclusive jurisdiction over all matters pertaining to the redemption.
  2. Redeeming owners must pay all charges described in the statute in order to redeem--that includes insurance premiums and value of preservation improvements when the property contains a residential structure.
  3. If there is a dispute about the value of the improvements, the probate court is the only court that has jurisdiction to resolve that dispute.
  4. Circuit courts have no authority to stop a probate court from issuing a redemption certificate.  In other words, don't waste your time trying to file a mandamus or other such petition in Circuit Court to stop a redemption. That is the wrong court.

Bottom line: In my opinion, if you are the tax sale investor, and are owed insurance premiums and/or improvements, and you know that the owner plans to redeem, you should file a petition in the probate court asking for an order determining the amount due and asking the court to collect those funds when the owner applies for a redemption certificate.

If you want to read the court opinion, it is HERE.

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  • Good insight, Howie, about a potential problem. But, as it turns out, you can start making preservation improvements as soon as you get your certificate or deed from the state, the same as after an auction.

    Denise L. Evans on
  • i have only purchased tax-delinquent property at a county sale – not from the state – and that in those situations the purchaser is not entitled to possession until he/she/it receives a certificate of purchase – therefore a proposed redemptioner might claim that any improvements made by the purchaser before the certificate was received were those of a stranger, especially if the certificate is not issued – if this issue goes to court i imagine the purchaser could claim he made the repairs under the belief that he would be reimbursed – i don’t know if the same issues exist for tax-sale property purchased from the state before a deed is issued

    howie on
  • I will definitely purchase your book and I’d like to attend one of your classes also.

    jack on
  • Hi Jack, Thanks for sharing such an interesting question. Starting with basic information, owners have redemption rights beyond the original 3 years after the tax sale. That time period is called the “administrative redemption period.” If no investor has taken possession of the property after the tax sale, then there is another time period, called the “judicial redemption period.” It goes for three years after the investor takes possession. If you did not start possessory acts until early 2015, that is when the 3 year period starts. You are entitled to be compensated for the value of preservation improvements made before the redemption claim is made to you, but you have only 10 days to provide those numbers, otherwise you will not be able to claim them. These deadlines are very important. And, yes, the son is entitled to redeem if the father deeded the property to him. The probate court is not involved because it’s been more than three years since the original tax sale. The two of you will have to deal with each other. I don’t ordinarily do this on my blog, but I highly recommend you buy my book, Alabama Tax Sale Investing, for guidance on how to deal with these, and other issues. You have too many issues in your question to really answer all of them here. My book can be found HERE, click on the books link.

    Denise L. Evans on
  • I have a very peculiar redemption situation that you all may be interested in. Here are the facts: I purchased a tax deed from the state back in February. According to public records, no taxes have been paid on the property since the 2009 tax year. The property owner of record is now deceased (not sure for how long). I haven’t received my tax deed yet, but I’ve been notified by the state that I will receive it in the next few weeks. I cleaned out the property and got it boarded up this past weekend, but while I was there, I was approached by a young man that claimed his father is the property owner. I spoke with the father over the phone and he claims that while the owner was alive, the owner’s son had power of attorney and that he had purchased the property and received marketable title from the son. He also stated the reason he was not listed as the property owner is because he never filed his deed and subsequently never had the property assessed in his name. He claims he’s going to redeem the property, but my question is does he have any redemption rights under the circumstances I just detailed? Will the Probate Court recognize this man as the owner of the property and issue him a redemption ceritificate? If so, do I have a claim to be reimbursed for the preservation improvements I’ve made even though they were done prior to actually receiving the tax deed? Thanks in advance for your responses.

    Jack on

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