From the outside looking in, investing in tax sales in Alabama seems like a no brainer. The state of AL holds one of the largest inventories of tax delinquent properties in the country and each year the annual county tax sales offer tens of thousands of investment opportunities for hungry investors.

The interest rates are healthy and with only a 3-yr redemption period, what’s not to love? Well, if you have ever invested at a tax sale in Alabama then you probably already know that the process can be extremely confusing.

Depending on what county you invest in, the type of enforceable instrument can vary between a tax lien and tax certificate. Both of these recorded instruments enforce your interest in the property but grant you completely different rights that you can exercise as a debtor. If you go the route of purchasing over-the-counter, directly from the state inventory, what you receive and how long you have to wait to take possession can vary depending on how seasoned the property is.

With so many intricacies to worry about, the last task an investor should be concerned with is going through a quiet title action; however, most title companies and attorneys will advise you that it is required…but is it?

Historically, AL has sold tax sale certificates. The certificate is similar to a lien in that you do not have ownership of the property and a deed is not conveyed to you.

There is a 3-yr redemption period with a predetermined interest rate that an investor can receive.

However, since you are responsible for the property with a certificate, as the certificate holder you are able to collect rent and make necessary repairs which will need to be repaid by the redeeming property if the property is redeemed. If the property is not redeemed after 3 yrs, the investor is able to apply for a deed granting ownership to the property.

A recent bill has allowed counties to decide on selling a tax certificate or a tax lien. When investing in a tax lien sale, you bid down on interest and there is a 3 yr redemption period that is closed through a foreclosure. When investing directly on the state lands list, you could receive the property, a lien or a certificate. It all depends on how long the debt/property has been with the state.  

If you choose to invest in certificates or form the states over-the-counter, possession is mandatory in AL.

An investor must show 3-yrs of continuous, unchallenged possession to establish true ownership interest in a property. This is because AL wants to give delinquent taxpayers every opportunity to keep their property.

Although a quiet title action is not required by law, title insurance companies do make it a requirement for title insurance.

This can be burdensome for an investor since all parties will need to be given notification of the quiet title action and await their day in court to challenge the sale. If you are looking for another option to a quiet title, look no further. Tax Title Services offers its industry leading Tax Sale Certification for all types of Alabama tax sale properties.

The process is fast, simple and non-judicial so you do not have to go through the hassle of the courts like you would for a quiet title.