Tax Sale Redemptions Explained by Alabama Supreme Court

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.