A Calhoun County tax sale is not a sale of the land itself. Since 2018, the county’s Revenue Commission has used Alabama’s tax lien auction method, meaning the county sells the delinquent tax debt and the winning bidder receives a certificate that earns interest, not a deed to the property.1Calhoun County, Alabama. Calhoun County Revenue Commission Turning that certificate into ownership takes years, more money, and a court case, and most certificates never get there because the owner redeems first.
Lien Auction, Not a Deed Sale
Alabama gives each county’s tax collecting official sole authority to choose between a tax lien auction and a direct sale of the property to recover unpaid ad valorem taxes.2Alabama Legislature. Alabama Code 40-10-180 – Purpose; Choice of Remedy Calhoun County picked the lien method starting with the 2018 collection year.1Calhoun County, Alabama. Calhoun County Revenue Commission
When taxes go unpaid, a lien attaches to the property. The county then auctions that lien. You are buying the government’s position as creditor. The owner keeps possession, keeps the deed, and keeps the right to pay you off.
How the Bidding Works
The auction runs backwards from what most people expect. Every bidder pays the same fixed amount: all delinquent taxes, penalties, interest, fees, and costs on the parcel. The competition is over the interest rate the bidder is willing to accept on that money.3Alabama Legislature. Alabama Code 40-10-184 – Auction Procedures; Winning Bids
Bidding opens at a maximum of 12 percent per year. Each new bid must be lower than the last. Lowest rate wins. On a sought-after parcel, that competition can drive your return well below 12 percent. On parcels no one wants, you keep the ceiling rate, but there is usually a reason no one wanted it.3Alabama Legislature. Alabama Code 40-10-184 – Auction Procedures; Winning Bids
Payment is due the same day or within a very short window after the auction closes. Bring certified funds, such as a cashier’s check or money order. Miss the payment deadline and your winning bid is void.
Doing Your Homework First
Alabama requires the tax collecting official to advertise the delinquent list once a week for three consecutive weeks in a newspaper of general circulation before any auction, and to maintain a public list of properties at least 30 days ahead of time.4Alabama Legislature. Alabama Code 40-10-182 – Tax Liens Subject to Public Auction or Sale Calhoun County also posts upcoming auction information on its government website.1Calhoun County, Alabama. Calhoun County Revenue Commission
Each entry carries a parcel identification number, legal description, the tax year owed, and the total delinquent amount. Before bidding, check the legal description against county records to confirm location and boundaries. Look up assessed value, any other recorded liens, and the physical condition of the property. A parcel that looks cheap for the tax debt may carry code violations, environmental problems, or structural damage that makes the lien worthless.
What the Certificate Gives You
The winning bidder receives a tax lien certificate, which is the legal document evidencing the purchase.5Alabama Legislature. Alabama Code 40-10-187 – Tax Lien Certificate It records the property description, the auction date, the tax year and total due as of the auction, and the annual interest rate you bid. Interest accrues from the date of sale on the amount you paid. Keep the certificate safe; it is your proof of claim.
The Subsequent-Tax Trap
If the owner falls behind again in a later year, a new lien goes up for auction. As the existing certificate holder, you have first right to purchase that new lien, exercisable between five and 30 days before the next auction date, at your original interest rate.6Alabama Legislature. Alabama Code 40-10-191 – Holder of Certificate to Have First Right to Purchase Tax Lien
Treat this as mandatory. If you skip it and someone else buys the new lien, your original certificate is canceled. You get back what you paid originally, but your accrued interest and your path to the property disappear. Investors who treat tax liens as passive investments lose certificates this way regularly.6Alabama Legislature. Alabama Code 40-10-191 – Holder of Certificate to Have First Right to Purchase Tax Lien
How the Owner Gets the Property Back
The property owner, their heirs, mortgage holders, and anyone else with a legal interest can redeem within three years of the auction date.7Alabama Legislature. Alabama Code 40-10-120 – When and by Whom Land May Be Redeemed They redeem by depositing money with the county judge of probate. The payment covers the original sale price plus interest, plus reimbursement for any subsequent taxes you paid, also with interest. For liens sold to private buyers, the statutory rate on redemption is eight percent per year, and the owner also pays recording fees and costs owed to county officials.8Alabama Legislature. Alabama Code 40-10-122 – Manner of Redemption When Land Sold to Party Other Than State
Improvements in Redevelopment Areas
If the parcel sits inside a designated urban renewal or redevelopment area, a redeeming owner also has to reimburse you for permanent improvements and for any casualty insurance premiums you paid, with eight percent interest on both. Permanent improvements include repairs, upgrades, and equipment installed as fixtures. For properties with a residential structure at the time of sale, the same reimbursement rule covers preservation improvements and insurance. If the parties disagree on the value, each side appoints a referee, and if the referees cannot agree, they pick an umpire whose vote breaks the tie. The redeeming owner must finish all improvement reimbursements before January 1 of the next tax year or forfeit the right to redeem.8Alabama Legislature. Alabama Code 40-10-122 – Manner of Redemption When Land Sold to Party Other Than State
Bankruptcy Can Extend the Owner’s Options
If the owner files Chapter 13 before the redemption period runs out and no tax deed has issued and been recorded, courts have held the property remains part of the bankruptcy estate. In that situation the certificate holder is treated as a secured creditor paid through the debtor’s plan. Some courts have let debtors redeem through a bankruptcy plan even after the formal three-year window has closed, as long as no deed has been recorded.
Turning a Certificate Into Ownership
If no one redeems, you still cannot just take the land. You have to file a lawsuit in the circuit court of the county where the property sits to foreclose the right to redeem and quiet title. The earliest you can file is four years after the auction. The latest is ten years. Miss that outside deadline and the certificate expires worthless.9Alabama Legislature. Alabama Code 40-10-197 – Action to Foreclose the Right to Redeem and Quiet Title
Before filing, you have to send a notice of intent by certified or first-class mail to the owner at the address in tax records (and at the property itself if different), to holders of any outstanding mortgages or judgment liens, to the county tax collecting official, and to anyone else with a recorded interest. The notice must go out at least 30 days but no more than 180 days before you file, and you must file an affidavit in the action listing everyone you notified and how you found them. Miss someone and the court will dismiss the case.9Alabama Legislature. Alabama Code 40-10-197 – Action to Foreclose the Right to Redeem and Quiet Title
Any unsold tax liens still on the property from other years must be paid off before you file. The notice itself has to warn defendants that they have 30 days after service to respond and that they can still redeem at any time before the court enters a final judgment. The owner’s last chance runs right up to the judgment.9Alabama Legislature. Alabama Code 40-10-197 – Action to Foreclose the Right to Redeem and Quiet Title
Budget for an attorney, court costs, and a title search to identify everyone who must be notified. Legal fees often run well beyond the price of the certificate itself.
Watch for Federal Tax Liens
If the owner owes the IRS, a federal tax lien may attach to the property. That lien covers all of the taxpayer’s property, including real estate, and does not disappear when you buy a tax lien certificate.10Internal Revenue Service. Understanding a Federal Tax Lien A recorded Notice of Federal Tax Lien is public; check county records before bidding.
Even after a tax deed sale or foreclosure, federal law gives the United States 120 days or the state redemption period, whichever is longer, to reclaim the property.11Office of the Law Revision Counsel. 28 USC 2410 – Actions Affecting Property on Which United States Has Lien In Alabama, the federal window aligns with the longer three-year state period. During that window a title company is unlikely to issue title insurance, which can block a resale or a loan on the property.
Reporting the Interest You Earn
Interest paid to you on a redemption is taxable income. When the owner redeems, the county distributes the interest portion of the payment to you, and if the amount is $10 or more the payer is required to file a Form 1099-INT.12Internal Revenue Service. About Form 1099-INT, Interest Income You still owe tax on interest below that threshold even if no form is issued. The income is reported in the year of redemption, not the year of purchase, so investors holding certificates across multiple years should track payments carefully.