Selling a House With Back Taxes in Alabama: Tax Liens, Redemption, and Closing

Alabama property taxes are billed in the fall, due October 1, and delinquent if not paid by December 31. After the new year, the county's collection process begins, and interest, fees, and advertising costs start adding to the bill.

If you have a mortgage with an escrow account, the servicer normally pays the taxes for you. If you do not have escrow, or the escrow came up short, check the county's records. When taxes go unpaid on a house with a mortgage, the servicer may pay them and add the amount to your loan, which can raise your payment or put the loan in default.

Alabama counties collect delinquent property taxes in one of two ways.

• Sale of the land, the older system. After a probate court decree, the county sells the property itself for the taxes. The buyer gets a tax certificate, and if the property is not redeemed within three years, the buyer can get a tax deed (Ala. Code § 40-10-29).
• Sale of the tax lien. The county sells its lien for the unpaid taxes, not the land. Bidders compete on the interest rate they will accept, starting at no more than 12 percent a year (Ala. Code § 40-10-184). The lien holder can try to collect through garnishment, and if the lien is not redeemed, can sue to foreclose your right to redeem, but not until at least four years after the auction (Ala. Code § 40-10-197). Alabama rewrote these rules in 2018 and again in 2024.

Jefferson County uses the lien system. Both its Birmingham and Bessemer divisions have used the lien format since the 2021 tax year. Their notices for the 2025 tax year set online tax lien auctions starting May 5, 2026, and warn that a lien holder may pursue garnishment and foreclosure. Each county's tax official picks the system (Ala. Code § 40-10-180), so if your house is in Shelby, St. Clair, Walker, or Blount County, ask that county's revenue commissioner which one applies this year.

A tax sale does not end your ownership right away, but the clock works differently under each system.

• Land sale system. Under Ala. Code § 40-10-120, the owner, and others with an interest such as a mortgage lender, can generally redeem within three years of the sale by paying what the buyer paid plus later taxes, costs, and interest at 8 percent a year (Ala. Code § 40-10-122). After three years, the buyer can get a tax deed.
• Lien system, which Jefferson County uses. You can redeem by paying the amount on the lien certificate plus interest at the rate the winning bidder took, up to 12 percent a year, along with later taxes and fees (Ala. Code § 40-10-193). There is no fixed deadline, but starting four years after the auction the lien holder can sue to foreclose your right to redeem.

Either way, the cost of redeeming grows the longer you wait. Under the land sale system, Alabama courts have allowed some owners who kept possession of the property to redeem after three years through a lawsuit, but that route is slow, costly, and uncertain. If a deadline is getting close, or a lien holder has sent you a notice, talk to an Alabama real estate attorney right away. This page is general information, not legal advice.

You do not need to pay the back taxes before you sell. At closing, the title company or closing attorney gets the amount needed to clear the delinquent taxes, or to redeem if the taxes were already sold, and pays it from the sale proceeds. The current year's taxes are split between buyer and seller by the day. The buyer gets clear title, and you get what is left after the mortgage, taxes, and any other liens are paid.

That matters because owners who are behind on taxes are often behind on other things too: a mortgage, a home equity loan, a city demolition or weed lien, or repairs. A sale can clear all of it at one closing.

Tell us about every tax year that is behind, and about any letter you have received from a lien holder. That lets the title work start right away, so the payoff numbers are ready before closing day.

• Pay or redeem if you want to keep the house and can afford the taxes going forward. Get the exact redemption amount in writing with a good-through date.
• List on the open market if the house is in good shape and you have plenty of time before a tax deed or lien foreclosure is possible. Back taxes come out at closing either way.
• Sell for cash if the house needs work, the deadline is close, or the taxes are part of a bigger pile of debt.
• Waiting is usually the most expensive choice. Interest and fees keep adding up, and every month brings you closer to a tax deed or a lien foreclosure.

Tell us about the house and the tax situation. We usually make a cash offer within about 24 hours, and there is no obligation. If you accept, you pick the closing date, and we can close in as little as 7 to 14 days through a local title company or closing attorney. At closing, the back taxes or redemption amount, the mortgage, and other liens are paid from the proceeds. You pay no commission, we cover the normal closing costs, and you do not repair or clean anything.

Our offer will usually be below what a fully repaired house would bring on the open market. Compare it against what you would net from a listing after the taxes, interest, repairs, commission, and the months it takes.