Sell a Fire Damaged House in Birmingham: What It Costs to Come Back

The Chain That Starts With a Fire

It is worth setting out plainly because it is so ordinary. A house burns. The owner moves out, the insurance is contested or there was none, and the property tax falls behind. The county sells the property for the unpaid taxes.

That is not a hypothetical. The leading Alabama Supreme Court case on this subject concerned exactly it: a rental home that suffered extensive fire damage and was left uninhabitable, an owner who stopped paying property taxes in 2015, and a county that auctioned the property to the State at a tax sale the following year.

How Long Do I Have?

Where a party other than the state buys, the owner may redeem at any time within three years from the date of the sale under sections 40-10-120 and 40-10-29. Where the state buys, the property may be redeemed at any time before title passes out of the state. That three-year administrative window runs through the tax office and is the straightforward route back.

The full position is on our page covering redemption and possession.

And What It Costs Grows While You Wait

This is the part owners do not expect, and it is what makes waiting expensive rather than merely risky.

Redeeming under section 40-10-122 means paying what the land sold for, plus all subsequent taxes the purchaser paid, plus interest. Under section 40-10-83 that interest runs at 12 per cent per annum.

And for any property containing a residential structure at the time of sale, regardless of location, the purchaser is also entitled to recover casualty insurance premiums paid and the value of all preservation improvements made on the property.

How Much Can That Come To?

In the case above, the State sold the fire-damaged property on in its uninhabitable state and the new owner invested close to ninety thousand dollars renovating and restoring it. The Alabama Supreme Court held that a broad range of improvements, including permanent ones, count as a redemption expense. So the cost of coming back is not a fixed number you can plan against. It is whatever somebody else decided to spend on your house.

The Clock Only Runs If You Have Left

The second half, and it is the one piece of this that runs in the owner's favour.

After the administrative period, the remedy is judicial redemption under section 40-10-83: an original civil action against the tax-sale purchaser, or a counterclaim in an ejectment action, with the required sums paid into court. Where the tax debtor pays, the court enters judgment for them and all title and interest is divested out of the owner of the tax deed.

The three-year limitation on bringing that action does not begin to run against the owner unless the tax purchaser adversely possesses the land. Where the owner has retained possession, the right of judicial redemption remains without a time limit.

What Counts as Retaining Possession?

The tax purchaser must have peaceable possession for their clock to run, while the owner's possession may be constructive or scrambling rather than actual and peaceable. That is a low bar by design, and it is precisely what a fire takes away. An owner who is burned out of a house and stops going near it has done the one thing that lets somebody else's three years begin.

What a Fire-Damaged Birmingham Property Is Actually Worth

The Terms That Move the Number Here

Whether the taxes are current. The first question, and it outranks the damage.

Whether a sale has already happened. A matter of public record, and owners are often the last to know.

What has been spent on it since. Preservation improvements are a redemption expense.

Who goes near the property. It bears on whether anybody's clock is running.

Which system the county used. The traditional tax sale and the newer tax lien auction are not the same.

Anyone quoting without checking the tax position has priced a property they may not be able to buy from you.

Two Systems, Not One

Alabama now operates two frameworks and they do not work the same way. The preservation improvements rule described above applies to properties bought under the traditional tax sale framework rather than under the newer Alabama tax lien auction.

Which applies to your property depends on the county and the year. It is a question for the tax office rather than an assumption to make from what you have read about the state generally.

Jefferson County Documents the Claims

Worth knowing because it gives an owner something to work with. During the administrative process, an investor seeking reimbursement for preservation improvements must respond with the amount or value of those improvements within the statutory time frame if the redemptioner asks.

Some counties, Jefferson among them, use affidavits to document whether an investor asserted preservation claims. So asking is a step with a procedure behind it rather than a request somebody can simply ignore.

How the Timeline Runs

An open claim does not prevent a sale. What removes a Birmingham owner's options is a tax sale nobody told them about and three years spent away from a house they still had the right to reclaim.

If you are weighing several offers, how to tell local cash buyers apart covers the checks that separate them.

Questions Owners Ask

Has My Property Been Sold?

The tax office holds the answer and it is public. Ask rather than assume, particularly if post has been going to the property itself.

I Still Own It, Do I Not?

Until a sale you do. After one you hold a right to redeem rather than clear title, and that right has conditions and costs attached.

Can I Sell With an Open Claim?

Yes. Who keeps the proceeds is a contract term rather than a legal barrier.

Somebody Is Working on My Burned House.

Then find out today who they are and under what right. Money spent on the property becomes part of what you would owe to get it back.

Sources

Code of Alabama sections 40-10-29, 40-10-82, 40-10-83, 40-10-120, 40-10-122 and 40-10-132
Ex parte J.C. King III (In re Anderson Realty Group, LLC v. J.C. King III), No. SC-2022-0653
O'Connor v. Rabren, 373 So. 2d 302 (Ala. 1979)
Tensaw Land & Timber Co. v. Rivers, 244 Ala. 657, 15 So. 2d 411 (1943)
Moorer v. Chastang, 247 Ala. 676, 26 So. 2d 75 (1946)

Sell a Fire Damaged House in Birmingham