Birmingham Fire Damage Rules: Redemption and Possession

Two Kinds of Redemption

Alabama distinguishes between them and the difference matters a great deal.

Administrative redemption runs through the tax office. Owners, and parties with an interest such as mortgagees, have a three-year window to repay taxes, interest and qualifying preservation costs. Where the property was sold to a party other than the state, 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 bought it, redemption is available at any time before title passes out of the state.

Judicial redemption comes afterwards. It involves filing an original civil action against the tax-sale purchaser, or a counterclaim in an ejectment action brought by that purchaser, and paying specified sums into the court where the action is pending. Where the tax debtor pays the required amount, section 40-10-83 provides that the court shall enter judgment for them for the land, and all title and interest shall be divested out of the owner of the tax deed.

Why Does the Distinction Matter?

Because the first is a payment and the second is a lawsuit. Administrative redemption is a counter transaction with the tax office; judicial redemption means litigation, costs and a court timetable. After the three-year administrative process the redemptioner's only remedy is judicial redemption, unless a settlement with the tax purchaser can be reached. So the same right becomes considerably more expensive to exercise simply by being exercised later.

What Redemption Costs

Section 40-10-122 governs the amount for land sold to a party other than the state. The redeeming party pays the amount for which the land was sold at the tax sale, together with all subsequent taxes paid by the purchaser, plus interest on those amounts.

Section 40-10-83 sets out what a court ascertains on a motion by the defendant before trial: the amount paid by the purchaser at the sale and the taxes subsequently paid, together with 12 per cent per annum, subject to the limitations in section 40-10-122(a).

The Two Additions

Urban renewal and redevelopment areas. Where property sits within an urban renewal or urban redevelopment project area designated under Chapters 2 or 3 of Title 24, the purchaser recovers all insurance premiums paid or owed for casualty loss coverage on insurable structures, and the value of all permanent improvements made, together with 12 per cent per annum.

Residential structures, anywhere. For any property containing a residential structure at the time of sale, regardless of location, the purchaser recovers casualty insurance premiums paid and the value of all preservation improvements.

What Are Preservation Improvements?

The 2002 amendment to the redemption statute defines them, at section 40-10-122(d), as improvements made to preserve the property by properly keeping it in repair for its proper and reasonable use, having due regard for the kind and character of the property at the time of sale. That definition sounds narrow and the Alabama Supreme Court has read it broadly.

The Case That Settled It, and It Was a Fire

In Ex parte J.C. King III, in re Anderson Realty Group, LLC v. J.C. King III, No. SC-2022-0653, the Alabama Supreme Court addressed the term preservation improvements in section 40-10-122(d) for the first time.

The property was a rental home that had suffered extensive fire damage, leaving it uninhabitable. The owner stopped paying property taxes in 2015 and the county auctioned it to the State at a tax sale the following year. In 2019 the State sold it on, in its uninhabitable state, to Anderson Realty Group. Anderson Realty invested close to ninety thousand dollars renovating and restoring the property.

The Court's analysis focused on the statutory framework for redemption in tax sales, which it determined was rooted in traditional foreclosures, and examined the legislative intent behind the 2002 amendment. It concluded that a host of improvements, including permanent improvements, are included as a redemption expense.

What Does That Mean for an Owner in Practice?

That the price of coming back is set by somebody else's spending decisions rather than by anything you control. A purchaser who restores a burned house thoroughly has increased what redemption costs, and the more time passes the more there is to reimburse. This is the reverse of how owners intuitively think about a redemption period, which they picture as a fixed debt sitting still while they arrange funds.

We publish no redemption calculations, tax positions or title findings for any individual property. The tax office holds the records, and where a sale has occurred an Alabama lawyer is the right first call rather than a buyer.

Which System Applies

The preservation improvements framework described above affects properties bought under the traditional Alabama tax sale framework rather than under the newer Alabama tax lien auction. The state now operates both, and which one governs a given property depends on the county and the year.

That is a question for the tax office and it changes the answer materially, so it is worth establishing before reasoning from anything written about Alabama generally.

Possession, and Whose Clock Is Running

The doctrine that runs in the owner's favour, and the one owners are least likely to know.

No action for the recovery of real estate sold for the payment of taxes lies unless brought within three years from the date when the purchaser became entitled to demand a deed. That is the limitation period on judicial redemption.

But the three-year period does not begin to run against the owner unless the tax purchaser adversely possesses the land. Where the owner seeking to redeem has retained possession, the right of judicial redemption remains without a time limit.

How Much Possession Does an Owner Need?

Less than the purchaser needs. The tax purchaser must have peaceable possession for the limitation to run, while the owner's possession need not be actual and peaceable and may be constructive or scrambling. Those principles come from cases including Tensaw Land and Timber Co. v. Rivers and Moorer v. Chastang, and the Alabama Supreme Court compared the statutory and judicial redemption periods in O'Connor v. Rabren. The practical point is that continuing to treat a property as yours is not a formality here; it is the thing that keeps a right alive.

Why a Fire Attacks Exactly That

A fire removes an owner from the property. That is what it does, and everything reasonable that follows compounds it: staying with family, moving to a rental, boarding the house, redirecting the post.

None of that is a mistake. It is worth knowing that the same steps that make sense after a fire are the steps that let a tax purchaser establish peaceable possession, and that a right which had no time limit acquires one.

What This Means Before Anything Has Happened

Keep the taxes paid if you possibly can. Cheaper than every remedy on this page combined.

Check the tax status even if you think you know it. On inherited property especially, where several people assume somebody else is paying.

Keep a connection to the property. Somebody with keys who goes by, mail collected, the lot maintained.

Ask early if anything has been sold. It is public and the answer changes your options entirely.

Your Options, Compared

Redeem administratively. The straightforward route, within three years, through the tax office.

Redeem judicially. Available afterwards, a lawsuit, and subject to the possession question.

Sell before a sale happens. The cleanest position, because you are conveying title rather than a right to redeem.

Wait. The route where the cost of return grows by whatever somebody else spends.

Across Birmingham and Jefferson County

Tax delinquency varies enormously across this metro. The western neighbourhoods are covered under Ensley, West End and Pratt City, the east under Woodlawn, East Lake and Avondale, and the centre under Southside and Five Points. Further pages deal with Over the Mountain, the Jefferson County cities and the outer counties.

Those outer areas include Bessemer, Fairfield, Tarrant, Irondale, Center Point, Trussville and Gardendale, with Alabaster, Pelham, Calera and Moody beyond the county line.

The full index is on our service area index.

Rules Questions

Was My Property Sold at a Tax Sale?

The tax office will tell you and the records are public. It is worth asking rather than waiting to be told.

Can I Still Redeem After Three Years?

Possibly, through judicial redemption, and whether the limitation has run turns on possession. This is a question for an Alabama lawyer.

Can I Sell a Property I Have Only a Right to Redeem In?

That is a different transaction from selling title and it needs advice. Tell any buyer at the outset rather than partway through.

Primary Sources

Code of Alabama sections 40-10-29, 40-10-82, 40-10-83, 40-10-120, 40-10-122 and 40-10-132
Section 40-10-122(d) — definition of preservation improvements, 2002 amendment
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); First Properties, L.L.C., 959 So. 2d 653
Tensaw Land & Timber Co. v. Rivers (1943); Moorer v. Chastang (1946)