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House passes bill to reform property tax seizures

Brandon Moseley

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By Brandon Moseley
Alabama Political Reporter

Thursday, the Alabama House of Representatives passed legislation to give county tax collectors the option of ending property tax overbids by investors.

Under current Alabama law, the county tax collector, often the revenue commissioner, is able to sell real estate, including homes, that failed to pay the property taxes. Investors who pay off the property tax debts are entitled to 12 percent interest on top of what they paid. Many investors will overbid. That is, they will pay the county revenue authority more than the tax bill. The homeowner has to pay off the taxes, the overbid amount and 12 percent interest on the total amount in order to redeem their property, or they could face the loss of their property, including legal eviction.

House Bill 354 is sponsored by state Rep. Corley Ellis, R-Columbiana, and it would give counties the option of ending the practice of allowing the overbids.

Ellis said currently, if you have a $500 tax bill, they sell the property. The buyer pays the bill but can also pay an overbid. On a $150,000 home, the buyer could buy the property for the $500 tax plus $15,000. The homeowner would have to pay the tax, the overbid, plus 12 percent interest on what the buyer paid to redeem the property.

HB354 would also allow the county to sell the property to the bidder with the lowest interest rate rather than the standard across the board – 12 percent.

In Ellis’s example, a $500 tax debt became a $17,360 in demand debt in just a few short months.

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Ellis said that this would be at the option of the counties. “The tax collecting authority has to choose to go to this.”

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State Rep. James Buskey, D-Mobile, asked, “What if they don’t choose this option?”

Ellis answered, “They can continue to do it as they are doing now.”

Buskey said, “I like this proposal. It will be a benefit to people who have fallen on hard times and are in danger of losing their property.”

Ellis said, “You would have up to three years to redeem the property. At that point, the loan holder could foreclose.”

HB354 passed on a 96 to zero vote.

The legislation now moves on to the state Senate for their consideration.

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