William S. Hereford*
The State of Alabama owns tens of thousands of tax–delinquent properties, and that number is increasing at an alarming rate. According to a recent Cumberland Law Review article, the state owned 8,595 tax–delinquent properties in 2005, and the number jumped to 25,000 by 2012, representing $141 million in property value at that time. The increase continued after 2012, reaching a total of 38,664 state–owned tax–delinquent properties as of September 21, 2017. These properties create a multitude of problems for the state and local communities. For one, they represent millions of dollars in uncollected property tax revenues, on which counties, cities, and local school districts rely. Further, because state–owned properties are not taxed, they represent the continuing loss of millions of dollars of tax revenue each year during the state’s ownership. Moreover, there is a high correlation between urban blight and the number of tax–delinquent properties, and efforts to address blighted properties are intertwined with the state’s ability to sell tax–delinquent properties.
Given the magnitude of this problem, the wide array of factors impacting the state’s ability to sell its tax-delinquent properties need to be carefully considered. This article focuses only on a specific factor relating to the demand for the state’s properties: the impact that an ambiguity involving Alabama’s property tax sale redemption law has on the demand for the state’s properties. The article seeks to clarify the law in that area to improve the demand for state-owned properties and maximize the benefit to the state.
* Partner, Burr & Forman LLP, Birmingham, Alabama; B.S.B.A., 1985, Univ. of Alabama – Huntsville; J.D. 1988, Vanderbilt Univ. Appreciation is given to the following for their contributions to this article: Thomas Williams, J.D., Univ. of Alabama, The Title Group, for his valuable input on the section addressing title underwriters’ concerns with tax delinquent properties; my son, Faulkner Hereford, M.A. Applied Economics, Univ. of Alabama, Investment Banking Analyst, Deutsche Bank, for his organizational and editorial suggestions from the perspective of someone without previous experience with this topic; and the Cumberland Law Review Editorial Board for its helpful review and editing.