Most states that reimburse a tax-sale purchaser for work done during the redemption period describe that work loosely, or not at all, and leave the rest to argument. Alabama wrote a definition. Section 40-10-122(d) of the Code of Alabama says what a "preservation improvement" is, in language a field contractor would recognise, and subsection (c) makes its value recoverable at eight per cent per annum. It then builds a valuation procedure out of ten-day deadlines and ends it with a sentence that can wipe out the whole claim.
The Base Amount, at Eight Per Cent
Section 40-10-122(a)(1) sets the floor. To redeem land sold to someone other than the state, the redeeming party deposits with the judge of probate of the county where the land sits the amount for which the land was sold, "with interest payable at the rate of eight percent per annum from date of sale," together with the amount of all taxes paid by the purchaser, "with interest on the payment at eight percent per annum." Where taxes have been assessed to the purchaser and are unpaid, the probate judge requires the redeeming party to pay those too before redeeming. The redeeming party pays the officers' costs and fees, plus fifty cents to the judge of probate.
Interest at eight per cent from the date of sale, on both the bid and the taxes, is the baseline return. What is added to it depends on what kind of property it is.
Two Categories, Two Different Words
Subsection (b) deals with property located within an urban renewal or urban redevelopment project area designated under Chapters 2 or 3 of Title 24. There the redemptioner must additionally pay all insurance premiums paid or owed by the purchaser for casualty loss coverage on insurable structures, with eight per cent interest, and "the value of all permanent improvements made on the property," also with eight per cent interest.
Subsection (c) deals with property "which contains a residential structure at the time of the sale regardless of its location" - the broader and more commonly relevant case. There the redemptioner must additionally pay all insurance premiums for casualty loss coverage on the residential structure with eight per cent interest, and "the value of all preservation improvements made on the property," with eight per cent interest.
Note what triggers subsection (c): a residential structure present at the time of the sale, anywhere in Alabama. Not occupancy, not condition, not location. If a house was standing on it when you bought it, preservation improvements are in play.
The Definition Worth Memorising
Subsection (d) defines both terms. "Permanent improvements" shall include, but not be limited to, "all repairs, improvements, and equipment attached to the property as fixtures." And then: "'preservation improvements' shall mean 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."
Three limbs are doing work there. Keeping it in repair - maintenance of the existing fabric, not enhancement. For its proper and reasonable use - measured against what the property is for. Having due regard for the kind and character of the property at the time of sale - the benchmark is the building as you found it, so the standard for a derelict rental house is not the standard for a maintained suburban home.
That cuts both ways for a purchaser. It protects reasonable securing, weatherproofing and repair of a residential structure against an argument that the former owner never asked for it. It also means an upgrade dressed up as preservation will not survive a referee who reads the definition - and the phrase "at the time of sale" is precisely why dated photographs taken on the first visit matter more than any later document.
The Ten-Day Chain
Subsection (d) then sets out how value is fixed, and it is a sequence of deadlines rather than a negotiation:
| Step | Who acts | Deadline |
|---|---|---|
| Written demand for a statement of the value of improvements made since the tax sale | Proposed redemptioner | Any time |
| Furnish the amount claimed as the value of the improvements | Purchaser | Within 10 days of receiving the demand |
| Accept the stated value, or disagree and appoint a referee, notifying the purchaser in writing of the disagreement and the referee's name | Proposed redemptioner | Within 10 days of receiving the response |
| Appoint a referee and advise the redemptioner of the name | Purchaser | Within 10 days of receiving that notice |
| The two referees meet and confer on the award; if they cannot agree they "shall at once appoint an umpire" | Both referees | Within 10 days of the purchaser's appointment |
| Award by a majority of the referees and umpire, "final between the parties" | Referees and umpire | Within 10 days of the umpire's appointment |
A purchaser's first exposure is step two. Ten days from receipt of a written demand to produce a figure for the value of every preservation improvement made since the sale. That is not long enough to reconstruct a year of work from invoices held by three different vendors.
The Forfeiture Is Not Symmetrical
Subsection (e) states both failure cases in consecutive sentences, and they are not the same.
"If the proposed redemptioner fails or refuses to nominate a referee as provided in subsection (d), he or she must pay the value put upon the improvements by the purchaser." A redemptioner who ignores the process simply pays the purchaser's number.
"If the purchaser refuses or fails to appoint a referee, as provided in subsection (d), the purchaser shall forfeit his or her claim to compensation for such improvements." A purchaser who ignores the process loses the claim entirely - not reduced to a reasonable figure, not sent to court, forfeited.
The only relief runs to the referees, not the parties: failure of the referees or either of them to act or to appoint an umpire "shall not operate to impair or forfeit the right of either the proposed redemptioner or the purchaser," and where no award is made without fault of the parties, "the appropriate court shall proceed to ascertain the true value of such permanent or preservation improvements as applicable and enforce the redemption accordingly." Miss your own deadline and you are outside that protection.
Possession Before Payment, and a Hard Date
Section 40-10-122(a)(2) separates possession from payment, which catches purchasers who assume they hold the property until the money arrives. Reimbursement for allowable improvements and insurance premiums under subsections (b) to (e) "is not required for the proposed redemptioner to take possession of the property."
There is a deadline on the other side of it. The redemptioner "shall reimburse the purchaser for such costs prior to January 1 of the subsequent tax year in order to complete the redemption process," and failure to do so "shall forfeit the right of the proposed redemptioner in the property." So the redemptioner gets in early and pays later, but a redemption left unpaid past that 1 January is forfeited.
What This Means If You Do the Work
- Establish the condition at the time of sale before touching anything - the statutory standard has "due regard for the kind and character of the property at the time of sale" built into it, and dated first-visit photographs are the only practical evidence of that
- Keep a running improvement schedule with values, not just invoices, because step two asks for a value within ten days of a written demand
- Diary the ten-day steps the moment a demand arrives; a purchaser who fails to appoint a referee forfeits the entire claim under § 40-10-122(e)
- Separate casualty insurance premiums from improvement value in your records - both are recoverable at eight per cent but under different limbs of subsections (b) and (c)
- Check whether a residential structure stood on the property at the time of sale; that single fact moves the file into subsection (c) and puts preservation improvements in play anywhere in the state
- Keep preservation work on the right side of the definition - keeping the structure in repair for its proper and reasonable use, not upgrading it
- Expect the redemptioner to be able to take possession before paying you, with their own hard deadline of 1 January of the subsequent tax year
For the same question in the state that makes the recovery turn on a ten-day itemisation instead of a referee, see Texas, where only itemised costs are allowed. The states that reimburse nothing through a redemption price are Ohio, Oklahoma, Louisiana, Arkansas and, depending on which statute the sale ran under, Pennsylvania. Alabama's other routes into a building someone else owns are covered separately: there is no blighted-property receivership and the municipality does the work itself, a personal representative's duty to preserve estate property, an Alabama conservator and the ward's house, and a chapter 7 trustee in Alabama's Bankruptcy Administrator districts. On the municipal side see Birmingham's registration under the 2026 act. Field capability is on our Alabama page.
Ethreon works tax-sale property across Alabama through the redemption period — Birmingham, Montgomery, Mobile, Huntsville and the counties between — for purchasers who need a defensible improvement schedule rather than a shoebox of invoices when a ten-day demand arrives. First-visit condition reports with dated photographs establishing the property as it stood at sale, then secure and re-key, board-ups, grass cutting, winterisation and repairs, each valued and recorded line by line. Send the property address and the date of sale through the contact form.
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Frequently Asked Questions
1What does Alabama let a tax-sale purchaser recover on redemption?
The bid with interest at eight per cent per annum from the date of sale, the taxes the purchaser has paid with the same eight per cent, and - depending on the property - casualty insurance premiums and the value of improvements, also at eight per cent. Section 40-10-122(c) applies to property containing a residential structure at the time of sale, regardless of location, and covers "preservation improvements." Section 40-10-122(b) applies to property in an urban renewal or urban redevelopment project area and covers "permanent improvements."
2What is a "preservation improvement"?
The statute defines it. Section 40-10-122(d): "preservation improvements" means "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 is a standard tied to the building as it stood when you bought it, not to what you would like it to become.
3How is that different from a "permanent improvement"?
Permanent improvements are broader and apply in the urban renewal and redevelopment context under subsection (b). Section 40-10-122(d) says the term "shall include, but not be limited to, all repairs, improvements, and equipment attached to the property as fixtures." Preservation improvements are about keeping a residential structure in repair; permanent improvements are about what has been added to the property.
4How is the value decided if the parties disagree?
By referees, on a chain of ten-day deadlines in § 40-10-122(d). The redemptioner makes written demand for a statement of value; within 10 days of receipt the purchaser must furnish the amount claimed; within 10 days of that response the redemptioner either accepts it or appoints a referee and notifies the purchaser in writing of the disagreement and the referee's name; within 10 days of that notice the purchaser appoints a referee; within 10 days of the purchaser's appointment the two referees confer, and if they cannot agree they "shall at once appoint an umpire," with the award of a majority due within 10 days of the umpire's appointment and "final between the parties."
5What happens if a deadline is missed?
The consequences are not symmetrical. Section 40-10-122(e): if the redemptioner fails or refuses to nominate a referee, "he or she must pay the value put upon the improvements by the purchaser." But if the purchaser fails or refuses to appoint a referee, "the purchaser shall forfeit his or her claim to compensation for such improvements." Missing your ten days costs you the entire improvement claim.
6What if the referees themselves do not act?
That does not penalise either party. Section 40-10-122(e) provides that failure of the referees, or either of them, to act or to appoint an umpire "shall not operate to impair or forfeit the right of either the proposed redemptioner or the purchaser," and where an award fails without fault of the parties "the appropriate court shall proceed to ascertain the true value of such permanent or preservation improvements as applicable and enforce the redemption accordingly."
7Does the redeeming owner have to pay for improvements before taking possession?
No, and this surprises purchasers. Section 40-10-122(a)(2) provides that reimbursement for allowable improvements and insurance premiums "is not required for the proposed redemptioner to take possession of the property" - but the redemptioner must reimburse those costs "prior to January 1 of the subsequent tax year in order to complete the redemption process," and failure to do so "shall forfeit the right of the proposed redemptioner in the property."