HB536 Alabama 2010 Session

Summary

Primary Sponsor

Marcel Black

Democrat

Session

Regular Session 2010

Title

Fee covenants, transfer fee covenants prohibited, Prohibition Against Transfer Fee Covenants Act, Sec. 35-4-77 added

Summary

HB536 would prohibit transfer fee covenants in Alabama real estate and render such covenants unenforceable.

What This Bill Does

It adds a new provision (35-4-77) to the Alabama Code to prohibit transfer fee covenants and declares they harm property marketability and transferability. It defines key terms (environmental covenant, transfer, transfer fee) and lists several items that are not transfer fees, such as broker commissions, certain lender fees, and HOA or club membership charges. It also prohibits recording transfer fee covenants, makes covenants recorded on or after the effective date unenforceable against future owners, and voids liens tied to such covenants; environmental covenants are specifically not transfer fees; the act takes effect immediately after passage and governor’s approval, and pre-existing covenants are not automatically invalidated by the act.

Who It Affects

• Property owners, buyers, and sellers in Alabama, who would be protected from transfer fee obligations and would experience fewer barriers to transferring property.
• Lenders, mortgagees, licensed real estate brokers/agents, and homeowners associations or similar entities involved in property transfers, whose ability to impose or attach transfer fee covenants would be blocked and whose related liens would be void.

Key Provisions

• Adds Section 35-4-77 to prohibit transfer fee covenants and declares them against public policy because they reduce marketability and alienation of real property.
• Defines terms: Environmental Covenant (not a transfer fee), Transfer (any transfer of real property ownership in Alabama), and Transfer Fee (fee charged upon transfer, with various computations and inclusions).
• Not a transfer fee: excludes items such as immediate grantee consideration, broker commissions, certain lender-related fees, leases, options/rights, government taxes/fees, HOA/condo fees, club memberships, and environmental covenant payments.
• Prohibits recording transfer fee covenants and states covenants recorded on or after the effective date do not run with the title and are unenforceable against later owners; any liens securing such fees recorded on or after the date are void.
• Environmental covenants related to remediation are not transfer fees.
• Effective date is immediate upon passage and governor’s approval; pre-existing covenants are not automatically declared valid or invalid by this act.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Property, Real and Personal