HB141 Alabama 2015 Session

Summary

Primary Sponsor

Patricia Todd

Democrat

Session

Regular Session 2015

Title

Mortgages, fee increase for recording of mortgages, deeds of trust, distribution of proceeds to Alabama Housing Trust Fund, Sec. 40-22-2 am'd.

Summary

HB141 would raise recording fees for mortgages and related documents and dedicate part of the Mortgage Record Tax to the Alabama Housing Trust Fund.

What This Bill Does

It increases the fee charged to record mortgages, deeds of trust, contracts of conditional sale, and similar security documents. It changes how the Mortgage Record Tax is calculated and distributed: 25% would go to the Alabama Housing Trust Fund, and the remaining 75% would be divided among probate judges, county treasurers, and the State Treasury, with probate judges receiving 5% as compensation. The bill adds rules for calculating the tax (including open-end or revolving debt and extensions), establishes reporting and auditing requirements, and outlines penalties for underreporting; it also provides mechanisms for multi-county property and refund scenarios. The tax applies to sale contracts and is not to be duplicated with other taxes, and the act includes an effective date.

Who It Affects

• Mortgage lenders, title/recording offices, borrowers, and others who file mortgages, deeds of trust, or similar instruments would face higher recording taxes and more complex tax calculations under the new rules.
• The Alabama Housing Trust Fund and state/local government entities (probate judges, county treasurers, State Treasury) would receive dedicated revenue and operate under new reporting, auditing, and compliance requirements; banks and other financial institutions involved in recording could participate in a streamlined certification process but face penalties for misreporting.

Key Provisions

• Recording privilege tax on mortgages and similar instruments increases from 0.15 to 0.30 per $100 of indebtedness, with the applicable basis (initial indebtedness or maximum principal indebtedness) defined for calculating the tax.
• Revenues: 25% of Mortgage Record Tax receipts go to the Alabama Housing Trust Fund; the remaining 75% are distributed to probate judges, county treasurers, and the State Treasury, with probate judges receiving 5% of the amount collected as compensation.
• Calculation and reporting rules: alternative methods allow banks/financial institutions to certify indebtedness and require annual reporting; the Department of Revenue can audit and impose penalties for underreporting (fine up to three times the tax due).
• Apportionment and refunds: when property is in more than one county or partly outside the state, the tax is allocated proportionally or the owner can elect to be taxed on the entire amount with a later refund; refunds and adjustments are handled by the Department of Revenue and probate court.
• Additional provisions: when an instrument extends or renews indebtedness, the tax applies to the extended amount; a deed with an unpaid balance can be treated as a mortgage for tax purposes; non-duplication of taxes with ad valorem taxes is required; penalties apply for probate judges who fail to collect taxes or certify payment.
• Effective date: the act becomes effective on the first day of the third month after passage and approval.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Mortgages