HB139 Alabama 2019 Session

Updated Feb 26, 2026

Notable

Summary

Primary Sponsor: K.L. Brown
Republican
Session: Regular Session 2019
Title: Insurance, withheld insurance payments by lender, release and notice requirement provided
Summary: HB 139 requires lenders to notify insured homeowners when they withhold insurance proceeds and to release funds or specify the exact conditions to release, with interest penalties for failure.
What This Bill Does
The bill defines who is a lender and what counts as residential real property. If an insurance claim payout is made to the insured but the lender withholds some or all proceeds while repairs are done, the lender must notify the insured of the release requirements within 14 days. When the insured asks for release, the lender must either release the funds if the insured shows they’ve met the requirements, or provide a detailed notice explaining why they won’t release and what the insured must do to release. If the lender fails to provide notice or to release proceeds as required, they owe interest on the withheld funds at a specified annual rate, with interest starting and stopping at defined points when requirements are met.

Who It Affects
Insured homeowners with mortgage or security interests in residential real property (e.g., single-family homes, duplexes, triplexes, quadraplexes, or unit in a condo/cooperative) who receive insurance proceeds for property damage.
Lenders (including assignees, receivers, or other transferees of a mortgage or security interest) who hold insurance proceeds and must release them under specified conditions.

Key Provisions
Defines 'lender' and 'residential real property' for the purposes of the act.
Section 2: If a claim is paid to the insured and the lender holds proceeds, the lender must notify the insured of each release requirement within 14 days after receiving the proceeds.
Section 3: Within 10 days after a request for release, the lender must either release the proceeds if the insured has complied with the requirements, or provide a detailed notice stating the reason for withholding and the exact requirements needed to release.
Section 4: If the lender fails to provide the required notice or to release the proceeds as required, the lender owes interest to the insured at the rate of 10% per year on the withheld proceeds.
Section 5: Details when interest begins to accrue and stops (based on notice and release actions).
Section 6: The act does not alter other lender rights provided by law or by contract.
Section 7: The act becomes effective on the first day of the third month after passage and governor 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: Insurance