HB487 Alabama 2019 Session

Summary

Primary Sponsor

Neil RaffertyRepresentative

Democrat

Session

Regular Session 2019

Title

Taxation, to increase the fee for recording certain mortgages, deeds of trust, contracts of conditional sale, or other instruments of like character and to modify rate and distribution of funds, Sec. 40-22-2 am'd.

Summary

HB 487 would raise the mortgage recording fee and earmark part of the revenue for the Alabama Housing Trust Fund.

What This Bill Does

It increases the recording privilege tax for mortgages, deeds of trust, contracts of conditional sale, and similar security instruments to 20 cents for every $100 of the indebtedness, with the same rate applying to open-end or revolving debt under the bill's options. It also changes how Mortgage Record Tax revenue is distributed, allocating 25% to the Alabama Housing Trust Fund, 23.75% to the county treasurer, 47.5% to the State Treasury, and 3.75% to the probate judges. The bill includes rules for calculating taxes when property spans multiple counties, as well as reporting, bonding, and auditing requirements for certain institutions, and penalties for misreporting or failing to collect the tax. It becomes effective on the first day of the third month after the bill passes into law.

Who It Affects

• Mortgage lenders and borrowers who record mortgages or similar security instruments, as they would pay a higher recording tax.
• Public offices and funds that receive and manage the tax revenue (Alabama Housing Trust Fund, county treasurers, probate judges, and the State Department of Revenue), which includes new administration, reporting, and auditing requirements and altered funding allocations.

Key Provisions

• Increase the recording tax on mortgages, deeds of trust, contracts of conditional sale, and similar instruments to 20 cents per $100 of indebtedness (with mechanisms for initial indebtedness and open-end debt).
• Establish dedicated revenue distribution: 25% to the Alabama Housing Trust Fund, 23.75% to the county treasurer, 47.5% to the State Treasury, and 3.75% to the probate judges.
• Provide procedures for cross-county property filings and for determining tax amounts when property is located in more than one county, including Department of Revenue endorsement and bond requirements for ongoing indebtedness.
• Introduce reporting and auditing provisions for banks, savings institutions, and other financial organizations that issue such instruments, with penalties for willful underreporting (fine up to three times the tax due) and required auditing fees.
• Impose penalties on probate judges who fail to collect or certify the tax (misdemeanor with fines from $10 to $1,000) and require proper certification of paid taxes on recorded instruments.
• Effective date set as 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

Taxation