HB 550

Existing law provides for the rights and remedies of a purchaser of real estate at a tax sale and provides that an owner may redeem the real estate sold at the tax sale within three years from the date of the tax sale under certain conditions

Existing law also provides that there is no time limit for recovery of real estate by an owner who has retained possession of the real estate after the tax sale

This bill would further clarify that the three-year time limit on actions for recovery would apply to owners not in possession of the real estate after the tax sale

This bill would also provide that there is no time limit for a tax purchaser to bring an action to possess real estate bought at a tax sale if the real estate was not recovered pursuant to existing law

This bill would also authorize the tax purchaser to retain a tax lien on the real estate for all taxes, insurance, improvements, attorneys' fees, costs, and interest until the lien is satisfied under certain conditions

Existing law also provides that an owner redeeming real estate sold at a tax sale would be subject to an interest rate of 12 percent before January 1, 2020, and on or after January 1, 2020, the interest rate would be eight percent

This bill would keep the interest rate at 12 percent on or after January 1, 2020

To amend Sections 40-10-82 and 40-10-120, Code of Alabama 1975, relating to real estate sold for the payment of taxes; to further provide for actions for recovery of the real estate by the owner and for actions by the tax purchaser for possession of the real estate; to authorize the tax purchaser to retain a tax lien on the real estate under certain conditions; and to repeal Act 2018-494, 2018 Regular Session, relating to the interest rate paid by an owner to redeem property sold at a tax sale.

Section 1

Sections 40-10-82 and 40-10-120, Code of Alabama 1975, are amended to read as follows:

§40-10-82.

(a) No action by an owner not in possession of real estate for the recovery of real estate sold for the payment of taxes shall lie unless the same is brought within three years from the date when the purchaser became entitled to demand a deed therefor; but if the owner of such the real estate was, at the time of such the sale, was under the age of 19 years or insane, he or she, his or her heirs, or legal representatives shall be allowed one year after such the disability is removed to bring an action for the recovery thereof; but this section shall not apply to any action brought by the state, to cases in which the owner of the real estate sold had paid the taxes, for the payment of which such the real estate was sold prior to such the sale, or to cases in which the real estate sold was not, at the time of the assessment or of the sale, was not subject to taxation or subject to other applicable law. There shall be no time limit for recovery of real estate by an owner of land who has retained possession. If the owner of land seeking to redeem has retained possession, character of possession need not be actual and peaceful, but may be constructive and scrambling and, where there is no real occupancy of land, constructive possession follows title of the original owner and may only be cut off by adverse possession of the tax purchaser for three years after the purchaser is entitled to possession.

(b) There shall be no time limit for the tax purchaser to maintain an action for possession to the real estate that has not been recovered by the real estate owner as described in subsection (a).

(c) The tax purchaser shall retain a tax lien on the real estate for all taxes, insurance, improvements, attorneys' fees, costs, and interest on the same until the lien is satisfied with payment by the real estate owner in an action to recover the real estate as described in subsection (a).

§40-10-120.

(a) Real estate which hereafter may be sold for taxes and purchased by the state may be redeemed at any time before the title passes out of the state or, if purchased by any other purchaser, may be redeemed at any time within three years from the date of the sale by the owner, his or her heirs, or personal representatives, or by any mortgagee or purchaser of such the lands, or any part thereof, or by any person having an interest therein, or in any part thereof, legal or equitable, in severalty or as tenant in common, including a judgment creditor or other creditor having a lien thereon, or on any part thereof; and an infant or insane person entitled to redeem at any time before the expiration of three years from the sale may redeem at any time within one year after the removal of the disability; and such the redemption may be of any part of the lands so sold, which includes the whole of the interest of the redemptioner. If the mortgage or other instrument creating a lien under which a party seeks to redeem is duly recorded at the time of the tax sale, the party shall, in addition to the time herein specified, shall have the right to redeem the real estate sold, or any portion thereof covered by his or her mortgage or lien, at any time within one year from the date of written notice from the purchaser of his or her purchase of the lands at tax sale served upon such the party, and notice served upon either the original mortgagees or lienholders or their transferee of record, or their heirs, personal representatives, or assigns shall be sufficient notice.

(b) Nothing in this section shall limit the amount of time a tax purchaser has to maintain an action for possession to the real estate.

(c) Until a tax purchaser maintains an action for possession to the real estate, the tax purchaser shall retain a lien on the real estate for all taxes, insurance, improvements, attorneys' fees, costs, and interest on the same. The lien may be satisfied with payment by the real estate owner in an action to recover the real estate as described in Section 40-10-82.

(b) (d) If any real property has been sold for taxes and is subject to redemption from the sale as set forth in subsection (a) and has also been sold in one or more subsequent sales for taxes, then any party entitled to redeem such the sale for taxes may redeem such the sale if the redemptioner simultaneously redeems his or her sale and all subsequent sales. In the event of a redemption of successive sales, the redemption amount shall be ascertained by applying the provisions of Sections 40-10-121 and 40-10-122. Redemption amounts computed pursuant to Section 40-10-121 shall be paid as stated therein. Redemption amounts computed pursuant to Section 40-10-122 shall be paid as stated therein if the purchaser had the right to redeem pursuant to subsection (a) or was the owner of the then current tax certificate or tax title. Otherwise, those funds shall be disposed of as set forth in Section 40-10-28 and paid to such the purchaser or his or her assignee only as set forth in Section 40-10-28, with the time limits for such the application computed utilizing the sale date when the purchaser's interest was sold for taxes."

Section 2

Act 2018-494, 2018 Regular Session, amending Sections 40-10-75, 40-10-76, 40-10-77, 40-10-83, 40-10-121, and 40-10-122, effective January 1, 2020, to provide for an interest rate of not more than eight percent, is repealed.

Section 3

This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.