SB233 Alabama 2024 Session

Summary

Primary Sponsor

Linda Coleman-MadisonSenator

Democrat

Session

Regular Session 2024

Title

Mortgages, fee increase for recording of mortgages, deeds of trust, distribution of proceeds to Alabama housing trust fund.

Summary

SB233 would raise and restructure the mortgage recording fee to fund the Alabama Housing Trust Fund, with new tax rules and distribution of the proceeds.

What This Bill Does

The bill increases the fee charged to record mortgages, deeds of trust, and related security instruments and changes the rate structure. It creates a dedicated revenue stream for the Alabama Housing Trust Fund by modifying how the mortgage record tax is collected and distributed. It specifies how the tax revenue is split among probate courts, the Alabama Housing Trust Fund, county treasuries, and the State Treasury, including how multi-county property is handled. It also introduces new administration, auditing, and penalty provisions for reporting and collecting the tax, and takes effect on October 1, 2024, along with technical language updates.

Who It Affects

• Homebuyers, property sellers, and borrowers with mortgages or security instruments, who would face higher recording fees.
• Mortgage lenders, banks, title companies, and other financial institutions, due to new fee structures, reporting duties, and potential bond requirements to secure tax payments.
• Alabama Housing Trust Fund, which would receive a dedicated 25% of mortgage tax revenue.
• County governments and probate judges, which would receive 33% and 5% respectively of mortgage tax revenues and would be involved in collection and certification.
• State Treasury and county treasuries, which would receive portions of the mortgage tax revenues (37% to State Treasury and 33% to county treasuries).
• Property owners with multi-county property, where tax distributions would be prorated according to property value in each county.

Key Provisions

• Increase the recording fee for mortgages, deeds of trust, contracts of conditional sale, and similar instruments, with a per-$100 fee structure for initial indebtedness.
• Create a dedicated revenue stream for the Alabama Housing Trust Fund by modifying the rate and distribution of the mortgage record tax.
• Distribute mortgage tax revenues as follows: 5% to probate judges, 25% to the Alabama Housing Trust Fund, 33% to county treasuries, and 37% to the State Treasury; apportion distributions for properties located in multiple counties accordingly.
• Require a bond and audits by the State Banking Department to ensure accurate reporting of indebtedness and payment of taxes; impose fines and auditing fees for underreporting or misreporting taxes.
• Provide procedures for handling purchases where part of the purchase price is unpaid, treating unpaid balances as mortgage debt for tax purposes under certain conditions.
• Allow alternative certification methods for certain financial institutions to certify indebtedness and remit taxes; require annual reporting and cross-county distribution when applicable.
• Ensure taxes are paid before recording, with certification by probate judges; require explanations and stampings on instruments to reflect tax status.
• Implement exemptions and no-tax stamps for exempt instruments and establish conditions under which taxes are not required to be paid for certain filings.
• Effective date: October 1, 2024, with nonsubstantive technical revisions to update existing code language.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue