Senate Bill 244 Alabama 2026 Session

Summary

Primary Sponsor

Rodger SmithermanSenator

Democrat

Session

2026 Regular Session

Title

Relating to Alabama Housing Trust Fund; mortgage recording fee increase

Summary

SB244 would raise the mortgage recording fee and reallocate mortgage taxes to fund the Alabama Housing Trust Fund, with updated calculation rules and administration.

What This Bill Does

SB244 increases the fee charged to record mortgages and similar security instruments, and updates how the mortgage record tax is calculated. It creates a dedicated revenue stream for the Alabama Housing Trust Fund by directing 25% of mortgage record taxes to the Fund, with the remaining funds distributed to probate judges (5%), county treasuries (33%), and the State Treasury (37%). The bill includes new administration, reporting, bonding, auditing, and enforcement measures to ensure taxes are paid and properly recorded, and it makes nonsubstantive technical updates to current law. The changes take effect October 1, 2026.

Who It Affects

• Borrowers/homebuyers and other parties recording mortgages or similar security instruments will face higher recording taxes, with amounts based on the indebtedness and the type of security instrument.
• Alabama Housing Trust Fund and state/local government entities (probate judges, county treasuries, and the State Treasury) will gain a dedicated revenue stream and will assume new administrative, reporting, and audit responsibilities related to the mortgage tax.

Key Provisions

• Increase the recording privilege tax for mortgages, deeds of trust, contracts of conditional sale, and similar instruments; the rate is set at $0.30 per $100 of indebtedness for initial indebtedness (with specific calculations for amounts above $100 and for open-end or revolving indebtedness, including an optional method based on initial or maximum indebtedness).
• Create a fixed distribution of mortgage record tax revenues: 5% to the probate judge, 25% to the Alabama Housing Trust Fund, 33% to the county treasurer where the tax is collected, and 37% to the State Treasury; when property spans multiple counties, distributions are apportioned by value.
• Establish procedures for determining the value and indebtedness when taxes depend on property across counties, including Department of Revenue actions or bank-signed certifications and endorsements on the recording instrument.
• Impose bonding and reporting requirements to secure tax payments, with annual reporting by owners and institutions; authorize audits by the State Banking Department; and specify penalties for noncompliance (misdemeanors and fines for failure to collect or certify taxes, including fines from $10 to $1,000 and potential threefold tax penalties for underreporting).
• Provide conditions under which certain security instruments may be recorded without additional tax or with endorsements showing prior tax payments, and outline transitional rules for extended or renewed indebtedness and for instruments involving property located in more than one county.
• Effective October 1, 2026, plus nonsubstantive technical revisions to update the code language to current style.

AI-generated summary using openai/gpt-5-nano on Feb 12, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue