1 HB371
2 217485-2
3 By Representative Ellis
4 RFD: County and Municipal Government
5 First Read: 16-FEB-22
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8 SYNOPSIS: Existing law provides for the sale of tax
9 liens for unpaid taxes through public auction.
10 This bill would clarify that the tax
11 collecting official of a county may conduct public
12 tax lien auctions through an online method.
13
14 A BILL
15 TO BE ENTITLED
16 AN ACT
17
18 Relating to taxation; to amend Sections 40-10-180,
19 40-10-182, 40-10-183, 40-10-185, 40-10-186, 40-10-187,
20 40-10-188, 40-10-191, 40-10-193, 40-10-194, and 40-10-197,
21 Code of Alabama 1975; to authorize and provide procedures for
22 the use of an online public auction for the collection of
23 delinquent property taxes.
24 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
25 Section 1. Sections 40-10-180, 40-10-182, 40-10-183,
26 40-10-185, 40-10-186, 40-10-187, 40-10-188, 40-10-191,
Page 1 1 40-10-193, 40-10-194, and 40-10-197, Code of Alabama 1975, are
2 amended to read as follows:
3 "§40-10-180.
4 "(a) The Legislature declares that the purpose of
5 this article is to provide counties with an alternative remedy
6 for collecting delinquent property taxes by the sale of a tax
7 lien.
8 "(b) The tax collecting official for each county
9 shall have the sole authority to decide whether his or her
10 county shall utilize the sale of a tax lien or the sale of
11 property to collect delinquent property taxes and the method
12 decided by the tax collecting official shall apply to all real
13 property in that county for the year so decided.
14 "(c) The tax collecting official's decision to
15 change the current remedy used for collecting delinquent
16 property taxes shall be published on the tax collecting
17 official's website or by advertising once a week for three
18 consecutive weeks in a newspaper with general circulation in
19 that particular county, all of which shall occur not later
20 than October 1 when the property taxes become due and payable.
21 "§40-10-182.
22 "(a) All tax liens representing unpaid and
23 delinquent taxes on real property shall be subject to a tax
24 lien auction or a tax lien sale.
25 "(b)(1) The If the sale of a tax lien is chosen as
26 the method to collect delinquent property taxes, the tax
27 collecting official of any county shall conduct a public
Page 2 1 auction for the sale and transfer of delinquent tax liens. The
2 tax collecting official shall notify the delinquent taxpayer
3 of the auction and all charges pursuant to Section 40-10-183
4 at least 30 days prior to the tax lien auction by first class
5 mail and by any one of the following:
6 "a. Advertising for once a week for three
7 consecutive weeks in a newspaper with general circulation in
8 the county where the property is located.
9 "b. Advertising on an online website controlled by
10 the tax collecting official and accessible from the tax
11 collecting official's website.
12 "c. Posting at the courthouse of the county and if
13 possible in a public place in the precinct where the property
14 is located.
15 "(2) The notices shall declare the time, the method,
16 whether online or in person, and the location of the auction.
17 "(c) The tax collecting official may auction or sell
18 tax liens representing delinquent taxes for any year taxes are
19 delinquent and unpaid.
20 "§40-10-183.
21 "Prior At least 30 days prior to any tax lien
22 auction, the tax collecting official shall prepare and
23 maintain a list of all tax liens. The list shall be known as
24 the tax lien auction list and shall contain all of the
25 following:
Page 3 1 "(1) The names of the several persons appearing in
2 the latest tax roll as the respective owners of tax-delinquent
3 properties.
4 "(2) A description of each property as it appears in
5 the latest tax roll.
6 "(3) The year or years for which taxes are
7 delinquent on each property.
8 "(4) The principal amount of the delinquent taxes
9 and the amount of accrued and accruing interest thereon and
10 penalties, fees, and administration costs pursuant to Section
11 40-10-184(b) to the day of the proposed tax lien auction
12 relating to each year of assessment.
13 "§40-10-185.
14 "When a tax lien is offered for auction or sale, it
15 shall not be necessary to list, auction, or sell it as being
16 against the property of any specific person. The auction or
17 sale is not invalid by reason of the fact that the property
18 was assessed in the name of a person other than the rightful
19 owner or to a person unknown, if the description and the
20 uniform parcel number of the real estate in the tax lien
21 auction list is sufficient to identify it and the amount of
22 taxes, interest, penalties, fees, and costs for which its tax
23 lien is to be auctioned or sold.
24 "§40-10-186.
25 "(a) The purchase price for a tax lien shall be the
26 amount of delinquent taxes plus any interest, penalties, fees,
27 and costs accrued as of the date of the auction or sale.
Page 4 1 "(b) The purchase price for a tax lien shall be paid
2 in a form acceptable to the tax collecting official in cash or
3 immediately available certified funds not later than one hour
4 before close of business on the date of the auction or sale
5 or, if the auction is online, not later than the close of
6 business two days following the date of the auction.
7 "(c) The purchase price for a tax lien received by
8 the tax collecting official shall be credited to the tax
9 collecting official for purposes of calculating commissions,
10 if any, on taxes collected by the tax collecting official
11 pursuant to Section 40-5-4.
12 "§40-10-187.
13 "(a) The tax collecting official, upon receipt of
14 the purchase price, shall make, execute, and deliver a tax
15 lien certificate to each purchaser at a tax lien sale or
16 auction or to each assignee thereafter and shall collect from
17 the purchaser or assignee a fee of five dollars ($5) for each
18 tax lien certificate. The tax lien certificate shall be in a
19 form provided by the Department of Revenue and shall also
20 include a certificate of redemption form as provided in
21 Section 40-10-194.
22 "(b) A tax lien certificate shall evidence the
23 auction or sale or assignment to the holder of the tax lien
24 certificate of the delinquent and unpaid taxes, penalties,
25 interest, fees, and costs set forth therein and represented by
26 the tax lien.
Page 5 1 "(c) A tax lien certificate shall bear the interest
2 rate per annum as bid on by the purchaser at the tax lien
3 auction or as agreed upon by the purchaser at the tax lien
4 sale, until the tax lien certificate is redeemed as provided
5 pursuant to Section 40-10-193 or Section 40-10-197.
6 "(d) The tax lien certificate shall do all of the
7 following:
8 "(1) Describe the real property on which a tax lien
9 is auctioned or sold as it is described in the tax lien
10 auction list.
11 "(2) Specify the date on which the tax lien was
12 auctioned or sold to the original purchaser.
13 "(3) Specify the year of assessment to which the tax
14 lien relates and the amount for which the tax lien was
15 auctioned or sold to the original purchaser.
16 "(4) Recite the amount of all taxes, penalties,
17 interest, fees, and costs due on the property, which relate to
18 the year of assessment described in subdivision (3), as of the
19 date specified in subdivision (2).
20 "(5) Recite that the certificate bears interest at
21 the rate per annum bid on by the purchaser at the tax lien
22 auction or agreed upon at the tax lien sale on the amount
23 described in subdivision (4) from the date specified in
24 subdivision (2).
25 "(e) The purchaser of a tax lien certificate may
26 transfer and assign the certificate to any person, and the
27 transferee of a tax lien certificate may subsequently transfer
Page 6 1 the certificate to any other person. The transferor of a tax
2 lien certificate shall endorse the certificate and shall swear
3 to the endorsement before a notary public or other officer
4 empowered to administer oaths. The transferee shall present
5 the endorsed tax lien certificate to the tax collecting
6 official who prepared and executed the certificate, or his or
7 her successor, who, for a fee of five dollars ($5), shall
8 acknowledge the transfer on the certificate and shall make
9 note of the transfer on the record of tax lien auctions and
10 sales kept as provided in Section 40-10-188. An assignment and
11 transfer as provided in this subsection shall vest in the
12 assignee all the right and title of the original purchaser.
13 "(f) A security interest in a tax lien certificate
14 may be created and perfected in the manner provided for
15 general intangibles under Title 7. Notice of the security
16 interest shall be given to the tax collecting official
17 pursuant to Section 7-9A-406 and as otherwise required by law.
18 "(g) Within 10 30 days of a completed tax lien
19 auction or sale, the tax collecting official shall send notice
20 to the property owner for whom the property was assessed
21 informing the property owner that the tax lien has been
22 auctioned or sold. The notice shall include the date of
23 auction or sale and the name and address of the purchaser and
24 shall be made by first class mail to the address listed in the
25 assessment.
26 "§40-10-188.
Page 7 1 "The tax collecting official shall make a correct
2 record of all auctions and sales of tax liens in a durable
3 book or an electronic file, which shall be known as the record
4 of tax lien auctions and sales, containing all of the
5 following:
6 "(1) The date of auction or sale.
7 "(2) A description of each parcel and uniform parcel
8 number on which a tax lien was auctioned or sold.
9 "(3) The year of assessment to which the tax lien
10 relates.
11 "(4) The name and address of the property owner for
12 whom the property was assessed, if known.
13 "(5) The name and address of the original purchaser
14 of the tax lien.
15 "(6) The total amount of taxes, interest, penalties,
16 fees, and costs due on the tax lien, which relate to the year
17 of assessment, as described in Section 40-10-187, as of the
18 date of the auction or sale of the tax lien to the original
19 purchaser.
20 "(7) The interest rate bid on by the purchaser at
21 the tax lien auction or as agreed by the purchaser at the tax
22 lien sale.
23 "(8) The amount of any subsequent taxes, penalties,
24 interest, fees, and costs paid by the original purchaser, or
25 assignee, of the tax lien certificate as provided in Section
26 40-10-191 and the year of assessment to which the payment
27 relates.
Page 8 1 "(9) The name and address of the assignee, if any,
2 and the date of assignment of the tax lien certificate.
3 "(10) Any security interest of which the tax
4 collecting official has been notified pursuant to Section
5 40-10-187(f).
6 "(10) (11) The name and address of the person
7 redeeming and the date of redemption.
8 "(11) (12) The total amount paid for redemption.
9 "§40-10-191.
10 "(a) The holder of a tax lien certificate shall have
11 the first right to purchase the tax lien relating to a
12 subsequent delinquency on the property described in the tax
13 lien certificate of the holder. A holder of the certificate
14 shall exercise this right between five and 30 days prior to
15 the tax lien auction date, and the purchase by the holder
16 shall be effective as of the date of the tax lien auction as
17 if the holder has been the winning bidder. A holder of the
18 certificate who exercises this right, upon payment of the
19 purchase price, shall be issued a certificate of purchase in
20 accordance with Section 40-10-187 and is entitled to the same
21 interest rate as shown on the previous tax lien certificate.
22 The owner of the property shall be notified within 30 days of
23 the completion of the first right of purchase in accordance
24 with Section 40-10-187(g). The owner of the property may pay
25 the current year taxes due once the property owner redeems all
26 outstanding tax liens on the property.
Page 9 1 "(b) In the event that a mortgagee is or becomes the
2 holder of a tax lien certificate, the mortgagee may add all
3 costs, fees, interest, penalties, and taxes regarding the tax
4 sale to the principal of the loan.
5 "(c) A holder of a tax lien certificate may abandon
6 the certificate at any time upon notification given to the tax
7 collecting official and the surrender of the tax lien
8 certificate. Abandonment of a tax lien certificate
9 relinquishes all rights of recovery of any monies or expenses.
10 "§40-10-193.
11 "(a)(1) Tax liens auctioned or sold may be redeemed
12 by any of the following:
13 "a. The owner, including a partial owner under
14 Section 40-10-195, or his or her heirs or personal
15 representative.
16 "b. Any mortgagee or purchaser of the property or
17 any portion of the property.
18 "c. Any other person listed under subsection (a) of
19 Section 40-10-120, if the property had been sold for taxes.
20 "(2) Property may be redeemed under subdivision (1)
21 by payment to the tax collecting official of the amount
22 specified on the tax lien certificate as the total amount of
23 delinquent tax, interest, penalties, fees excluding lost
24 certificate fees provided in Section 40-10-190, and costs paid
25 to purchase the tax lien, plus interest at the rate specified
26 in the tax lien certificate, plus any due and owing taxes,
27 interest, penalties, fees, and costs due. The tax collecting
Page 10 1 official shall provide a separate receipt for any current
2 taxes, interest, penalties, fees, or costs paid.
3 "(b) Statutory fees paid by the holder of the tax
4 lien certificate in connection with the tax lien certificate
5 shall be added to the amount payable on redemption and shall
6 also bear interest at the rate of interest specified in the
7 tax lien certificate.
8 "§40-10-194.
9 "(a) The tax collecting official shall, upon
10 application to redeem a tax lien, and upon being satisfied
11 that the person applying has the right to redeem the tax lien,
12 and upon payment of the amount due, issue to the person a
13 certificate of redemption appended to a copy of the
14 certificate of tax lien, giving the date of redemption, the
15 amount paid, and by whom redeemed, and shall make the proper
16 entries in the record of tax lien auctions or sales in his or
17 her office. Upon issuance of the certificate of redemption,
18 the redemption is complete and perfected, the tax lien is
19 satisfied, and the certificate of tax lien is void and of no
20 effect other than to support a request for payment of
21 redemption money pursuant to Section 40-10-196.
22 "(b) For each certificate of redemption, the tax
23 collecting official shall collect from the person to whom the
24 certificate of redemption is issued a fee of ten dollars
25 ($10).
Page 11 1 "(c) The holder of a certificate of redemption may
2 record the certificate with the recording officer of the
3 county.
4 "§40-10-197.
5 "(a) At any time not less than three years after the
6 auction or sale of a tax lien but not later more than 10 years
7 after the auction or sale, if the tax lien is lien has not
8 been redeemed, the a holder of all of the sold tax lien
9 certificate certificates for a parcel of property may bring in
10 the circuit court of the county in which the property is
11 located an action to foreclose the right to redeem and quiet
12 title to the property in the name of the holder of the tax
13 lien certificate. If any applicable law or court order
14 prohibits bringing an action to foreclose the right to redeem
15 and quiet title to the property, the limitation provided in
16 this section shall be extended 12 months following the
17 termination of the prohibition.
18 "(b)(1) At least 30 days before filing a tax lien
19 foreclosure action under this article, but not more than 180
20 days before the action is commenced, the holder of the tax
21 lien certificate certificates shall send notice of intent to
22 file the foreclosure action by certified mail to all of the
23 following:
24 "a. The property owner of record, according to the
25 property tax records of the county in which the property is
26 located, at the owner's address shown in the records and at
27 the street address of the property if different.
Page 12 1 "b. All holders of outstanding mortgages, judgment
2 liens, or other liens on the property as recorded in the
3 probate office of the county in which the property is located.
4 "c. The tax collecting official of the county in
5 which the property is located.
6 "(2) The notice shall include the property owner's
7 name, the uniform parcel number, the legal description of the
8 property, the name and address of the holder of the tax lien
9 certificate, and a statement that the holder proposes to file
10 a tax lien foreclosure action between as soon as 30 and but
11 not later than 180 days after the date of mailing of the
12 notice. If the holder fails to send the notice required by
13 this subsection, the court shall dismiss any tax lien
14 foreclosure action filed under this article.
15 "(c) The holder shall name as parties defendant to
16 the tax lien foreclosure action all persons entitled to redeem
17 under this article. Upon filing the tax lien foreclosure
18 action, the holder shall file record a notice as provided by
19 Section 35-4-131.
20 "(d)(1) In a tax lien foreclosure action, if the
21 court finds that the tax lien auction or sale is valid, that
22 proper notice has been given, that the holder is the holder of
23 all of the sold tax certificates on the property, and that the
24 tax lien has liens have not been redeemed, the court shall
25 enter judgment foreclosing the right of the defendant or
26 defendants to redeem and shall direct the circuit clerk to
27 execute and deliver to the party in whose favor judgment is
Page 13 1 entered a deed conveying the interests of the defendants in
2 the property described in the tax lien certificate
3 certificates.
4 "(2) After entry of judgment, a party whose rights
5 to redeem the tax lien liens are foreclosed has no further
6 legal or equitable right, title, or interest in the property
7 subject to the right of appeal and stay of execution as in
8 other civil actions.
9 "(e) The foreclosure of the right to redeem does not
10 extinguish any easement or right-of-way on or appurtenant to
11 the property or rights of any public utility or governmental
12 entity in the property, nor does it affect the rights of
13 holders of prior tax lien certificates.
14 "(f)(1) The clerk's deed executed in accordance with
15 subsection (d) shall include all of the following information:
16 "a. The date of the judgment.
17 "b. The number and style of the case.
18 "c. The name of the plaintiff, who shall be known
19 stated as the grantee.
20 "d. The legal description of the property.
21 "e. The uniform parcel number of the property.
22 "f. The date of the conveyance.
23 "(2) The original deed shall be delivered to the
24 plaintiff for recording in the probate records in the county
25 in which the property is located.
26 "(g) Any person who is entitled to redeem under this
27 article may redeem at any time before judgment is entered,
Page 14 1 notwithstanding that an action to foreclose has been
2 commenced, by paying into the circuit court the redemption
3 amount that would have been paid to the tax collecting
4 official under Section 40-10-193 plus any other amounts
5 determined by the court under this section. If the person who
6 redeems has been served personally or by publication in the
7 action, or if the person became an owner after the action
8 began and redeems after a notice is recorded pursuant to
9 subsection (c), judgment shall be entered in favor of the
10 plaintiff against the person for the redeeming party shall
11 also pay into the court with the redemption amount the costs
12 incurred by the plaintiff in the action, including reasonable
13 attorney fees actually incurred, to be determined by the
14 court. The court shall then order the tax lien certificates
15 cancelled and the tax liens void, the redemption amount be
16 paid to the tax collecting official, and the costs and
17 attorney fees be paid to the plaintiff.
18 "(h) If a tax lien that was purchased pursuant to
19 this article is not redeemed and the holder of the tax lien
20 certificate fails to commence a tax lien foreclosure action on
21 or before 10 years from the date of the tax lien certificate,
22 the tax lien certificate shall expire and the lien shall
23 become void.
24 "(i) If a judicial proceeding prohibits bringing a
25 tax lien foreclosure action, the time of expiration under this
26 section shall be extended by 12 months following the
27 completion of the judicial proceeding."
Page 15 1 Section 2. Section 40-10-201 is added to the Code of
2 Alabama 1975, to read as follows:
3 §40-10-201.
4 A tax collecting official may conduct a tax lien
5 auction and sale online or in person in accordance with
6 procedures established by the tax collecting official.
7 Section 3. This act shall become effective
8 immediately following its passage and approval by the
9 Governor, or its otherwise becoming law.
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