HB335INTRODUCED
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HB335
PD7XGEE-1
By Representative Hill
RFD: Judiciary
First Read: 19-Mar-24
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5 PD7XGEE-1 03/18/2024 CNB (L)bm 2024-1124
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First Read: 19-Mar-24
SYNOPSIS:
Under existing law, all tax liens representing
unpaid and delinquent taxes on real property are
subject to a tax lien auction or a tax lien sale.
This bill would require a public auction to take
place between 8:30 a.m. and 4:00 p.m.
Under existing law, a person who purchases a tax
lien at auction is subject to three separate fees.
This bill would consolidate the three separate
fees into one fee, with the total amount remaining
consistent.
Under existing law, the holder of a tax lien
certificate has the first right to purchase a tax lien
relating to a subsequent delinquency.
This bill would provide that if a holder of a
tax lien certificate fails to exercise the first right
to purchase, the cost of the redemption price of the
tax lien shall be added to the purchase price at the
tax lien sale or auction and would provide for the
transfer of the tax lien certificate and included
rights.
This bill would further provide for who may
redeem a tax lien that has been auctioned or sold.
This bill would prohibit a holder of a tax lien
certificate from entering upon or possessing any
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certificate from entering upon or possessing any
property until a deed is received from the circuit
clerk.
This bill would prevent a holder of a tax lien
certificate from being criminally or civilly liable for
violations in certain circumstances.
This bill would also establish that certain
books and records are prima facie evidence of an
auction, sale, or redemption of a tax lien certificate.
A BILL
TO BE ENTITLED
AN ACT
Relating to tax lien auctions and sales; to amend
Sections 40-10-182, 40-10-183, 40-10-184, 40-10-186,
40-10-187, 40-10-191, 40-10-193, 40-10-198, 40-10-199, and
40-10-200, Code of Alabama 1975; and to add Section 40-10-202
to the Code of Alabama 1975; to further provide for times a
public auction may be held; to further provide for fees; to
provide for the purchase price of a tax lien if a holder of a
tax lien certificate fails to purchase a subsequent tax lien;
to provide for the transfer of the tax lien and rights of the
purchaser; to further provide for who may redeem a tax lien
that has been auctioned or sold; to further provide for a
title report for use in a foreclosure and quiet title action;
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title report for use in a foreclosure and quiet title action;
to prohibit a holder of a tax lien certificate from entering
upon or possessing any property until a deed is received; to
prevent a holder of a tax lien certificate from being
criminally or civilly liable for violations in certain
circumstances; and to provide that certain books and records
are prima facie evidence in certain circumstances.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 40-10-182, 40-10-183, 40-10-184,
40-10-186, 40-10-187, 40-10-191, 40-10-193, 40-10-198,
40-10-199, and 40-10-200, Code of Alabama 1975, are amended to
read as follows:
"§40-10-182
(a) All tax liens representing unpaid and delinquent
taxes on real property shall be subject to a tax lien auction
or a tax lien sale.
(b)(1) If the sale of a tax lien is chosen as the
method to collect delinquent property taxes, the tax
collecting official of any county shall conduct a public
auction for the sale and transfer of delinquent tax liens
between the hours of 8:30 a.m. and 4:00 p.m. on the auction
date. The tax collecting official shall notify the delinquent
taxpayer of the auction and all charges pursuant to Section
40-10-183 at least 30 days prior to the tax lien auction by
first class mail and by any one of the following:
a. Advertising for once a week for three consecutive
weeks in a newspaper with general circulation in the county
where the property is located.
b. Advertising on an online website controlled by the
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b. Advertising on an online website controlled by the
tax collecting official and accessible from the tax collecting
official's website.
c. Posting at the courthouse of the county and if
possible in a public place in the precinct where the property
is located.
(2) The notices shall declare the time, the method,
whether online or in person, and the location of the auction.
(c) The tax collecting official may auction or sell tax
liens representing delinquent taxes for any year taxes are
delinquent and unpaid."
"§40-10-183
At least 30 days prior to any tax lien auction, the tax
collecting official shall prepare and maintain a list of all
unsold tax liens. The list shall be known as the tax lien
auction list and shall contain all of the following:
(1) The names of the several persons appearing in the
latest tax roll as the respective owners of tax-delinquent
properties.
(2) A description of each property as it appears in the
latest tax roll.
(3) The year or years for which taxes are delinquent on
each property.
(4) The principal amount of the delinquent taxes and
the amount of accrued and accruing interest thereon and
penalties, fees, and administration costs pursuant to Section
40-10-184(b) relating to each year of assessment."
"§40-10-184
(a) On the day and time designated for a tax lien
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(a) On the day and time designated for a tax lien
auction, the tax collecting official shall proceed to auction
all tax liens described in the tax lien auction list compiled
as provided in Section 40-10-183, except those for which the
taxes, penalties, interest, fees, and costs thereon have been
paid. Any tax lien unsold after a tax lien auction shall be
retained by the county continue pursuant to Section 40-1-3 for
future auction or sale as provided in this article. Interest
shall continue to accrue on unsold tax liens at the rate
imposed on delinquent real property taxes.
(b)(1) A tax lien shall be sold at auction pursuant to
this article to the person who :(i) pays all taxes due,
including unpaid taxes for previous years, interest,
penalties, fees, and costs due on the property, including an
origination cost of twenty dollars ($20) as of the date of
auction and a twenty dollar ($20) auction (ii) pays an
administrative fee, and who, in addition, of forty-five
dollars ($45), effective upon the preparation of the tax lien
auction list, plus the amount to be paid to the holder of a
tax lien certificate who has not exercised his or her first
right to purchase as provided in Section 40-10-191; and (iii)
bids the lowest interest rate on the amount required to be
paid to redeem the property from the sale.
(2) The beginning interest rate bid shall not exceed a
rate of 12 percent and additional bids may be made at a rate
less than the immediately preceding bid.
(3) If the interest rate bid for the property reaches
0.00 percent and more than one bidder remains, an in-person
auction ends in a tie and the winner cannot be determined, the
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auction ends in a tie and the winner cannot be determined, the
tax collecting official shall draw lots to determine the
winning bidder for the property . If an online auction ends in
a tie and the winner cannot be determined, the tie shall be
resolved by a random number generator.
(c) The sale of a tax lien does not extinguish any deed
restriction, deed covenant, or easement on or appurtenant to
the parcel. A tax lien offered for auction or sale shall be
identified by a uniform parcel number and a legal
description."
"§40-10-186
(a) The purchase price for a tax lien shall be the
amount of delinquent taxes plus any interest, penalties, fees,
and costs accrued as of the date of the auction or sale as
required in Section 40-10-184 .
(b) The purchase price for a tax lien shall be paid in
a form acceptable to the tax collecting official not later
than one hour before close of business on the date of the
auction or sale or, if the auction is online, not later than
the close of business two days following the date of the
auction.
(c) The purchase price for a tax lien received by the
tax collecting official shall be credited to the tax
collecting official for purposes of calculating commissions,
if any, on taxes collected by the tax collecting official
pursuant to Section 40-5-4."
"§40-10-187
(a) The tax collecting official, upon receipt of the
purchase price, shall make, execute, and deliver a tax lien
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purchase price, shall make, execute, and deliver a tax lien
certificate to each purchaser at a tax lien sale or auction or
to each assignee thereafter and shall collect from the
purchaser or assignee a fee of five dollars ($5) for each tax
lien certificate . The tax lien certificate shall be in a form
provided by the Department of Revenue and shall also include a
certificate of redemption form as provided in Section
40-10-194.
(b) A tax lien certificate shall evidence the auction
or sale or assignment to the holder of the tax lien
certificate of the delinquent and unpaid taxes, penalties,
interest, fees, and costs set forth therein and represented by
the tax lien.
(c) A tax lien certificate shall bear the interest rate
per annum as bid on by the purchaser at the tax lien auction
or as agreed upon by the purchaser at the tax lien sale, until
the tax lien certificate is redeemed as provided pursuant to
Section 40-10-193 or Section 40-10-197.
(d) The tax lien certificate shall do all of the
following:
(1) Describe the real property on which a tax lien is
auctioned or sold as it is described in the tax lien auction
list.
(2) Specify the date on which the tax lien was
auctioned or sold to the original purchaser.
(3) Specify the year of assessment to which the tax
lien relates and the amount for which the tax lien was
auctioned or sold to the original purchaser.
(4) Recite the amount of all taxes, penalties,
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(4) Recite the amount of all taxes, penalties,
interest, fees, and costs due on the property, which relate to
the year of assessment described in subdivision (3), as of the
date specified in subdivision (2).
(5) Recite the rate per annum bid on by the purchaser
at the tax lien auction or agreed upon at the tax lien sale on
the amount described in subdivision (4) from the date
specified in subdivision (2).
(e) The purchaser of a tax lien certificate may
transfer and assign the certificate to any person, and the
transferee of a tax lien certificate may subsequently transfer
the certificate to any other person. The transferor of a tax
lien certificate shall endorse the certificate and shall swear
to the endorsement before a notary public or other officer
empowered to administer oaths. The transferee shall present
the endorsed tax lien certificate to the tax collecting
official who prepared and executed the certificate, or his or
her successor, who, for a fee of five dollars ($5), shall
acknowledge the transfer on the certificate and shall make
note of the transfer on the record of tax lien auctions and
sales kept as provided in Section 40-10-188. An assignment and
transfer as provided in this subsection shall vest in the
assignee all the right and title of the original purchaser.
(f) A security interest in a tax lien certificate may
be created and perfected in the manner provided for general
intangibles under Title 7. Notice of the security interest
shall be given to the tax collecting official pursuant to
Section 7-9A-406 and as otherwise required by law.
(g) Within 30 days of a completed tax lien auction or
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(g) Within 30 days of a completed tax lien auction or
sale, the tax collecting official shall send notice to the
property owner for whom the property was assessed informing
the property owner that the tax lien has been auctioned or
sold. The notice shall include the date of auction or sale and
the name of the purchaser and shall be made by first class
mail to the address listed in the assessment."
"§40-10-191
(a) The holder of a tax lien certificate shall have the
first right to purchase the tax lien relating to a subsequent
delinquency on the property described in the tax lien
certificate of the holder. A holder of the certificate shall
exercise this right between five and 30 days prior to the tax
lien auction date, and the purchase by the holder shall be
effective as of the date of the tax lien auction as if the
holder has been the winning bidder. A holder of the
certificate who exercises this right, upon payment of the
purchase price, shall be issued a certificate of purchase in
accordance with Section 40-10-187 and is entitled to the same
interest rate as shown on the previous tax lien certificate.
The owner of the property shall be notified within 30 days of
the completion of the first right of purchase , in accordance
with Section 40-10-187(g). The owner of the property may pay
the current year taxes due once the property owner redeems all
outstanding tax liens on the property.
(b)(1) If the holder of a tax lien certificate fails to
exercise the first right to purchase a subsequent tax lien, an
amount equal to the redemption price of the tax lien shall be
added to the purchase price at the subsequent tax lien sale or
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added to the purchase price at the subsequent tax lien sale or
auction and the tax lien certificate shall be transferred to
the purchaser of the subsequent tax lien.
(2) A transfer of the tax lien certificate as provided
in this subsection shall vest in the transferee all the rights
and title of the previous holder of the tax lien certificate;
the previous tax lien certificate shall be canceled; and a new
tax lien certificate shall be issued to the purchaser.
(3) The amount paid from the transfer shall be
distributed to the previous holder of the tax lien
certificate, along with a notice of cancellation of the
previous tax lien certificate, within 30 days of the receipt
of the purchase price.
(b)(c) In the event that a mortgagee is or becomes the
holder of a tax lien certificate, the mortgagee may add all
costs, fees, interest, penalties, and taxes regarding the tax
sale to the principal of the loan.
(c)(d) A holder of a tax lien certificate may abandon
the certificate at any time upon notification given to the tax
collecting official and the surrender of the tax lien
certificate. Abandonment of a tax lien certificate
relinquishes all rights of recovery of any monies or
expenses."
"§40-10-193
(a)(1) Tax liens auctioned or sold may be redeemed by
any of the following:
a. The owner, including a partial owner under Section
40-10-195, or his or her heirs or personal representative
representatives.
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representatives.
b. Any mortgagee or purchaser of the property or any
portion of the property.
c. Any other person listed under subsection (a) of
Section 40-10-120, if the property had been sold for taxes. Any
person having an interest in the property or any portion of
the property, legal or equitable, in severalty or as tenant in
common, including a judgment creditor or other creditor having
a lien on the property or any portion of the property.
(2) Property may be redeemed under subdivision (1) by
payment to the tax collecting official of the amount specified
on the tax lien certificate as the total amount of delinquent
tax, interest, penalties, fees excluding lost certificate fees
provided in Section 40-10-190, and costs paid to purchase the
tax lien and to obtain a title report for use in a forclosure
and quiet title action under Section 40-10-197 , plus interest
at the rate specified in the tax lien certificate, plus any
due and owing taxes, interest, penalties, fees, and costs due.
The tax collecting official shall provide a separate receipt
for any current taxes, interest, penalties, fees, or costs
paid.
(b) Statutory fees paid by the holder of the tax lien
certificate in connection with the tax lien certificate shall
be added to the amount payable on redemption and shall also
bear interest at the rate of interest specified in the tax
lien certificate."
"§40-10-198
(a) Each holder of a tax lien certificate shall be
entitled to the same rights and remedies with respect to the
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entitled to the same rights and remedies with respect to the
collection of the amounts due on such the tax lien certificate
as are available to the tax collecting official with respect
to the collection of delinquent taxes, including, but not
limited to, the right to institute garnishment proceedings
against the taxpayer for the payment of taxes.
(b) The holder of a tax lien certificate shall not be
entitled to charge the taxpayer for the release or
satisfaction of the tax lien any amount more than what would
otherwise have been available to the tax collecting official
with respect to the collection of the delinquent tax.
(c) The holder of a tax lien certificate shall not have
the right to enter upon or otherwise possess any property upon
which he or she holds a tax lien until he or she receives a
deed from the circuit clerk pursuant to a court action under
this article. Prior to receiving a clerk's deed, the holder of
a tax lien certificate shall not make any repairs or
alterations to the property or require the property owner to
pay mesne profits or rents as part of any redemption amount.
The holder of a tax lien certificate shall not be held
criminally or civilly liable for any code violation on the
property occurring prior to obtaining a clerk's deed. "
"§40-10-199
(a) Tax liens that are not sold at the tax lien auction
conducted by the tax collecting official shall be separated in
the tax lien auction list as prescribed by Section 40-10-183
and the county shall retain the lien shall continue pursuant
to Section 40-1-3. The tax collecting official, within 45 days
at any time after the tax lien auction date, may sell at
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at any time after the tax lien auction date, may sell at
private sale an unsold tax lien for no less than all taxes,
interest, penalties, costs, and fees , plus the amount to be
paid to the holder of a tax lien certificate who has not
exercised his or her first right to purchase as provided in
Section 40-10-191 . The purchaser at private sale shall be
entitled to interest on the amount paid at a rate agreed to by
the tax collecting official, not to exceed 12 percent. All
private tax lien sales shall be entered in the record of tax
lien auctions and sales, as provided in Section 40-10-188.
(b) All tax liens that remain unsold by the tax lien
auction or sale shall be included in all future tax lien
auctions or sales until sold.
(c) Any tax lien that does not sell at auction shall be
reported to the county commission when seeking approval of
errors in assessments, litigations, or insolvents as the tax
collecting official will shall be allowed credit for taxes due
to this state upon final settlement with the state
Comptroller."
"§40-10-200
(a)(1) Except as provided in subdivision (2), no a tax
assessor,assessing or tax collecting official, commissioner of
revenue, officer judge or clerk of the court with jurisdiction
over actions filed under this article , or any employee of any
of those offices shall not knowingly have a direct or indirect
financial interest in the purchase of any tax lien sold for
delinquent taxes within their jurisdiction. A sale made in
violation of this subsection is void .
(2) This section does not apply to an attorney
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(2) This section does not apply to an attorney
representing a party in the purchase of a tax lien sold for
delinquent taxes or an employee of the attorney.
(b) A violation of this section shall be is a Class C
misdemeanor and the sureties on his or her official bond shall
be liable for a penalty not to exceed five hundred dollars
($500) and to be fixed by the circuit judge with jurisdiction
in the county. The penalty shall be remitted to the general
fund of the county."
Section 2. Section 40-10-202 is added to the Code of
Alabama 1975, to read as follows:
§40-10-202
Unless otherwise provided, in the trial of any issue
involving the auction, sale, or redemption of a tax lien
certificate, an action for public auction, or a foreclosure
and quiet title action filed under this article, the originals
or certified copies of the books and records belonging to the
office of the tax assessing official, tax collecting official,
or board of equalization required to be kept by law shall be
prima facie evidence of the facts included in the books or
records.
Section 3. This act applies to all tax liens for which
a final judgment in a foreclosure and quiet title action has
not been rendered on or before June 1, 2024
Section 4. This act shall become effective on June 1,
2024.
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