SB233INTRODUCED
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SB233
ID716WZ-1
By Senators Coleman-Madison, Smitherman, Elliott
RFD: County and Municipal Government
First Read: 19-Mar-24
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5 ID716WZ-1 03/06/2024 TEW (F)TEW 2024-1069
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First Read: 19-Mar-24
SYNOPSIS:
Under existing law, a fee is required to record
certain mortgages, deeds of trust, contracts of
conditional sale, or other instruments of like
character which is given to secure the payment of any
debt which conveys any real or personal property.
This bill would increase the fee for recording
of certain mortgages, deeds of trust, contracts of
conditional sale, or other instruments of like
character which is given to secure the payment of any
debt which conveys any real or personal property.
This bill would modify the rate and distribution
of the mortgage record tax in order to provide a
dedicated revenue for the Alabama Housing Trust Fund.
This bill would also make nonsubstantive,
technical revisions to update the existing code
language to current style.
A BILL
TO BE ENTITLED
AN ACT
To amend Section 40-22-2, Code of Alabama 1975; to
increase the fee for recording of certain mortgages, deeds of
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increase the fee for recording of certain mortgages, deeds of
trust, contracts of conditional sale, or other instruments of
like character which is given to secure the payment of any
debt which conveys any real or personal property; and to
modify the rate and distribution of the mortgage record tax in
order to provide a dedicated revenue for the Alabama Housing
Trust Fund.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 40-22-2, Code of Alabama 1975, is
amended to read as follows:
"ยง40-22-2
No mortgage, deed of trust, contract of conditional
sale, or other instrument of like character which is given to
secure the payment of any debt which conveys any real or
personal property situated within this state or any interest
therein or any security agreement or financing statement
provided for by the Uniform Commercial Code, except a security
agreement or a financing statement relating solely to security
interests in accounts, contract rights, or general
intangibles, as thesesuch terms are defined in the Uniform
Commercial Code, and except for the re-recordation of
corrected mortgages, deeds, or instruments executed for the
purpose of perfecting the title to real or personal property,
specifically, but not limited to, corrections of maturity
dates thereof, shall be received for record or for filing in
the office of any probate judge of this state unless the
following privilege or license taxes shall have been paid upon
such instrument before the same shall be received for record
or for filing:
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or for filing:
(1)a. Upon all such instruments which are executed to
secure or to evidence the securing of an initial indebtedness
which shall not exceed one hundred dollars ( $100), there shall
be paid the sum of $.15thirty cents ($.30) , and upon all
instruments which shall be executed to secure or to evidence
the securing of an initial indebtedness of more than one
hundred dollars ( $100), there shall be paid the sum of
$.15thirty cents ($.30) for each one hundred dollars ( $100) of
such initial indebtedness or fraction thereof.
b. Upon all such instruments which are executed to
secure or to evidence the securing of an open end or revolving
indebtedness with any interest in property, at the option of
the person offering the instrument for record or for filing,
(i) there shall be paid the sum of $.15thirty cents ($.30) for
each one hundred dollars ( $100) of such initial indebtedness
or fraction thereof and the procedures set forth in paragraphs
a, b, and ca., b.,and c. of subdivision (2) of this section
shall be applicable; or, in lieu thereof, (ii) there shall be
paid the sum of $.15thirty cents ($.30) for each one hundred
dollars ($100) of maximum principal indebtedness, or fraction
thereof, to be secured by such instrument at any one time as
stated in the instrument or any amendment thereto. In any
event, the privilege or license tax to be paid upon such
instruments securing or evidencing the securing of open end or
revolving indebtedness with any interest in property shall not
exceed the amount of $.15thirty cents ($.30) for each one
hundred dollars ( $100) of maximum principal indebtedness, or
fraction thereof, to be secured by such instrument at any one
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fraction thereof, to be secured by such instrument at any one
time as stated in the instrument or any amendment thereto,
irrespective of the cumulative amount advanced from time to
time thereunder.
(2)a. If subdivision (1)b.(i) applies and any part of
the indebtedness which the mortgagor or debtor in any
instrument conveying any real property situated within this
state, or any interest therein, other than fixtures under the
Uniform Commercial Code, is authorized to incur under the
terms of the instrument has not been or will not be presently
incurred at the time thesuch instrument is offered for record,
the tax shall be paid on the amount of indebtedness presently
incurred, and the Department of Revenue, upon the petition of
the owner of any such instrument or upon the petition of the
agent or attorney of thesuch owner, shall ascertain to its own
satisfaction the amount then taxable and the amount to be
incurred thereafter and determine the amount upon which the
tax shall be paid at the time thesuch instrument is offered
and shall endorse its findings on thesuch instrument. Upon the
presentation of thesuch instrument with thesuch endorsement
thereon, the probate judge of any county in which the
instrument is offered, upon the payment of the tax upon the
amount so ascertained by the Department of Revenue and the
recording fees of the probate judge, shall accept the same for
record. The Department of Revenue shall also require the owner
of thesuch instrument to execute a bond in an amount
sufficient to secure to the state the privilege tax to become
due and payable under this section upon the amount of the
indebtedness to be incurred thereafter, such bond to be
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indebtedness to be incurred thereafter, such bond to be
approved by the Department of Revenue and payable to the State
of Alabama and conditioned that the owner of thesuch
instrument will promptly report to thesaid Department of
Revenue and to the probate judge of the county where thesaid
instrument is first filed for record, whenever thesuch owner
or his successor in interest incurs any additional
indebtedness thereunder, and the amount so incurred; and that
the said owner of thesuch instrument will pay or cause to be
paid to the probate judge of the county in which said
instrument is first filed the privilege or license tax
required under this section upon the accrual of any additional
indebtedness, and the said owner of such instrument will
report to the said probate judge and the Department of Revenue
during the month of September of each year the amount of all
indebtedness and all bonds, debentures, notes or other forms
of indebtedness incurred or certified and delivered under said
instrument to such date, and the amount so certified and
delivered during the preceding 12 months, and the aggregate of
all such evidence of indebtedness certified and delivered
under such instrument prior to such year. The bond executed to
secure payment of the tax herein required shall cover a term
of five years; and, after the expiration of thesaid term of
five years, the owner of the instrument offered for record
shall execute such further bond as may be required by the
Department of Revenue covering the succeeding term of five
years, and thereafter every term of five years, in the same
manner so long as any of the indebtedness authorized to be
incurred by thesuch instrument has not been incurred with like
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incurred by thesuch instrument has not been incurred with like
condition and in thesuch sum as the said department may
prescribe.
b. Notwithstanding the provisions of paragraph a. of
this subdivision , any bank, savings and loan association,
insurance company, or other financial institution organized
and established under the laws of the State of Alabama or the
United States which is the owner of thesuch instrument, in
lieu of the foregoing procedures, may certify the amount of
indebtedness presently incurred, and the probate judge of any
county in which the instrument is offered, upon payment of the
tax upon the amount so certified and the recording fees of the
probate judge, shall accept the instrument for record. During
the month of September of each year, any such bank, savings
and loan association, insurance company, or other financial
institution which has recorded such instruments as described
hereinabove shall report to the appropriate probate judge the
amount of additional indebtedness incurred under the
instrument and pay any tax required upon the additional
indebtedness.
c. Each probate judge will forward to the State Banking
Department by the end of October a statement showing the
amounts certified to him or her by each forenamed
organization. The State Banking Department will then have the
authority to make unannounced audits on any organization
electing to use this system of reporting indebtedness. Any
organization which is found to have willfully certified less
than the true amount it should have certified shall be
required to pay a fine equal to three times the amount of tax
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required to pay a fine equal to three times the amount of tax
due on the amount of indebtedness not certified to the probate
judge. This fine shall be paid into the State General Fund of
Alabama. In addition, any organization so fined must pay an
auditing fee in accordance with established Banking Department
audit fees into the funds of the State Banking Department.
(3) When any deed is filed for record which recites
that part of the purchase money is unpaid, such deed to the
extent of such unpaid balance shall be held and treated as a
mortgage, and the mortgage tax shall be collected by the
probate judge in addition to the tax for recording the
instrument as a deed before recording the same, unless the
balance of purchase money shall be secured by mortgage or deed
of trust which has already been filed for record, and the tax
thereon paid, and the fact of such prior payment shall be
endorsed on the deed. When any such deed is recorded and the
tax thereon is paid, and thereafter a mortgage securing the
debt is filed for record, the same shall be admitted to record
without the payment of the mortgage tax and the fact of
thesuch prior payment shall be endorsed on the deed.
(4) The privilege taxes herein imposed shall not be
required on or for the filing of any such instrument,
providing additional or substitute security for any
indebtedness secured by, or the securing of which is evidenced
by, an instrument previously filed, upon the filing of which
the taxes provided by law have been paid or which was filed at
a time when no such privilege taxes were required by law;
provided, that the secured indebtedness remains unchanged in
amount and in time of maturity.
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amount and in time of maturity.
(5) Upon the filing for record of such instrument and
upon the payment of the tax thereon, the probate judge or his
or her clerk shall certify on the instrument the fact that the
said tax has been paid, and when so certified by the probate
judge or his or her clerk, thesuch instrument shall be
admitted to record in any county wherein any of the property
mentioned in the instrument is situated without the payment of
any further tax thereon, except the fee to the probate judge
for recording thesuch instrument, and thesuch certificate of
the probate judge shall be recorded by such probate judge when
such instrument is recorded. Upon the filing for record of any
instrument which has been exempted by law from the payment of
the tax provided for in this section, the probate judge shall
certify thereon that no tax has been paid and shall stamp in
bold letters on the face of thesaid instrument "No Tax
Collected," and the certificate shall be recorded with and as
a part of such instrument, and thereafter thesuch instrument
shall be received for record in any county in this state
without the payment of any further tax thereon, when submitted
by a tax-exempt institution, but if submitted by or
transferred to an institution or person not exempt from the
payment of the tax levied under this section, the probate
judge shall collect the tax levied by this section upon the
then unpaid balance of the secured debt together with the fee
of the probate judge for recording such instrument before it
will be admitted to record. The tax herein provided for shall
be paid upon all contracts for the sale of real or personal
property, whether the same are in the nature of a conditional
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property, whether the same are in the nature of a conditional
sale or a bond for title, and no such contract shall be
received for record until such tax shall have been paid.
(6) When the time for the payment of the indebtedness
secured by, or the securing of which is evidenced by, any such
instrument is extended or renewed, and the extension or
renewal contract is offered for filing or for record, the tax
required in this section shall be paid on the amount of
indebtedness so extended or renewed; and the same shall be
governed in all respects by the provisions of this article. No
state, county, or municipal ad valorem tax shall be payable on
any such instrument upon which the tax prescribed by this
section shall have been paid, on the debt secured or evidenced
thereby or on the security agreement evidenced thereby.
(7) Of the taxes collected by the probate judge under
this section there shall be paid to the county treasurer of
the county in which such taxes are collected one-third of the
amount collected, to be accounted for by the judge of probate,
and the remaining two-thirds of the amount collected to the
State Treasury. The probate judge shall receive five percent
of the amount collected as compensation for services in
collecting the money and certifying the instrument, the five
percent to be retained by the judge of probate out of the
money collected under this section; but when the property
described in the instrument is situated within different
counties within this state, then the probate judge who
collects the taxes shall pay over to the county treasurer of
each of the different counties in which the property is
situated an amount of the taxes that would be in proportion to
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situated an amount of the taxes that would be in proportion to
the value of the property therein as compared to the whole
property within this state described in the
instrument.Revenues from the mortgage record tax shall be
divided between four recipients: The judges of probate, the
Alabama Housing Trust Fund, county treasuries, and the State
Treasury. Five percent of all mortgage record taxes collected
shall be distributed to the judges of probate, 25 percent of
all mortgage record taxes collected shall be distributed to
the Alabama Housing Trust Fund, 33 percent of all mortgage
record taxes collected shall be distributed to the county
treasurer in the county in which the tax is collected, and 37
percent of all mortgage record taxes collected shall be
distributed to the State Treasury. If the property described
in the instrument is situated within different counties within
this state, then the judge of probate who collects the taxes
shall pay over to the county treasurer of each of the
different counties in which the property is situated an amount
of the taxes that would be in proportion to the value of the
property therein as compared to the whole property within this
state described in the instrument.
(8) If any part of the property embraced or described
in any instrument which is required under this section to pay
a record privilege tax is located without this state, the
indebtedness upon which the tax shall be paid for the
privilege of recording such instrument shall be that
proportion of the indebtedness secured by the instrument which
the value of the property located in this state bears to the
whole property described in the instrument. The Department of
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whole property described in the instrument. The Department of
Revenue may ascertain the value of the whole property and of
that part of it which is located within this state for the
purpose of ascertaining the amount of the indebtedness upon
which the tax shall be paid, and the value of that part of the
property located within this state and the amount of the
indebtedness upon which such tax shall be paid shall be
ascertained in the following manner: First, the owner of any
such instrument or his or her agent or attorney may petition
the Department of Revenue to ascertain the value of the whole
property and of that part of which is located within this
state and the amount of the indebtedness upon which such tax
shall be paid, and the Department of Revenue, after hearing
such evidence as may be offered or as may be before it, shall
fix and determine the value of that part of the property
located within this state and the amount of the indebtedness
upon which the tax shall be paid and shall endorse its
findings on such instrument, and upon the presentation of the
instrument, with such endorsements to the probate judge of the
county in which any part of the property is located, such
instrument shall be accepted for record upon the payment of
the tax upon the amount of such indebtedness as so ascertained
by the Department of Revenue and of the recording fees of the
probate judge; or, second, the owner of any such instrument or
his or her agent or attorney may have such instrument recorded
by paying to the probate judge of the county in which the
instrument is offered for record the privilege tax on the
entire amount of the indebtedness secured by such instrument,
and may thereupon present a petition to the Department of
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and may thereupon present a petition to the Department of
Revenue within 30 days after such instrument is recorded, and
it shall be the duty of the Department of Revenue to ascertain
the value of the whole property and of that part of it located
within this state, and to fix and determine the amount of the
indebtedness upon which the tax shall be paid, and the
department shall thereupon ascertain such valuation and fix
and determine such indebtedness and shall order the probate
judge to refund the excess of privilege tax collected , and
the probate judge shall comply with such order; and the tax
paid upon the entire amount of such indebtedness shall be held
by the probate judge until the Department of Revenue
determines the amount of the indebtedness upon which such tax
shall be paid.
(9) Any probate judge who shall file for record or
shall receive any such instrument for record or for filing,
without collecting the recording or registration tax provided
for the filing, recording, or registration of such instrument,
or who shall fail to certify the fact that such tax has been
paid before filing such instrument shall be guilty of a
misdemeanor and, upon conviction, shall be fined not less than
ten dollars ($10) nor more than one thousand dollars ( $1,000).
(10) Every petition filed with the Department of
Revenue to ascertain the amount of the mortgage tax due to be
paid under this section shall, when the property conveyed in
the instrument offered for record is located in more than one
county of the state, show the value of the property conveyed
in each county in which the instrument is to be recorded.
(11) Any probate judge who fails to keep the abstract
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(11) Any probate judge who fails to keep the abstract
of mortgages or other instruments intended to secure the
payment of moniesmoneys which are filed in his or her office
for filing or for record, as he or she is required by law to
keep, shall be guilty of a misdemeanor and, upon conviction,
shall be fined not less than ten dollars ($10) nor more than
five hundred dollars ( $500)."
Section 2. This act shall become effective on October
1, 2024.
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