Alabama 2024 2024 Regular Session

Alabama Senate Bill SB9 Introduced / Bill

Filed 01/03/2024

                    SB9INTRODUCED
Page 0
SB9
65NR33-1
By Senator Coleman-Madison
RFD: County and Municipal Government
First Read: 05-Feb-24
PFD: 03-Jan-24
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6 65NR33-1 12/11/2023 SLU (L)bm 2023-2880
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PFD: 03-Jan-24
SYNOPSIS:
This bill would authorize Class 1 municipalities
to petition for judicial in rem foreclosure of
municipal code enforcement and nuisance abatement liens
on property that is not owner-occupied.
This bill would also authorize Class 1
municipalities to recover the amount of unpaid
municipal code and nuisance abatement liens and the
cost of municipal code enforcement upon the
court-ordered sale of property that is not
owner-occupied.
A BILL
TO BE ENTITLED
AN ACT
Relating to Class 1 municipalities; to authorize Class
1 municipalities to enforce local and state building
maintenance regulations by judicial in rem foreclosure of
municipal code enforcement and nuisance abatement liens on
certain property; and to authorize Class 1 municipalities to
recover the amount of unpaid municipal code and nuisance
abatement liens and the cost of municipal code enforcement
upon the court-ordered sale of certain property.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
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BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. For purposes of this act, the following
terms have the following meanings:
(1) INTERESTED PARTY. Any of the following:
a. The person who last appears as owner of a particular
real property in the office of the judge of probate's property
records.
b. The current mortgagee of record of the real property
or assignee of record of the mortgagee.
c. The current holder of a beneficial interest in a
deed of trust recorded against the real property.
d. A tax certificate holder.
e. A tax sale purchaser that holds a deed of purchase
in accordance with Section 40-10-29, Code of Alabama 1975.
f. A tax lien purchaser that holds a tax lien
certificate in accordance with Section 40-10-187, Code of
Alabama 1975.
g. Any party having an interest in the real property,
in whole or in part, legal or equitable, in severalty or as
tenant in common, whose identity and address is reasonably
ascertainable from the records of the Class 1 municipality or
records maintained in the county office of the judge of
probate or as revealed by a full title search, consisting of
60 years or more.
h. An interested party shall not include the holder of
the benefit of an easement that burdens the real property, the
holder of the benefit or burden of a real covenant that
burdens the real property, or the holder of the benefit of a
utility easement that burdens the real property.
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utility easement that burdens the real property.
(2) MINIMUM BID PRICE. The price that equals the
redemption amount.
(3) MUNICIPAL CODE LIEN. Any lien that has been levied
against real property by a Class 1 municipality due to the
nonpayment of any fine, penalty, abatement cost, assessment,
or enforcement cost incurred by a Class 1 municipality related
to the enforcement of state or local housing and building
codes or a lien arising from the abatement of nuisances by the
Class 1 municipality. The term shall apply only to those liens
that arise out of a failure to comply with any of the
following or from the failure to comply with a Class 1
municipality's ordinances enacted pursuant to the authority
granted in any of the following: 
a. Article 2 of Chapter 40 of Title 11, Code of Alabama
1975.
b. Sections 11-47-117 and 11-47-118, Code of Alabama
1975.
c. Sections 11-47-130, 11-47-131, and 11-47-140, Code
of Alabama 1975.
d. Chapter 53 of Title 11, Code of Alabama 1975.
e. Chapter 53B of Title 11, Code of Alabama 1975.
f. Article 4 of Chapter 67 of Title 11, Code of Alabama
1975.
g. Section 45-37A-53, Code of Alabama 1975.
(4) MUNICIPAL CODE LIEN PAYOFF. An amount equal to the
sum of the following:
a. The principal amount of a municipal code lien.
b. Interest accrued at the rate of six percent per
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b. Interest accrued at the rate of six percent per
annum from the date the municipal code lien was filed in the
judge of probate's office unless a different rate and date of
accrual is specified by statute. 
c. Any fees or costs incurred in the collection of a
lien under this act including, without limitation, the cost of
title examinations and publication of notices.
d. Any attorney fees, filing fees, and court costs
incurred in a judicial in rem foreclosure proceeding under
this act.
e. Any other penalties authorized under state law or
pursuant to an ordinance enacted by a Class 1 municipality.
(5) OWNER-OCCUPIED. Real property that is lawfully
occupied as a principal residence and that is any of the
following:
a. A homestead as provided in Section 40-9-19, Code of
Alabama 1975.
b. Exempt from ad valorem taxation under Sections
40-9-19.1, 40-9-20, or 40-9-21, Code of Alabama 1975.
c. Eligible for, but not yet granted, either of the
designations set forth in paragraph a. or b.
d. Lawfully occupied by a family member of a deceased
individual.
(6) REDEMPTION AMOUNT. The sum of the following:
a. The full amount of the municipal code lien payoff
for each municipal code lien on which a Class 1 municipality
is seeking to foreclose under this act.
b. Any tax payoff that may be applicable to the
property on which the Class 1 municipality is seeking to
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property on which the Class 1 municipality is seeking to
foreclose under this act.
(7) TAX CERTIFICATE HOLDER. Any of the following:
a. A tax sale purchaser that holds a certificate of
purchase pursuant to Section 40-10-19, Code of Alabama 1975.
b. The state, in the event that it has accepted and
recorded a certificate of purchase obtained at a tax sale
pursuant to Section 40-10-20, Code of Alabama 1975.
c. A county, in the event that a tax lien not sold at a
tax lien auction of real property situated in the county is
retained by the county pursuant to Section 40-10-199, Code of
Alabama 1975.
d. Any party to which a certificate of purchase
obtained at a tax sale has been assigned pursuant to Section
40-10-21, Code of Alabama 1975.
e. The purchaser or assignee of a tax lien certificate
as provided in Section 40-10-187, Code of Alabama 1975.
(8) TAX PAYOFF. All amounts necessary to satisfy any
claims for delinquent taxes assessed against the real property
on which a Class 1 municipality is seeking to foreclose under
this act. These amounts shall include all of the following:
a. If the taxes associated with the property are
delinquent pursuant to Sections 40-11-4 or 11-51-2, Code of
Alabama 1975, but the property has not yet been sold for
taxes, then the full amount of delinquent taxes, costs, fees,
and charges due to the county tax collector pursuant to
Section 40-5-8, Code of Alabama 1975.
b. If the property has been sold to the state for
taxes, then those amounts required for redemption as provided
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taxes, then those amounts required for redemption as provided
in Sections 40-10-83, 40-10-120, 40-10-121, and 40-10-122,
Code of Alabama 1975, except that when a Class 1 municipality
is the prevailing bidder, the tax payoff amount shall be the
lesser of these amounts or the amount provided by Section
40-10-132(a)(2), Code of Alabama 1975.
c. If the property has been sold for taxes to a party
other than the state, then those amounts required for
redemption as provided in Sections 40-10-83, 40-10-120,
40-10-121, and 40-10-122, Code of Alabama 1975.
d. If a tax lien has been sold by a county pursuant to
Section 40-10-182, Code of Alabama 1975, then the amount
required for redemption pursuant to Section 40-10-193, Code of
Alabama 1975.
(9) TAXES. The taxes assessed against real property by
either the state, the county, or a Class 1 municipality in
which the real property is situated which are delinquent
pursuant to Sections 40-11-4 or 11-51-2, Code of Alabama 1975,
as of the date a proceeding under this act is commenced or at
any time before final resolution of the same and shall include
any taxes assessed against real property that are unpaid from
any previous year and any amounts required for redemption
pursuant to Sections 40-10-83, 40-10-120, 40-10-193, or
11-51-23, Code of Alabama 1975. As provided in Section
11-51-6, Code of Alabama 1975, a lien for taxes shall be
superior to all other liens, including municipal code liens.
Section 2. (a) This act applies only to Class 1
municipalities.
(b) This act shall not apply to owner-occupied
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(b) This act shall not apply to owner-occupied
property.
Section 3. (a) Notwithstanding any law to the contrary,
any fees, penalties, and abatement costs imposed against real
property for abatement of nuisances or violations of a Class 1
municipality's housing and building codes adopted pursuant to
state law, other than owner-occupied property, may be enforced
in rem as a lien pursuant to this act.
(b) Unless otherwise specified by law, municipal code
liens may be filed in the judge of probate's office for the
county where the real property is situated.
(c) Every municipal code lien shall be superior to all
other liens except those liens for taxes pursuant to Section
11-51-6, Code of Alabama 1975.
Section 4. (a) A Class 1 municipality may proceed with
judicial in rem foreclosures of municipal code liens in
accordance with this act by enacting an ordinance of the
governing body of the Class 1 municipality where the real
property is situated, which ordinance shall be sufficient
authority for use of this act by the Class 1 municipality to
enforce its municipal code liens.
(b) The ordinance of a Class 1 municipality authorizing
and approving the use of this act shall set forth all of the
following:
(1) The initial effective date for application of these
procedures.
(2) If the Class 1 municipality elects not to apply
these procedures to all real properties as of the same initial
effective date, it shall specify all of the following:
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effective date, it shall specify all of the following:
a. Which real properties are subject to these
procedures.
b. The order in which the real properties shall be
subject to these procedures.
c. The time and manner of determining paragraphs a. and
b.
(3) The explicit exclusion of owner-occupied properties
from the application of the judicial in rem foreclosure
procedures authorized under this act.
(4) Any other matters related to code enforcement that
the Class 1 municipality designates for administrative
regulation.
(c) The provisions of a Class 1 municipality ordinance
and administrative regulations issued pursuant to the
ordinance shall not conflict with Sections 5 through 8 of this
act.
(d) Proceedings in accordance with this act are
intended solely to enforce the municipal code lien for real
property subject to the lien and shall not constitute an
action for personal liability of the owner or owners of the
real property to which the lien applies.
(e) The rights and remedies provided in this act are
available solely to the governmental entities authorized by
law to enforce municipal ordinances and shall not extend to
any nongovernmental transferee of municipal code liens.
(f) A Class 1 municipality that has adopted the
provisions of this act by ordinance and that seeks to enforce
a municipal code lien through the sale of real property shall
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a municipal code lien through the sale of real property shall
utilize the judicial in rem proceedings authorized under this
act as the sole remedy for the enforcement through the sale of
real property.
(g) The enforcement proceedings authorized under this
act may be initiated only by a Class 1 municipality.
(h) A municipal code lien shall not include any lien
that has previously been certified to the tax collector of the
county for inclusion on the property tax bill associated with
the real property, such as those liens certified pursuant to 
Section 11-67-66 or Section 45-37A-53, Code of Alabama 1975,
or any other applicable local act.
Section 5. (a)(1) After a municipal code lien has been
recorded with the office of the judge of probate for the
county in which the real property is situated, the governing
body of a Class 1 municipality may identify by resolution
those properties on which to commence a judicial in rem
foreclosure pursuant to this act, provided, however, that
those properties the Class 1 municipality identifies as
owner-occupied shall not be subject to judicial in rem
foreclosure.
(2) A Class 1 municipality shall not file a petition
for judicial in rem foreclosure pursuant to this act for a
period of six months following the date upon which the
municipal code lien is recorded in the office of the judge of
probate. A petition for judicial in rem foreclosure may
include any other municipal code lien that has been filed
against the subject property prior to the date the petition is
filed. After enforcement proceedings have commenced, the
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filed. After enforcement proceedings have commenced, the
enforcement proceedings may be amended to include any
subsequently arising municipal code liens and, if applicable,
any taxes.
(b) If the property on which a Class 1 municipality is
seeking to foreclose is subject to taxes, then at least 60
days prior to the filing of the petition the Class 1
municipality shall notify all other taxing entities within the
jurisdiction of the Class 1 municipality and the state of its
intention to file a petition for judicial in rem foreclosure
of the real property on which a municipal code lien exists.
Upon notification, the county tax collector shall provide the
tax payoff amount.
(c) A Class 1 municipality shall initiate an action to
foreclose a code enforcement lien pursuant to this act by
filing a petition with the clerk of the circuit court for the
judicial circuit in which the real property is situated. The
petition shall be substantially identical in form and content
to the form provided in subsection (j). The case shall be
docketed in the circuit court by the clerk where it shall be a
preferred case. The circuit court in which a petition is filed
under this subsection shall immediately set the date, time,
and place for a hearing on the petition.
(d) Upon filing the petition, a Class 1 municipality
shall record an appropriate lis pendens in the office of the
judge of probate of the county in which the real property is
situated. The lis pendens shall include all of the following
information pertaining to the real property:
(1) The legal description.
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(1) The legal description.
(2) The tax identification number of the real property.
(3) The street address if available.
(4) A statement that the property is subject to
judicial in rem foreclosure proceedings under this act.
(5) A statement that those proceedings may extinguish
any legal interests in the property.
(e) The petition shall be filed against the real
property to which the recorded municipal code lien pertains
and shall provide all of the following pertaining to the real
property:
(1) The identity of the Class 1 municipality.
(2) A legal description.
(3) The tax identification number of the property.
(4) The street address if available.
(5) A description of the municipal code lien that is
being foreclosed.
(6) The principal amount of the municipal code lien and
any applicable interest and penalties.
(7) The principal amount of any additional municipal
code liens against the property and any applicable interest
and penalties in accordance with subsection (a).
(8) The year or years for which the taxes are
delinquent, if any.
(9) The principal amount of the taxes and any interest
and penalties.
(10) The tax payoff amount.
(11) A statement that upon final sale in accordance
with this section and payment of any applicable tax payoff
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with this section and payment of any applicable tax payoff
amount, an interested party's rights of redemption under
Chapter 10 of Title 40, Chapter 51 of Title 11, Section
11-53B-10, or Section 11-48-54, Code of Alabama 1975, shall be
extinguished.
(12) The names and addresses of all interested parties
to whom copies of the petition shall be sent pursuant to
subsection (f).
(13) A deraignment of title for a period of at least 60
years before filing the complaint, unless the court otherwise
directs, setting forth the book and page of the records where
any instrument affecting the title may be recorded.
(f)(1) A Class 1 municipality shall mail copies of the
petition by both certified mail, return receipt requested, and
by regular mail to all interested parties whose identities and
addresses are reasonably ascertainable. 
(2) Copies of the petition shall also be mailed by
first-class mail to the real property address to the attention
of the occupants of the property, if any. 
(3) In addition, notice shall be physically posted on
the real property and shall include the following statement:
"THIS PROPERTY IS SUBJECT TO A JUDICIAL IN REM FORECLOSURE
ACTION AND MAY BE TRANSFERRED TO [NAME OF CLASS 1
MUNICIPALITY] OR ANOTHER PARTY. PERSONS WITH INFORMATION
REGARDING THE CURRENT OWNER OF THE PROPERTY ARE REQUESTED TO
CONTACT [NAME OF CLASS 1 MUNICIPALITY]."
(g) If a Class 1 municipality finds reason to believe
that the real property is owner-occupied after the filing of
the petition, the Class 1 municipality shall immediately seek
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the petition, the Class 1 municipality shall immediately seek
dismissal of its petition.
(h) Within 30 days after filing the petition, a Class 1
municipality shall cause a notice of the filing to be
published once each week for three consecutive weeks in a
newspaper of general circulation in the county in which the
property is located. The notice shall specify the name and
address of the Class 1 municipality and the following
pertaining to the real property:
(1) The legal description.
(2) The tax identification number.
(3) The street address if available.
(4) A description of any applicable municipal code lien
that is being foreclosed.
(5) The principal amount of any municipal code lien and
any interest and penalties.
(6) The applicable period of tax delinquency, if any.
(7) The principal amount of taxes, if any.
(8) Upon deposit by the court of any tax payoff amounts
with the appropriate parties, any rights of redemption
accorded to interested parties under Chapter 10 of Title 40,
Chapter 51 of Title 11, Section 11-53B-10, or Section
11-48-54, Code of Alabama 1975, are extinguished.
(9) The date and place of the filing of the petition.
(i) If the identity of some or all of the individuals
who may have an interest in the real property are unknown, or
if they are minors or individuals of unsound mind, the court
shall appoint a guardian ad litem to represent and defend the
interests of the unknown, minors, or incompetent parties in
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interests of the unknown, minors, or incompetent parties in
the action.
(j) The municipality, by ordinance, may adopt forms to
implement and administer this section.
Section 6. (a)(1) A Class 1 municipality shall request
that a judicial hearing on the petition occur not earlier than
30 days nor later than 90 days following the filing of the
petition. 
(2) At the judicial hearing, any interested party shall
have the right to be heard and to contest the delinquency of
the municipal code lien, the adequacy of the proceedings, the
classification of the real property as owner-occupied, and the
amount of the tax payoff. 
(b) If the court determines that the information set
forth in the petition is accurate, the court shall render its
judgment and shall order all of the following:
(1) The municipal code lien is delinquent.
(2) The amounts of any additional municipal code liens
and taxes described in the petition are delinquent. 
(3) Proper notice has been given to all interested
parties.
(4) The property is not owner-occupied.
(5) The property as described in the petition be sold
in accordance with the provisions of this act.
(6) The sale shall become final and binding immediately
after the sale is conducted in accordance with Section 8.
(c) The order of the court shall provide that the real
property be sold free and clear of all liens, claims, and
encumbrances other than all of the following:
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encumbrances other than all of the following:
(1) Rights of redemption provided under federal law.
(2) Taxes assessed against the property that are due
but not yet delinquent as of the date of the court's order.
(3) Any easement that burdens the property, any real
covenant that burdens the property, and any utility easement
that benefits the property as of the date of the filing of the
municipal code lien on which the Class 1 municipality is
seeking to foreclose under this act.
(d) If at any point in the proceedings the court
determines that the real property is owner-occupied, then the
Class 1 municipality shall seek immediate dismissal of the
proceedings.
Section 7. (a) At any point prior to the conclusion of
the sale described in Section 8(a), any interested party may
redeem the real property from the sale by payment of the
redemption amount. Payment shall be made to the Class 1
municipality. Following receipt of the redemption payment, the
Class 1 municipality shall file for dismissal of the
proceedings.
(b) In the event that the owner of the real property 
pays the redemption amount, the proceedings shall be
dismissed, and the rights and interests of all interested
parties shall remain unaffected.
(c) In the event of a redemption payment by any
interested party other than the owner, the party making the
payment shall possess a lien on the real property for the full
amount of the payment, which lien shall have the same priority
as the municipal code lien described in Section 3(c). The
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as the municipal code lien described in Section 3(c). The
lienholder shall have the right to enforce the lien as
permitted to the holder of any lien under existing law. The
lienholder shall not otherwise succeed to the rights of the
Class 1 municipality or tax certificate holder.
Section 8. (a) Following the hearing and order of the
court in accordance with Section 7, the court shall cause a
sale of the real property to be advertised and conducted by
the court in a manner similar to the procedure described in
Section 40-10-15, Code of Alabama 1975. The sale shall not
occur earlier than 45 days following the date of the order of
the court.
(b)(1) Except as otherwise authorized by law, the
minimum bid price for the sale of the real property shall be
the redemption amount.
(2)a. In the absence of any bid higher than the minimum
bid price, the court or its designee shall bid in for the
property on behalf of the Class 1 municipality or its designee
in an amount equal to the minimum bid price, causing the Class
1 municipality to become the purchaser at the sale pursuant to
Section 7.
b. A bid in on behalf of the Class 1 municipality or
its designee shall be tendered as a credit bid for the portion
of the minimum bid price equal to the municipal code lien
payoff. If the minimum bid price bid in by the Class 1
municipality includes a tax payoff amount, the Class 1
municipality shall tender the amount of the tax payoff to the
court, which, together with the municipal code lien payoff,
shall satisfy the full amount of the minimum bid price.
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shall satisfy the full amount of the minimum bid price.
(c) No party that has an interest in the real property
at the time the petition for foreclosure is filed pursuant to
Section 5 or owner of the real property within the corporate
limits of the Class 1 municipality who has any outstanding
municipal code lien or unremediated citation for violation of
the state and local codes and ordinances shall be eligible to
purchase property at the foreclosure sale.
(d) Payment of the winning bid shall be due immediately
after the sale is conducted. The proceeds of the foreclosure
sale shall be distributed in the following manner:
(1) If the purchaser is a party other than the Class 1
municipality, the court or its designee shall deposit with the
Class 1 municipality the amount of the proceeds equal to the
municipal code lien payoff, less any costs incurred or fees
charged by the office of the judge of probate.
(2) If the purchaser is the Class 1 municipality, then
the Class 1 municipality shall tender to the court an amount
equal to any costs incurred by the court that are included in
the amount of the municipal code lien payoff.
(3) If the minimum bid price includes a tax payoff
amount, the court shall deposit the amounts paid with the
appropriate parties in accordance with Sections 40-5-10,
40-10-128, 40-10-129, and 40-10-193, Code of Alabama 1975, and
any applicable local laws.
(4) In the event that the foreclosure sale price
exceeds the minimum bid price, the surplus shall be
distributed by the court to the interested parties, including
the owner, as their interests appear and in the order of
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the owner, as their interests appear and in the order of
priority in which their interests exist.
(e) Upon deposit by the court of any tax payoff amounts
with the appropriate parties as described in subdivision
(d)(3), any and all rights of redemption accorded to
interested parties under Chapter 10 of Title 40, Chapter 51 of
Title 11, Section 11-53B-10, or Section 11-48-54, Code of
Alabama 1975, are extinguished.
(f) From and after the moment of the sale, the sale
shall be final and binding.
(g) Within 90 days following the date of the sale, the
court shall cause to be executed a deed to the real property
identified in the petition. Upon execution, the court shall
cause the deed to be recorded with the office of the judge of
probate.
(h) Within 90 days following the date of the sale, the
Class 1 municipality shall file a report of the sale with the
clerk of the circuit court, which report shall identify
whether a sale took place, the foreclosure sale price, and the
identity of the purchaser.
(i) The municipality by ordinance, may adopt forms to
implements and administer this section.
Section 9. This act shall become effective on October
1, 2024.
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