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HB401 INTRODUCED
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HB401
SLIN955-1
By Representative Datcher
RFD: Ways and Means General Fund
First Read: 05-Feb-26
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SLIN955-1 02/05/2026 VSM (L)ma 2026-748
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First Read: 05-Feb-26
SYNOPSIS:
Under existing law, a fee is required to record
certain mortgages, deeds of trust, contracts of
conditional sale, or other similar instruments 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 similar instruments 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 similar
instruments 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 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:
"§40-22-2
No mortgage, deed of trust, contract of conditional
sale, or other similar 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 in any real or personal property, 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 such
these 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 probate of this state unless the following privilege
or license taxes shall have been paid upon such the instrument
before the same shall be received for record or for filing:
(1)a. Upon all such instruments which are executed to
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(1)a. Upon all such instruments which are executed to
secure or to evidence the securing of an initial indebtedness
which shall not exceed $100 one hundred dollars ($100) , there
shall be paid the sum of $.15 thirty cents ($0.30) , and upon
all instruments which shall be executed to secure or to
evidence the securing of an initial indebtedness of more than
$100 one hundred dollars ($100) , there shall be paid the sum
of $.15 thirty cents ($0.30) for each $100 one hundred dollars
($100) of such the initial indebtedness or fraction thereof of
it.
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 $.15 thirty cents ($0.30)
for each $100 one hundred dollars ($100) of such the initial
indebtedness or fraction thereof of it and the procedures set
forth in paragraphs a, b, and c (2) a., b., and c. of
subdivision (2) of this section shall be applicable; or, in
lieu thereof of, (ii) there shall be paid the sum of $.15
thirty cents ($0.30) for each $100 one hundred dollars ($100)
of maximum principal indebtedness, or fraction thereof of it ,
to be secured by such the 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 $.15 thirty cents ($0.30) for each $100 one
hundred dollars ($100) of maximum principal indebtedness, or
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hundred dollars ($100) of maximum principal indebtedness, or
fraction thereof of it , to be secured by such the instrument
at any one time as stated in the instrument or any amendment
thereto of it , 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 related 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 such the 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 the
instrument or upon the petition of the agent or attorney of
such the 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 such the instrument is offered and shall endorse its
findings on such the instrument. Upon the presentation of such
the instrument with such the endorsement thereon on it , the
probate judge of probate 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 of probate , shall accept the same
for record. The Department of Revenue shall also require the
owner of such the instrument to execute a bond in an amount
sufficient to secure to the state the privilege tax to become
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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 the bond to be
approved by the Department of Revenue and payable to the State
of Alabama and conditioned that the owner of such the
instrument will promptly report to said the Department of
Revenue and to the probate judge of probate of the county
where said the instrument is first filed for record, whenever
such the owner or his or her successor in interest incurs any
additional indebtedness thereunder, and the amount so
incurred; and that the said owner of such the instrument will
pay or cause to be paid to the probate judge of probate of the
county in which said the 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 the instrument will report to the said probate judge of
probate 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 the instrument
to such the 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
the 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 said the term of five
years, the owner of the instrument offered for record shall
execute such the further bond as may be required by the
Department of Revenue covering the succeeding term of five
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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 such the instrument has not been incurred with
like condition and in such the 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 such the instrument, in
lieu of the foregoing procedures, may certify the amount of
indebtedness presently incurred, and the probate judge of
probate 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 of probate , 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 the instruments as described hereinabove shall
report to the appropriate probate judge of probate the amount
of additional indebtedness incurred under the instrument and
pay any tax required upon the additional indebtedness.
c. Each probate judge of probate 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
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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
due on the amount of indebtedness not certified to the probate
judge of probate . 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
State 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 of probate in addition to the tax for recording
the instrument as a deed before recording the same it, 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 such
the 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
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by, an instrument previously filed, upon the filing of which
the taxes provided by law have been paid or which was were
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.
(5) Upon the filing for record of such the instrument
and upon the payment of the tax thereon, the probate judge of
probate 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 of probate or his or her clerk,
such the 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 of probate for recording
such the instrument, and such the certificate of the probate
judge of probate shall be recorded by such probate judge of
probate when such the 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 of probate shall certify thereon that no tax has
been paid and shall stamp in bold letters on the face of said
the instrument "No Tax Collected," and the certificate shall
be recorded with and as a part of such the instrument, and
thereafter such the 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 of probate shall collect the tax levied by
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the probate judge of probate 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 of probate for
recording such the 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 sale or a bond for
title, and no such contract shall be received for record until
such the 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
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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
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 judge 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
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in any instrument which is required under this section to pay
a record privilege tax is located without outside of this
state, the indebtedness upon which the tax shall be paid for
the privilege of recording such the 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
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 the tax shall be paid shall be
ascertained in the following manner: First, the (i) 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
the 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 probate 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
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indebtedness as so ascertained by the Department of Revenue
and of the recording fees of the probate judge of probate ; or,
second, the (ii) The owner of any such instrument or his or
her agent or attorney may have such the instrument recorded by
paying to the probate judge of probate of the county in which
the instrument is offered for record the privilege tax on the
entire amount of the indebtedness secured by such the
instrument, and may thereupon present a petition to the
Department of Revenue within 30 days after such the 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 the valuation and fix and determine such the indebtedness
and shall order the probate judge of probate to refund the
excess of privilege tax collected , and the probate judge of
probate shall comply with such the order; and the tax paid
upon the entire amount of such the indebtedness shall be held
by the probate judge of probate until the Department of
Revenue determines the amount of the indebtedness upon which
such the tax shall be paid.
(9) Any probate judge of probate 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
the instrument, or who shall fail to certify the fact that
such the tax has been paid before filing such the instrument
shall be guilty of a misdemeanor and, upon conviction, shall
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shall be guilty of a misdemeanor and, upon conviction, shall
be fined not less than $10 ten dollars ($10) nor more than
$1,000 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 of probate who fails to keep the
abstract of mortgages or other instruments intended to secure
the payment of moneys monies 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 $10 ten dollars ($10)
nor more than $500 five hundred dollars ($500) ."
Section 2. This act shall become effective on October
1, 2026.
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