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HB496 ENROLLED
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HB496
7BPSCVE-3
By Representatives Drummond, Clarke, Jones (N & P)
RFD: Mobile County Legislation
First Read: 24-Feb-26
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First Read: 24-Feb-26
Enrolled, An Act,
Relating to Class 2 municipalities; to amend Section
11-40-62, as last amended by Act 2025-348, 2025 Regular
Session, and Section 11-40-69, Code of Alabama 1975; to
include adjoining homeowners as interested parties that must
receive notice of municipal lien foreclosures; to allow
adjoining homeowners to have bidding preference in
foreclosures of municipal liens; and to make nonsubstantive,
technical revisions to update the existing code language to
current style.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 11-40-62, as last amended by Act
2025-348, 2025 Regular Session, and Section 11-40-69, Code of
Alabama 1975, are amended to read as follows:
"§11-40-62
As used in this article, the following words and
phrases have the following meanings:
(1) ADJOINING OWNERS. Property owners of owner-occupied
property that share a common property line or boundary with
the property.
(2) INTERESTED PARTY. a. Includes the following
parties:
1. The person who last appears as owner of the real
property in the county office of the judge of probate's
property records.
2. The current mortgagee of record of the property or
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2. The current mortgagee of record of the property or
assignee of record of the mortgagee.
3. The current holder of a beneficial interest in a
deed of trust recorded against the real property.
4. A tax certificate holder.
5. A tax sale purchaser that holds a deed of purchase
in accordance with Section 40-10-29.
6. Any party having an interest in the real property,
or in any part thereof, legal or equitable, in severalty or as
a tenant in common, whose identity and addresses are
reasonably ascertainable from the records of the Class 2
municipality or from records maintained in the county office
of the judge of probate or as revealed by a full title search,
consisting of 50 years or more.
7. Adjoining owners.
b. The term does not include: (i) the holder of the
benefit of an easement that burdens the real property; (ii)
the holder of the benefit or burden of a real covenant that
burdens the real property; or (iii) the holder of the benefit
of a utility easement that burdens the real property , unless
the holders are adjoining owners .
(2)(3) MINIMUM BID PRICE. The price that equals the
redemption amount.
(3)(4) MUNICIPAL CODE LIEN. Any lien that has been
levied against real property by a Class 2 municipality which
is the result of resulting from the nonpayment of any fine,
penalty, abatement cost, or enforcement cost incurred by the
Class 2 municipality related to the enforcement of in
enforcing state or local housing and building codes. The term
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enforcing state or local housing and building codes. The term
includes only those liens that arise out of from a failure to
comply with a Class 2 municipality's ordinance or resolution
enacted pursuant to the authority granted in Article 2 of
Chapter 40 or a failure to comply with any of the following
provisions of the Sections 11-47-117, 11-47-118, 11-47-130,
11-47-131, 11-47-140, Chapter 53, Chapter 53B, or Article 1 of
Chapter 67 Code of Alabama 1975 ., or from the failure to comply
with a Class 2 municipality's ordinance or resolution enacted
pursuant to the authority granted in Article 2 of Chapter 40;
Sections 11-47-117, 11-47-118, 11-47-130, 11-47-131, or
11-47-140, Chapter 53, Chapter 53B, or Article 1 of Chapter
67.
(4)(5) MUNICIPAL CODE LIEN PAYOFF. The principal amount
of a municipal code lien, interest accrued at the rate of
seven and one-half percent per annum from the date the
municipal code lien was filed in the office of the judge of
probate, any fees or costs incurred in the collection of such
a lien under this article including, without limitations, the
cost of title examinations and the publication of notices, and
any other penalties allowable under either state law or under
an ordinance or resolution enacted by the Class 2
municipality.
(5)(6) OWNER OCCUPIED. Real property that is lawfully
occupied as a principal residence and is either: (i) exempt
from ad valorem taxation under Sections 40-9-19, 40-9-19.1,
40-9-20, and 40-9-21; or (ii) lawfully occupied by the family
of a deceased individual who is eligible for an exemption
under these sections but has not yet been granted the
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under these sections but has not yet been granted the
exemption. that is any of the following:
a. A homestead as described in Section 40-9-19.
b. Exempt from ad valorem taxation under Sections
40-9-19.1, 40-9-20, and 40-9-21.
c. Eligible for the designations listed in paragraph a.
or b., but which has not yet been granted such designation and
which is lawfully occupied by the family of a deceased
individual.
(6)(7) REDEMPTION AMOUNT. The sum of: (i) the full
amount of the municipal code lien payoff for each municipal
code lien on which the Class 2 municipality is seeking to
foreclose under this article; and (ii) any tax payoff that may
be applicable to the property on which the Class 2
municipality is seeking to foreclose under this article.
(7)(8) TAX CERTIFICATE HOLDER. Any of the following:
a. A tax sale purchaser that holds a certificate of
purchase in accordance with Section 40-10-19.
b. The state, where if it has accepted and recorded a
certificate of purchase obtained at a tax sale in accordance
with Section 40-10-20.
c. Any party to which a certificate of purchase
obtained at a tax sale has been assigned in accordance with
Section 40-10-21.
d. The purchaser or assignee of a tax lien certificate
as described in Section 40-10-187.
(8)(9) TAXES. Those taxes assessed against real
property by either the State of Alabama, the county in which
the real property is situated, or the Class 2 municipality
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the real property is situated, or the Class 2 municipality
which that are delinquent, as defined in Section 40-11-4 or
11-51-2, as of the date a proceeding under this article is
commenced or at any time before final resolution of the same
proceeding . The term also includes any taxes assessed against
real property which are unpaid from any previous year and any
amounts required for redemption under Section 40-10-82,
40-10-120, or 11-51-23. As provided in Section 11-51-6, a lien
for taxes shall be superior to all other liens, including
municipal code liens.
(9)(10) TAX PAYOFF. Any and all amounts necessary to
satisfy any claims for delinquent taxes assessed against the
real property on which the Class 2 municipality is seeking to
foreclose under this article. Those amounts shall include:
a. If the taxes associated with the property are
delinquent as defined in Section 40-11-4 or 11-51-2, but the
property has not yet been sold for taxes, the full amount of
delinquent taxes, costs, fees, and charges due to the county
tax collector in accordance with Section 40-5-8;
b. If the property has been sold for taxes to the
state, those amounts required for redemption and described in
Sections 40-10-83, 40-10-120, 40-10-121, and 40-10-122, except
that when a Class 2 municipality is the prevailing bidder, the
tax payoff amount shall be the lesser of these amounts or the
amount as determined by Section 40-10-132(a)(2)
40-10-132(b)(2) ;
c. If the property has been sold for taxes to a party
other than the state, those amounts required for redemption
and described in Sections 40-10-83, 40-10-120, 40-10-121, and
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and described in Sections 40-10-83, 40-10-120, 40-10-121, and
40-10-122; and
d. If a tax lien has been sold by a county in
accordance with the provisions of Section 40-10-182, the
amount required for redemption in accordance with Section
40-10-193."
"§11-40-69
(a) Any municipal ordinance enacted pursuant to this
article shall include an avenue for input by adjoining
property owners to participate in the rehabilitation and use
of the property subject to this article.
(b) For all sales conducted pursuant to Section
11-40-68, the municipality shall establish procedures that
allow adjoining owners to submit bids before any public
auction. Bids shall be accompanied by an affidavit or
declaration stating: (i) the bidder is the owner-occupant of a
property that shares a common property line or border with the
property being bid on; and (ii) either the bidder is exempt
from ad valorem taxes under Sections 40-9-19, 40-9-19.1,
40-9-20, or 40-9-21, or the bidder is a family member of a
deceased individual and is eligible for an exemption from ad
valorem taxes under these sections but has not yet received
the exemption. If bids are received, the municipality shall
accept the highest bid from adjoining owners and cancel the
public auction. The winning bid shall be due immediately upon
acceptance. If there are no bids from adjoining owners, a
public sale shall proceed pursuant to Section 11-40-68. "
Section 2. This act shall become effective on October
1, 2026.
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1, 2026.
________________________________________________
Speaker of the House of Representatives
________________________________________________
President and Presiding Officer of the Senate
House of Representatives
I hereby certify that the within Act originated in and
was passed by the House 17-Mar-26, as amended.
John Treadwell
Clerk
Senate 02-Apr-26 Passed
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