Class 2 municipalities; municipal lien process revised

HB529 ENROLLED
Page 0
HB529
7BCG82E-2
By Representative Drummond (N & P)
RFD: Mobile County Legislation
First Read: 26-Feb-26
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First Read: 26-Feb-26
Enrolled, An Act,
Relating to Class 2 municipalities; to amend Sections
11-40-65, 11-40-67, and 11-40-68, Code of Alabama 1975; to
remove the requirement to notify state and local taxing
authorities, other than the local ad valorem tax collector, of
the municipalities' intent to foreclose on a municipal lien;
to remove the requirement to use statutory language for
petitions for judicial in rem foreclosure and foreclosure
deeds; to authorize a Class 2 municipality to adopt its own
forms for petitions to foreclose and foreclosure deeds; to
authorize the municipality to proceed with a foreclosure sale
30 days from the date of the judicial order directing the sale
instead of 45 days; to authorize the circuit court to execute
foreclosure deeds within 30 days after the foreclosure sale
instead of 90 days; to authorize the municipality to file a
foreclosure report with the circuit clerk within 30 days of
the foreclosure sale instead of 90 days; 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. This act shall apply only to Class 2
municipalities.
Section 2. Sections 11-40-65, 11-40-67, and 11-40-68,
Code of Alabama 1975, are amended to read as follows:
"§11-40-65
(a) After a municipal code lien has been recorded with
the office of the probate judge judge of probate of the county
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the office of the probate judge judge of probate of the county
in which the real property lies, the Class 2 municipality may
identify those properties on which to commence a judicial in
rem foreclosure in accordance with this article, except that
those properties identified by the Class 2 municipality
identifies as owner occupied owner-occupied shall not be
subject to judicial in rem foreclosure under this article. The
Class 2 municipality shall not file a petition for judicial in
rem foreclosure in accordance with this article for a period
of six months following the date upon which the municipal code
lien is recorded in the office of the probate judge judge of
probate . A petition for judicial in rem foreclosure may
include any other municipal code lien that has been filed
prior to the date the petition is filed. After enforcement
proceedings have commenced in accordance with this article,
the enforcement proceedings may be amended to include any
subsequently arising municipal code liens and, if applicable,
any and all taxes as defined in this article.
(b) If the property on which the Class 2 municipality
is seeking to foreclose under this article is subject to taxes
as defined in this article, then at least 60 days prior to the
filing of the petition, the Class 2 municipality shall notify
the county's ad valorem tax collecting official all other
taxing agencies within the jurisdiction of the Class 2
municipality, and the State of Alabama of the Class 2
municipality's intention to file a petition for judicial in
rem foreclosure of the real property on which a municipal code
lien exists. Upon notification, the Revenue Commissioner
county's ad valorem tax collector shall provide the tax payoff
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county's ad valorem tax collector shall provide the tax payoff
amount to the Class 2 municipality.
(c) The Class 2 municipality shall record in the
appropriate lis pendens record in the office of the judge of
probate of the county in which the real property is located, a
notice of his or her its intent to file a judicial in rem
foreclosure action. The notice shall include a legal
description of the property, the property's street address of
the property , if available, a statement that the property is
subject to judicial in rem foreclosure proceedings under this
article, and a statement that those proceedings may extinguish
any legal interests in the property.
(d) Simultaneous with the filing of his or her the
notice of intent to file a judicial in rem foreclosure action,
the Class 2 municipality shall file a petition with the clerk
of the circuit court for the judicial circuit in which the
real property is located , the petition shall have form and
content substantially identical to that form as provided in
subsection (i) .
(e) The petition shall be filed against the real
property against which the municipal code lien has been
recorded and shall provide all of the following:
(1) The identity of the Class 2 municipality.
(2) The real property address.
(3) A description of the real property.
(4) The tax identification number of the real property.
(5) The municipal code lien which that is being
foreclosed.
(6) The principal amount of the municipal code lien
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(6) The principal amount of the municipal code lien
together with applicable interest and penalties.
(7) The principal amount of any additional municipal
code liens , if any, in accordance with subsection (a) together
with applicable interest and penalties in accordance with
subsection (a) if any .
(8) The year or years for which the taxes are
delinquent, if any.
(9) The principal amount of the taxes together with
interest and penalties, if any.
(10) The tax payoff amount.
(11) A statement that upon final sale , in accordance
with this article and payment of the tax payoff amount, if
applicable, an interested party's rights of redemption under
Title 40 , or under Chapter 10 or this title, Chapter 51 of
this title , shall be extinguished.
(12) The names and addresses of all interested parties
to whom copies of the petition are to be sent in accordance
with subsection (f).
(f) The Class 2 municipality shall mail copies of the
petition by both certified mail, return receipt requested, and
by regular mail to all interested parties whose identity and
address are reasonably ascertainable. 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. 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 2 MUNICIPALITY] OR
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AND MAY BE TRANSFERRED TO [NAME OF CLASS 2 MUNICIPALITY] OR
ANOTHER PARTY. PERSONS WITH INFORMATION REGARDING THE CURRENT
OWNER OF THE PROPERTY ARE REQUESTED TO CONTACT [NAME OF CLASS
2 MUNICIPALITY]."
(g) If the Class 2 municipality finds reason to believe
that the real property is owner occupied owner-occupied after
the filing of the petition, the Class 2 municipality shall
immediately seek dismissal of its petition.
(h) Within 30 days of the filing of the petition, the
Class 2 municipality shall cause a notice of the filing of the
petition 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. Such notice shall specify:
(1) The name and address of the Class 2 municipality.
(2) The real property address.
(3) A description of the real property.
(4) The tax identification number of the real property.
(5) Any applicable municipal code lien upon which is
being foreclosed upon.
(6) The principal amount of any municipal code lien
together with interest and penalties.
(7) The applicable period of tax delinquency, if any.
(8) The principal amount of taxes, if any.
(9) Upon deposit with the appropriate parties by the
court of the tax payoff amounts, if any, any and all rights of
redemption accorded to interested parties under Title 40 , or
under Chapter 10 or under this title, Chapter 51 of this
title, are extinguished.
(10) The date and place of the filing of the petition.
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(10) The date and place of the filing of the petition.
(i) The Class 2 Municipality, by local ordinance, may
adopt forms and policies to implement and administer this
section. The petition for judicial in rem foreclosure shall be
in substantially the following form:
IN THE CIRCUIT COURT FOR__________ COUNTY
STATE OF ALABAMA-
Petitioner: )
[Class 2 municipality] )
Name, Address, )
Telephone Number )
v. Civil Action No: ________
Respondents:
__________, ACRES OF LAND LYING )
AND BEING IN __________________, )
_____________COUNTY, ALABAMA )
__________________________________ )
__________________________________ )
(Address of Property)
And
_______________________________ )
Name and mailing address of Owner
PETITION FOR JUDICIAL IN REM FORECLOSURE COMES NOW
(Petitioner) and petitions this Court for judicial in rem
foreclosure in accordance with Section _________ of the Code
of Alabama 1975, by showing this Court as follows:
1. _________ is the owner of certain real property
located at ________ (the "Property") having a tax
identification number of _____. (A legal description of the
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identification number of _____. (A legal description of the
Property is attached hereto as Exhibit "A" and by this
reference incorporated herein).
2. The municipal code lien(s) recorded against the
Property by City of _____ for nonpayment of costs incurred,
penalties, or fees arising from violations of the City of
_______'s Code of Ordinances related to the Property, the
total amount of which is $ ________ (amount includes principal
amount of the municipal code lien and any accrued interest and
penalties as of this date) have not been paid. (An itemized
list of any municipal code lien recorded against the Property
and the subject of this Petition is attached hereto as Exhibit
"B" and by this reference incorporated herein.)
3. The taxes assessed against the Property by
City/County of _____ or by the State of Alabama for the
year(s) _____ in the amount of $ ________ (amount includes
principal amount of taxes owed and any accrued interest and
penalties as of this date) [have] [have not] been paid.
4. Attached hereto as Exhibit "C" is a list of the
names and addresses of interested parties also receiving a
copy of this Petition by first class mail.
5. Occupants of the Property shall be served by mailing
the petition by first-class mail to the attention of the
occupants at the above-listed Property address.
6. Based upon the information and belief of the
Petitioner the Property is not owner-occupied property.
7. The Petition has also been posted on the Property in
accordance with Section 11-4-54(f), Code of Alabama 1975.
8. Simultaneously with the filing of this Petition,
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8. Simultaneously with the filing of this Petition,
Petitioner has filed a lis pendens in the appropriate office
of the judge of probate.
WHEREFORE, Petitioner demands (1) a hearing before the
Circuit Court in _____ County (the "Court") and (2) a judgment
by the Court stating that (a) the municipal code lien recorded
against the Property is delinquent and (b) that notice has
been given to all interested parties, and an order that the
Court may cause the Property to be sold at public outcry in a
similar manner as that required in Section 40-10-15 of the
Code of Alabama.
CITY OF ______________
By: ___________________
Its: ___________________
NOTICE TO RESPONDENTS AND ALL INTERESTED PARTIES
This petition serves as notice to the respondents and
all interested parties that (1) each party is presumed to own
or have a legal interest in the property, (2) that foreclosure
proceedings have been commenced because of the failure to pay
the municipal code lien cited above, and (3) foreclosure will
result in the loss of ownership of the Property and all rights
or interests of all interested parties, including any and all
rights or redemption accorded to by interested parties under
Title 40, Chapter 10 and Title 11, Chapter 5, Code of Alabama
1975.
To avoid loss of ownership or any interest in the
property, payment of the full amount of the municipal code
lien, penalties, interest, and costs, plus payment of the full
amount of any property taxes that are due or delinquent, if
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amount of any property taxes that are due or delinquent, if
any, including any related penalties, interest, and costs must
be paid to the _____ office located at _____ by _____date.
Respondents and all interested parties are also reminded that
each of you may wish to contact an attorney to protect your
rights.
A hearing on the above matter shall take place before
the Circuit Court of _____ County no earlier than 30 days
after the filing of this petition. To determine the exact time
and date of such hearing, please call the office of the
Circuit Court of _____ County.
This _____ day of _____, _____.
__________________________
Circuit Clerk of ______ County
EXHIBIT A
Description of the Property
Together with all rights, title, and interest running
with the above-described property but not taxed under a
separate tax reference number as delineated on the tax maps of
the petitioner for the year(s) for the municipal code liens
being foreclosed.
EXHIBIT B
Names and Addresses of Interested Parties "
"§11-40-67
(a) At any point prior to the moment of the sale, any
interested party may redeem the real property from the sale by
payment of paying the redemption amount. Payment shall be made
to the Class 2 municipality. Following Upon receipt of the
payment, the Class 2 municipality shall file for dismissal of
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payment, the Class 2 municipality shall file for dismissal of
the proceedings . If any delinquent ad valorem property taxes,
interest, or fees are included in the redemption amount, the
Class 2 municipality shall remit those amounts to the county's
tax collecting official .
(b) In the event of the payment by If the owner of the
real property makes payment of 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 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 discussed in subsection (b) of Section
11-40-63 (b). 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 2 municipality or the tax certificate holder."
"§11-40-68
(a) Following the hearing and order of the court in
accordance with Section 11-40-66, the court shall order the
Class 2 municipality to cause a sale of sell the real
property . to The sale shall be advertised in a newspaper of
general circulation in the county where the land is
located. and conducted by the court in a manner similar to that
procedure contemplated by Section 40-10-15. The sale shall not
occur earlier than 45 30 days following the date of the order
of the court.
(b) Except as otherwise authorized by law, the minimum
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(b) Except as otherwise authorized by law, the minimum
bid price for the sale of the real property shall be the
redemption amount.
(1) In the absence of any bid higher than the minimum
bid price, the court or its designee shall submit a bid in for
the real property on behalf of the Class 2 municipality or its
designee in an amount equal to the minimum bid price, thereby
causing the Class 2 municipality to become the purchaser at
the sale pursuant to Section 11-40-66.
(2) A bid in submitted on behalf of the Class 2
municipality or its designee shall be tendered as a credit bid
for that part of the minimum bid price equal to the municipal
code lien payoff , as defined in this article. If the minimum
bid price bid in submitted by the Class 2 municipality
includes a tax payoff amount , as defined in this article, the
Class 2 municipality shall tender the amount of the tax payoff
to the court ., which, together Together with the municipal
code lien payoff, the tax payoff shall satisfy the full amount
of the minimum bid price.
(c) 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 2
municipality, the court or its designee shall deposit with the
Class 2 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 2 municipality, then
the Class 2 municipality shall tender to the court an amount
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the Class 2 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 If the purchaser is a party other than the Class
2 municipality, and the minimum bid price includes a tax
payoff amount, the court shall deposit the amounts paid with
the appropriate parties in accordance with the following
Sections 40-5-10, 40-10-128, 40-10-129, and 40-10-193, and any
applicable local acts.
(4) In the event that the foreclosure sale price
exceeds the minimum bid price at the foreclosure sale, the
surplus shall be distributed by the court to the interested
parties, including the owner, as their interests appear and in
the order of priority in which their interests exist.
(d) Upon deposit with the appropriate parties by the
court of the tax payoff amounts, if any, described in
subsection (c)(3), any and all rights of redemption accorded
to interested parties under Title 40 , or under Chapter 10 or
under this title, Chapter 51 of this title , are extinguished.
(e) From and after the moment of the sale, the sale
Once the sale is completed, the sale shall be considered final
and binding.
(f) Within 90 30 days following the date of the sale,
the court shall cause to be executed a deed to the real
property identified in the petition to be executed . Upon
execution, the court shall cause the deed to be recorded with
the office of the judge of probate.
(g) Within 90 30 days following the date of the sale,
the Class 2 municipality shall file a report of the sale with
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the Class 2 municipality shall file a report of the sale with
the clerk of the circuit court, which report shall identify
identifying whether a sale took place, the foreclosure sale
price, and the identity of the purchaser.
(h) The Class 2 municipality, by local ordinance, may
adopt forms and policies to implement and administer this
section. The form of the deed provided for in subsection (e)
shall be substantially as follows:
When recorded please return to: Cross-reference:
_________________________ Deed Book ____, Page
_________________________ _______ County, Alabama
Records
STATE OF ALABAMA
COUNTY OF __________
JUDICIAL IN REM FORECLOSURE DEED
This indenture (the "deed") made this _____ day of
_____, _____, by and between _____, a _____ ("grantor") and
_____, a _____ ("grantee").
WITNESSETH
WHEREAS, on the _____ day of _____, _____, during the
legal hours of sale, grantor did expose for sale at public
outcry to the highest bidder for cash before the courthouse
door in _____ County, Alabama, the property (as hereinafter
defined) at which sale grantee was the highest and best bidder
for the sum of $_____ and the property was then and there sold
to grantee for the sum. The sale was made by grantor pursuant
to and by virtue of the power and authority granted to it in
that certain order of the court granted _____, _____, Case No.
_____, Circuit Court of _____ County, Alabama, (the "order").
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_____, Circuit Court of _____ County, Alabama, (the "order").
Said sale was made after advertising the time, place, and
terms thereof in the _____, published in _____, Alabama, in
the aforesaid county, and being the publication in which the
[Class 2 municipality's] advertisements for the county are now
published, once a week for three consecutive weeks prior to
the sale on the _____, _____, _____, and _____ of _____,
_____, and the advertisement in all respects complied with the
requirements of Section _____ of the Code of Alabama 1975.
Notice of the time, place, and terms of the sale of the
property was given pursuant to Section _____ , Code of Alabama
1975. Sale was made for the purpose of paying the municipal
code lien(s) owed to _____, the interest and penalties on the
indebtedness, the expenses of the sale including attorneys'
fees, all of which were mature and payable because of failure
of the owner to pay the amount owed and reflected in the
municipal code lien.
NOW, THEREFORE, grantor, acting under and by virtue of
the order and pursuant to Section _____, Code of Alabama 1975,
for and in consideration of the facts hereinbefore recited,
has bargained, sold, and conveyed and does hereby bargain,
sell, and convey unto grantee, its successors and assigns, the
following described property (herein referred to as the
"property"); to wit:
All that tract or parcel of land lying and being in
Land Lot _____ of the _____ District, _____ County, Alabama,
and being more particularly described on Exhibit "A" attached
hereto and by this reference made a party hereof.
This deed is given subject to all restrictions,
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This deed is given subject to all restrictions,
easements, rights-of-way, declarations, and covenants, if any,
to which the deed is junior and inferior in terms of priority.
TO HAVE AND TO HOLD, the property unto grantee, its
successors and assigns in fee simple.
IN TESTIMONY WHEREOF, I have hereunto set my hand and
seal, this ______ day of _____________________, 20_____.
____________________________
Judge of the Circuit Court of ______ County
THE STATE OF ALABAMA,
__________________________ COUNTY.
I, _______________________________, a
____________________ in and for the County, in the State of
Alabama, hereby certify that _________________________ whose
name as Judge of the Circuit Court of ________ County is
signed to the foregoing conveyance and who is known to me,
acknowledged before me, on this day, that, being informed of
the contents of this conveyance, he or she, in his or her
capacity as Judge of the Circuit Court of ___________ County,
executed the same voluntarily, on this day.
Given under my hand, this _______ day of
_________________________, 20______.
_____________________
EXHIBIT
Description of the Property
Together with all right, title, and interest running
with the above-described property but not taxed under a
separate tax reference number as delineated on the tax maps of
the petitioner for the year(s) for the municipal code lien
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the petitioner for the year(s) for the municipal code lien
being foreclosed. "
Section 3. 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.
John Treadwell
Clerk
Senate 31-Mar-26 Passed
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