SB286 By Senator Pittman RFD Fiscal Responsibility and Economic Development Rd 1 23-FEB-16

SYNOPSIS: Under existing law, the interest to be paid through any litigation related to properties that are the subject of a tax sale is currently 12 percent. Additionally, redemption of properties sold at a tax sale, including the amount in excess of taxes due that is paid by the tax sale purchaser at the time of the tax sale purchase, is 12 percent.

This bill would reduce the interest to be paid through any litigation related to properties that are the subject of a tax sale or the redemption of properties sold at a tax sale, including the amount paid in excess of taxes due that is paid by the tax sale purchaser, to seven and one-half percent.

A BILL TO BE ENTITLED AN ACT

To amend Sections 40-10-75, 40-10-76, 40-10-77, 40-10-83, 40-10-121, and 40-10-122, Code of Alabama 1975, to reduce interest due or paid on properties subject to tax sale to seven and one-half percent.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:Section 1. Sections 40-10-75, 40-10-76, 40-10-77, 40-10-83, 40-10-121, and 40-10-122, Code of Alabama 1975, are amended to read as follows:

§40-10-75.

"If, in In any action brought related to taxes delinquent on or after January 1, 2017, the interest rate on any amounts awarded pursuant to this section shall be 7.5 percent. In any other action brought for the possession of land sold for taxes, the title of the purchaser at the tax sale shall be defeated on account of any defect in the proceedings under which the sale is had, or on account of any defect in or insufficiency of the process by which the owner of the land was brought before the probate court, as is provided, or in the service of the process, or by reason of the failure of the judge of probate on account of any negligence or refusal on his or her part to produce when called upon, sufficient evidence of the proper issuance and service of the notice or process, or by reason of any other defect or insufficiency in any of the proceedings for the condemnation and sale of the property, or of the certificate or deed to the purchaser or any two or more of the causes, the officer or officers on account of whose omission or error the defect or insufficiency or defects or insufficiencies shall have arisen, together with the sureties on the official bond, shall be liable to the purchaser whose title shall be thus defeated and to his or her assignees for the full sum of the purchase money paid by him or her at the tax sale for the property, the cost of the action in which the title failed, which the purchaser shall have incurred in attempting to maintain title under the tax sale, together with the interest upon each of these amounts, at the rate of 12 percent per annum, subject to the limitations set forth in Section 40-10-122(a); provided that except as to the state, actions under this section shall be commenced within five years from the sale.

§40-10-76.

"If, in In any action brought related to taxes delinquent on or after January 1, 2017, the interest rate on any amounts awarded pursuant to this section shall be 7.5 percent. In any other action brought by the purchaser, or other person claiming under the purchaser, to recover the possession of lands sold for taxes, a recovery is defeated on the ground that such sale was invalid for any reason other than that the taxes were not due, the court shall forthwith, on the motion of the plaintiff, ascertain the amount of taxes for which the lands were liable at the time of the sale and for the payment of which they were sold, with interest thereon from the date of sale, and the amount of such taxes on the lands, if any, as the plaintiff, or the person under whom he claims, has, since such sale, lawfully paid or assumed by the state after its purchase, with interest thereon from the date of such payment, the interest on both amounts to be computed at the rate of 12 percent per annum, subject to the limitations set forth in Section 40-10-122(a); and the court shall thereupon render judgment against the defendant in favor of the plaintiff for the amount ascertained and the costs of the action, which judgment shall constitute a lien on the lands sued for, and payment thereof may be enforced as in other cases.

§40-10-77.

"If, in an In any action brought related to taxes delinquent on or after January 1, 2017, the interest rate on any amounts awarded pursuant to this section shall be 7.5 percent. In any other action brought against such purchaser or other person claiming under the purchaser to recover possession of lands sold for taxes, the defendant claims and defends under the tax title and the defense fails on the ground that such sale was invalid for any reason other than that the taxes were not due, and the plaintiff recovers, the court shall forthwith, on the motion of the defendant, ascertain the amount of taxes for which the lands were liable at the time of the sale and for the payment of which they were sold, with interest thereon from the day of sale, and the amount of such taxes on the lands, if any, as the defendant or the person under whom he or she claims has, since such sale, lawfully paid or assumed, in case of the state, with interest thereon from the date of such payment, the interest on both amounts to be computed at the rate of 12 percent per annum, subject to the limitations set forth in Section 40-10-122(a); and the court shall thereupon render judgment against the plaintiff in favor of the defendant for the amount ascertained and the cost of the action, which judgment shall constitute a lien on the land sued for, the payment of which may be enforced as in other cases, and no writ of possession shall issue until such judgment has been satisfied, and the court may order the land sold or condemn it to the satisfaction of the debt.

§40-10-83.

"When In any action brought related to taxes delinquent on or after January 1, 2017, the interest rate on any amounts awarded pursuant to this section shall be 7.5 percent. In any other action, when the action is against the person for whom the taxes were assessed or the owner of the land at the time of the sale, his or her heir, devisee, vendee or mortgagee, the court shall, on motion of the defendant made at any time before the trial of the action, ascertain (i) the amount paid by the purchaser at the sale and of the taxes subsequently paid by the purchaser, together with 12 percent per annum thereon, subject to the limitations set forth in Section 40-10-122(a); (ii) with respect to property located within an urban renewal or urban redevelopment project area designated pursuant to Chapters 2 or 3 of Title 24, all insurance premiums paid or owed by the purchaser for casualty loss coverage on insurable structures and the value of all permanent improvements made by the purchaser determined in accordance with Section 40-10-122, together with 12 percent per annum thereon; (iii) with respect to any property which contains a residential structure at the time of the sale regardless of its location, all insurance premiums paid or owed by the purchaser for casualty loss coverage on the residential structure and the value of all preservation improvements made by the purchaser determined in accordance with Section 40-10-122, together with 12 percent per annum thereon, subject to the limitations set forth in Section 40-10-122(a); and (iv) a reasonable attorney's fee for the plaintiff's attorney for bringing the action. The court shall also determine the right, if any, of the defendant to recover any excess pursuant to Section 40-10-28 and shall apply a credit and direct the payment of the same as set forth in subsection (b) of Section 40-10-78. Upon such determination the court shall enter judgment for the amount so ascertained in favor of the plaintiff against the defendant, and the judgment shall be a lien on the land sued for. Upon the payment into court of the amount of the judgment and costs, the court shall enter judgment for the defendant for the land, and all title and interest in the land shall by such judgment be divested out of the owner of the tax deed.

§40-10-121.

"(a) In order to obtain the redemption of land from tax sales where the same has been heretofore or hereafter sold to the state, the party desiring to make such redemption shall apply therefor as hereinafter provided and shall deposit with the judge of probate of the county in which the land is situated the amount of money for which the lands were sold, with interest thereon at the rate of 12 percent, together with the amount of all taxes found to be due on such land since the date of sale, as provided herein, with interest at the rate of 12 percent and all costs and fees due to officers.

"(b) Upon application to the probate judge to redeem land where the same has been sold to the state for taxes, which application shall be made on blank forms to be furnished by the Land Commissioner, the probate judge shall submit such application to the tax assessor of the county in which the land sought to be redeemed is located, and the assessor shall without delay enter on such application an assessment value for each of the years for which taxes are due, subsequent to the year for which such land was sold to the state for taxes, and such assessment value shall be such percentage as established by law of the fair and reasonable market value of such lands as of October 1 of the year or years subsequent to the year for which the land was sold for taxes.

"(c) Any party having a right to redeem said property, his agents, or attorney, shall have the right to file a written protest with the board of equalization, objecting to the valuation of said land as placed on said property by the tax assessor, setting forth his ground of objection to the assessed value of said property as fixed by said tax assessor, and the board of equalization shall, thereafter, fix a day for hearing said protest by giving to the tax assessor and party desiring to redeem, his agents, or attorney, at least 10 days' written notice of the day and place of hearing said petition, and upon the hearing of said cause, the board of equalization shall have the right to review the assessed value of said property as fixed by the tax assessor and shall fix and determine the assessed value for each of the years subsequent to the year for which such land was sold to the state for taxes, and the board of equalization shall certify to the probate judge the assessed value of the land so fixed.

"(d) The redemptioner shall deposit with the probate judge the amount of money for which lands were sold for taxes, plus the amount due for subsequent years based on the assessment value as required to be fixed herein, and interest, costs, and fees as provided in this section.

"(e) If any balance remains due to the state upon any lien arising by reason of any installment redemption the payment of which is secured under the provisions of Section 40-10-141, the redemptioner shall also deposit with the probate judge the amount of the balance due upon such lien, with interest to the date of redemption.

"(f) If the lands sought to be redeemed, or any portion thereof, are situated in any municipality, the redemptioner shall also deposit with the probate judge the amount of any unpaid taxes assessed against the same by such municipality, and an amount equal to any municipal taxes thereon which, subsequent to the tax sale, were not assessed by reason of the fact that such land had been purchased by the State of Alabama, plus interest which would have accrued upon such municipal taxes from the time the same would have otherwise become delinquent, which amounts, with interest, shall be treated and distributed in the same manner as taxes and interest thereon.

"(g) The interest rate of 12 percent, as prescribed throughout this section, shall only apply to tax sales occurring prior to January 1, 2017. For all tax sales occurring on or after January 1, 2017, whenever an interest rate of 12 percent is prescribed in this section, an interest rate of 7.5 percent shall apply in lieu thereof."

§40-10-122.

"(a) In order to obtain the redemption of land from tax sales where the same has been sold to one other than the state, the party desiring to make such redemption shall deposit with the judge of probate of the county in which the land is situated the amount of money for which the lands were sold, with interest payable at the rate of 12 percent per annum from date of sale, and, on the portion of any excess bid that is less than or equal to 15 percent of the market value as established by the assessing official, together with the amount of all taxes which have been paid by the purchaser, which fact shall be ascertained by consulting the records in the office of the tax collector, or other tax collecting official, with interest on the payment at 12 percent per annum. If any taxes on said land have been assessed to the purchaser and have not been paid, and if the taxes are due which may be ascertained by consulting the tax collector or other tax collecting official of the county, the probate judge shall also require the party desiring to redeem the land to pay the tax collector or other tax collecting official the taxes due on the lands which have not been paid by the purchaser before he or she is entitled to redeem the same. In all redemptions of land from tax sales, the party securing the redemption shall pay all costs and fees as herein provided for due to officers and a fee of $.50 three dollars ($3) to the judge of probate for his or her services in the matter of redemption. This application and payment may be executed by an on-line transaction via the Internet or other on-line provision.

The reimbursement to the purchaser from the proposed redemptioner for allowable improvements and insurance premiums as provided in subsections (b) through (e) of this section is not required before the redemption official completes the redemption process as provided in this subsection.

"(b) With respect to property located within an urban renewal or urban redevelopment project area designated pursuant to Chapters 2 or 3 of Title 24, the proposed redemptioner must pay to the purchaser or his or her transferee, in addition to any other requirements set forth in this section, the amounts set forth below:

"(1) All insurance premiums paid or owed by the purchaser for casualty loss coverage on insurable structures with interest on said payments at 12 percent per annum.

"(2) The value of all permanent improvements made on the property determined in accordance with this section with interest on said value at 12 percent per annum.

"(c) With respect to property which contains a residential structure at the time of the sale regardless of its location, the proposed redemptioner must pay to the purchaser or his or her transferee, in addition to any other requirements set forth in this section, the amounts set forth below:

"(1) All insurance premiums paid or owed by the purchaser for casualty loss coverage on the residential structure with interest on the payments at 12 percent per annum.

"(2) The value of all preservation improvements made on the property determined in accordance with this section with interest on the value at 12 percent per annum.

"(d) As used herein, "permanent improvements" shall include, but not be limited to, all repairs, improvements, and equipment attached to the property as fixtures. As used herein, "preservation improvements" shall mean improvements made to preserve the property by properly keeping it in repair for its proper and reasonable use, having due regard for the kind and character of the property at the time of sale. The proposed redemptioner shall make written demand upon the purchaser of a statement of the value of all permanent or preservation improvements as applicable made on the property since the tax sale. In response to written demand made pursuant to this subsection, within 10 days from the receipt of such demand, the purchaser shall furnish the proposed redemptioner with the amount claimed as the value of such permanent or preservation improvements as applicable; and within 10 days after receipt of such response, the proposed redemptioner either shall accept the value so stated by the purchaser or, disagreeing therewith, shall appoint a referee to ascertain the value of such permanent or preservation improvements as applicable. The proposed redemptioner shall in writing (i) notify the purchaser of his or her disagreement as to the value; and (ii) inform the purchaser of the name of the referee appointed by him or her. Within 10 days after the receipt of such notice, the purchaser shall appoint a referee to ascertain the value of the permanent or preservation improvements as applicable and advise the proposed redemptioner of the name of the appointee. Within 10 days after the purchaser has appointed his or her referee, the two referees shall meet and confer upon the award to be made by them. If they cannot agree, the referees shall at once appoint an umpire, and the award by a majority of such body shall be made within 10 days after the appointment of the umpire and shall be final between the parties.

"(e) If the proposed redemptioner fails or refuses to nominate a referee as provided in subsection (d), he or she must pay the value put upon the improvements by the purchaser. If the purchaser refuses or fails to appoint a referee, as provided in subsection (d), the purchaser shall forfeit his or her claim to compensation for such improvements. The failure of the referees or either of them to act or to appoint an umpire shall not operate to impair or forfeit the right of either the proposed redemptioner or the purchaser in the premises and in the event of failure without fault of the parties to affect an award, the appropriate court shall proceed to ascertain the true value of such permanent or preservation improvements as applicable and enforce the redemption accordingly.

"(f) The interest rate of 12 percent, as prescribed throughout this section, shall only apply to tax sales occurring prior to January 1, 2017. For all tax sales occurring on or after January 1, 2017, whenever an interest rate of 12 percent is prescribed in this section, an interest rate of 7.5 percent shall apply in lieu thereof."

Section 2. This act shall become effective on October 1, 2016, for actions related to taxes delinquent on or after January 1, 2017.

Interest

Property, Real and Personal

Tax Sales

Code Amended