Alabama Legislative Update

Alabama Legislative Update

The Alabama legislature has amended its statutes relating to redemption of certain real property foreclosed under a mortgage or sold by virtue of a judgment, effective January 1, 2016.

 

ALABAMA SENATE BILL 124

 

Current law permits the following parties to redeem real estate, or any interest, therein, where it has been sold:

·                    any debtor, including surety or guarantor;

·                    any mortgagor (even if not personally liable for the payment of debt)

·                    any junior mortgagee, or its transferee;

·                    judgment creditor, or its transferee

·                    any transferee of the interests of the debtor or mortgagor, either before or after the sale;

·                    the respective spouses of all debtors, mortgagors, or transferees of any interest of the debtor or mortgagor, who are spouses on the day of the execution, judgment, or foreclosure sale;

·                    children, heirs, or devisees of any debtor or mortgagor.

 

The time period for right of redemption (by the above named parties) has been amended as follows:

(1)               180 days from the date of the sale for residential property on which a homestead exemption was claimed in the tax year during which the sale occurred (previously one year); or

(2)               One year from the date of the sale for all other property.

 

A new section has been added requiring a mortgagee to provide a notice to mortgagors whose property is being foreclosed or has been foreclosed.  The mortgagee foreclosing on residential property for which a homestead exemption was claimed in the tax year during which the sale occurs must give notice to the mortgagor in a form substantially as follows:

 

“Alabama law gives some persons who have an interest in property the right to redeem the property under certain circumstances.  Programs may also exist that help persons avoid or delay the foreclosure process.  An attorney should be consulted to help you understand these rights and programs as a part of the foreclosure process.”

 

This notice must be mailed to the mortgagor at the address of the property subject to foreclosure at least 30 days prior to the foreclosure date by certified mail with proof of mailing.

 

This notice must also be included in the notice of sale that is required under Alabama law for foreclosure (i.e., the publication once each week for three successive weeks)

 

For foreclosed residential property for which a homestead exemption was claimed in the tax year during which the sale occurred, the period of time during which a right of redemption may be exercised shall not begin until notice is given as described above.

 

A defective notice, or failure to give notice, will not affect the validity of the foreclosure, including the transfer of title.

 

All actions related to the notice requirement must be brought within two years after the date of foreclosure, or the action is barred.

 

Tender of the redemption amount or filing suit to enforce rights of redemption shall be made or filed by the person redeeming within:

(1)               180 days from the foreclosure on residential property for which a homestead exemption was claimed in the tax year during which the foreclosure occurred; or

(2)               One year from the foreclosure for all other property.

 

The current law provides that a mortgagee, in good faith, takes a mortgage from an insane person without notice of the insanity, the mortgage is not void; and the insane person may redeem the property prior to foreclosure by paying the amount actually received at the time of executing the mortgage, or any balance due thereon, with interest to the date of redemption.

 

Under the above circumstances, if the property has already been foreclosed, the insane person may redeem by paying the amount actually paid at the foreclosure sale within interest at 8% per annum, together with all lawful charges, within:

(1)               180 days from the foreclosure on residential property for which a homestead exemption was claimed in the tax year during which the foreclosure occurred; or

(2)               One year from foreclosure for all other property.

 

The new redemption periods apply to all sales of property foreclosed under a mortgage or sold by virtue of a judgment, except the new periods do not apply to the following:

·                    Sales made under a power of sale contained in any mortgage or junior mortgage dated prior to January 1, 2016;

·                    Sales made pursuant to a statutory power of sale with respect to any mortgage or junior mortgage dated prior to January 1, 2016;

·                    Sales by virtue of a judgment rendered by a court prior to January 1, 2016.