ACMA Summary - 2023 - Combined States - Provinces

• Year: 2023

ALABAMA

FORM

SECURITY INSTRUMENT USED: Mortgage. Ala. Code § 35-10-11(1)

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. A vendor may obtain a

lien in a conveyance by retaining title to secure balance of purchase price without the necessity of a

mortgage. Stagg v. Van Sant, 390 So. 2d 620, 622 (Ala. 1980). Mortgage passes legal title to the

mortgagee with the mortgagor left with the equity right of redemption. Ala. Code § 35-10-5; In re Haas,

31 F.3d 1081 (11th Cir. 1994).

RECORDING REQUIREMENTS: Mortgage is valid between mortgagor and mortgagee whether

recorded or not. It must be recorded to constitute notice to third parties. Ala. Code § 35-4-90(a). See

Ala. Code §§ 35-4-20 and 35-4-23 for requirements of witnesses and use of acknowledgment by a

notary public as satisfying requirements of witnesses.

FORM OF ACKNOWLEDGMENT: Specific forms for use in preparation of acknowledgments

are found in Ala. Code § 35-4-29 and substantial compliance is required. Ala. Code § 35-4-26 prescribes

the officer authorized to take acknowledgments outside of the State of Alabama and beyond the limits

of the United States as well as the form of those acknowledgments. An acknowledgment executed in

a state outside the State of Alabama that is in compliance with the manner and form prescribed by the

laws of the place of its execution and is verified by the official seal of the officer before whom it is

acknowledged, has the same effect as an acknowledgment prescribed by law for instruments executed

in Alabama. Ala. Code § 35-4-26(b). The use of remote notarization for acknowledgments is authorized

Ala. Code § 36-20-73.1. All mortgages and other instruments affecting title to real estate that were

acknowledged via remote notarization before July 1, 2021 are ratified and confirmed. Ala. Code § 36-

20-73.1(g).

STATUTES TO BE WAIVED: Homestead of spouses, Ala. Code § 6-10-122, and personal

exemption from debt, Ala. Code § 6-10-121.

UNUSUAL TREATMENT OF STANDARD PROVISIONS: Debt may not be prepaid unless

provision permits. Ex parte Brannon, 683 So.2d 994 (Ala. 1996). Reasonable penalties are permitted if

condition of prepayment. However, there is a statutory right of prepayment without penalty for certain

debts subject to Alabama’s Consumer Credit Code. Ala. Code § 5-19-4.

SECURING FUTURE ADVANCES: If mortgage provides, future advances are secured up to

amount of recited indebtedness. In re Grocers’ Baking Co., 266 F. 900 (N.D. Ala. 1920). Any amount in

excess of face amount of mortgage must be evidenced by certificate filed of record reciting additional

advances. Any intervening lienholders will have preference over the amount of the advances in excess

of face amount of mortgage.

SECURING ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL,

INCLUDING PAYMENT OF TAXES AND INSURANCE: Additional advances to protect the

collateral, including taxes and insurance, are secured by mortgage if mortgage so provides. Guar. Sav.

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All Ala. Code references are to Alabama Code (1975).

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Alabama Alabama

Bldg. & Loan Ass’n v. Russell, 221 Ala. 32, 34, 127 So. 186, 187 (1930). If not provided for in the

mortgage, it may have to be established by the court.

TRUSTEE UNDER DEED OF TRUST: N/A.

FORECLOSURE

BRIEF DESCRIPTION OF PROCEDURE: For mortgages executed after December 31, 1988,

notice must be given by publication in a newspaper once a week for 3 consecutive weeks published in

the county or counties in which the property is located, setting the date of sale and including a

description of the property. Ala. Code § 35-10-13. The sale must be conducted between the hours of

11:00 a.m. and 4:00 p.m. at the front or main courthouse door of the county where the property is

located, Ala. Code § 35-10-14, and may be conducted by any person, or the personal representative of

any person, who, by assignment or otherwise, becomes entitled to the money thus secured. Ala. Code

§ 35-10-12. If a mortgage contains a power of sale, the mortgagee or its agent may sell the property to

the highest bidder at a non-judicial foreclosure sale, with proceeds applied to the cost of the sale,

including attorney’s fees, and to the indebtedness, with any excess amount remitted to the mortgagor.

Ala. Code §§ 35-10-1, 35-10-12. If a mortgage does not contain a power of sale, it may be foreclosed

by a court proceeding. Ala. Code § 35-10-3.

Similar requirements apply to mortgages executed on or before December 31, 1988, Ala. Code §§ 35-

10-1 – 35-1-10, but for such pre-1989 mortgages that are silent as to the place or terms of the sale,

notice must be given by publication for 4 consecutive weeks. See Ala. Code §§ 35-10-2, 35-10-3.

For mortgages entered into after August 1, 2009, if the surviving spouse or the estate of a mortgagor

who is a service member who dies while deployed overseas on active duty military service gives written

notice to the mortgagee with the statutorily-required information and asks that the foreclosure be

delayed for 6 months, the mortgagee is prohibited from initiating a foreclosure proceeding for 180

days following the death of the service member. Ala. Code § 35-10-71(a). A civil fine for violation of

that requirement is set forth in § 35-10-71(b).

TYPICAL LENGTH OF PROCEDURE: Public auction and date of sale is normally set 1 week

after the 3-week consecutive publication of notice of sale. Ala. Code § 35-10-8.

FORECLOSURE BID REQUIREMENTS: As detailed above, if the mortgage contains a power

of sale, the property may be sold at a non-judicial foreclosure; without a power of sale, the property

may be sold by court proceeding. See Ala. Code §§ 35-10-1, 35-10-12, 35-10-3. If part of the mortgaged

property is sold, any remaining mortgage indebtedness continues as a lien against the unsold property

as security for the balance of indebtedness. See Ala. Code §§ 35-10-6, 35-10-15. Deeds in lieu of

foreclosure are allowed but only transfer a mortgagor’s interest (equity right of redemption) and do

not affect rights or interests of third parties. Ala. Code § 35-10-51.

REDEMPTION PERIOD AND PRICE: Persons listed in Ala. Code § 6-5-248(a)(1)-(a)(7) have a

180-day statutory right of redemption for residential properties on which a homestead exemption was

claimed in the tax year during which the sale occurred. Ala. Code § 6-5-248(b); but see § 6-5-248(h) (right

of redemption does not begin to run until proper notice is given to mortgagor). All properties not

covered in Ala. Code § 6-5-248(a)(1)-(a)(7) carry a one-year right of redemption. The redemption price

is the amount of the foreclosure sales price with interest at the rate allowed by law on money

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Alabama Alabama

judgments (see Ala. Code § 8-8-10), plus the value of permanent improvements, taxes, insurance

premiums and any valid lien or encumbrance discharged. Ala. Code § 6-5-253(a). If redeeming from

the owner of the debt secured by the property, any remaining balance of the debt must also be paid

with interest at the rate allowed to be charged on money judgments as set forth in Section 8-8-10. Id.

The redeeming party is entitled to a credit against the redemption price if, during the redemption

period, the purchaser cuts or sells timber, removes oil, gas or minerals, or demolishes any

improvements on the mortgaged property. Ala. Code § 6-5-253(d). The mortgagor must deliver

possession within 10 days of written demand for possession. The mortgagor (or anyone holding

possession) loses the right of redemption if they fail to deliver possession within the 10-day period.

Ala. Code § 6-5-251(a), (c). Absent notice to deliver possession to the mortgagor, the mortgagor may

continue in possession after foreclosure as a tenant at will; if the mortgagor fails to deliver possession

after being given notice, the mortgagor remains in possession as a tenant at sufferance. Paint Rock Turf,

LLC v. First Jackson Bank, 169 So. 3d 990 (Ala. 2014).

For residential property on which a homestead exemption was claimed in the tax year during which

the sale occurred, the mortgagee must provide the mortgagor with the notice set forth in Ala. Code

§ 6-5-248(h), which 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. In this

situation, the time period in which a right of redemption may be exercised does not begin until this

notice is given, although no right of redemption may be exercised later than one year after the date of

foreclosure. See id.

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD: May not waive

right of redemption prior to foreclosure sale but may waive or assign after sale. Ala. Code § 6-5-250.

DEFICIENCIES: Any deficiency remains the mortgagor’s debt, subject to suit for collection under

the note. Generally, the mortgagee may sue under the mortgage note after default. The statute of

limitations, if under seal, is 10 years; otherwise, 6 years after default on foreclosure.

EFFECT OF FORECLOSURE UPON LEASES: Any lease executed after the mortgage is not

binding upon the mortgagee, Mack v. Beeland Bros. Mercantile Co., 21 Ala. App. 97, 105 So. 722 (Ala.

1925), and any lease executed prior to the mortgage is binding upon the mortgagee upon the tenant

attorning to the mortgagee. The mortgagee accedes to the lessor’s rights under the lease, including the

right to intercept the rent. Any lease after the recording of the mortgage is extinguished on foreclosure.

The mortgagee is entitled to all rents and profits paid or accrued after foreclosure, until the date of

redemption. Homecorp v. Secor Bank, 659 So. 2d 15 (Ala. 1994); Md. Casualty Co. v. Owens, 261 Ala. 446,

74 So.2d 608 (Ala. 1954); Henderson v. Coon, 244 Ala. 324, 13 So.2d 564 (Ala. 1943).

USURY

USURY CEILING: No ceilings on loans in excess of $2,000, the only restriction being

unconscionability, Ala. Code § 8-8-5. Lending individuals, banks, corporations, and other legal entities

may charge the same interest rate under the same conditions as any federal or state chartered lending

institution whose principal place of business is Alabama. Ala. Code § 8-8-1.1.

USURY EXEMPTIONS: Debts incurred pursuant to National Housing Act or Veteran’s Benefits,

Ala. Code § 8-8-6, and bond notes of state or localities instrumentalities, Ala. Code § 8-8-7.