Bulletin: AL2023001

Dear Associates:

The following is a summary of legislation that was passed during the 2023 Regular Session that may impact the title industry.

Title Agent Pre-Licensing Course

HB 60 / Act 2023-104. This act amends §§ 27-7-5, 27-7-14.1, 27-9A-6, 27-9A-8, 27-9A-9, 27-9A-11, 27-25-4.1 and 27-25-4.3 of the Code of Alabama to delete the requirement for prospective title agents to complete a pre-licensing course of study approved by the Alabama Commissioner of Insurance prior to examination and licensure by the department.

What you should know: Although prospective title agents no longer need to complete a 20-hour pre-licensing course, it is still required that they sit for a licensing exam prior to licensure. (Effective January 1, 2024).

Recordation of Judgments Quieting or Establishing Title to Lands

HB 328 / Act 2023-520. This act amends §§ 6-6-544 and 6-6-570 of the Code of Alabama to change the procedure for and timing for recording judgments quieting or establishing title to lands in the office of the judge of probate. The judgment is now to be recorded within thirty (30) days after the judgment becomes final, with no possibility of post-trial motions or appellate review. The judgment is also to be filed by the prevailing party, who must assume the cost.

What you should know: Previously the clerk would record such a judgment within 30 days of the entry of the judgment. This amendment places the responsibility and cost of filing the judgment in the land records on the prevailing party and also pushes back the time within which the judgment is to be recorded. In general, the time in which to appeal a judgment is forty-two (42) days. Contact your state underwriter should there be any open litigation involving the property or a party to your transaction. (Effective September 1, 2023).

Foreign Ownership and Possession of Real Property

HB 379 / Act 2023-332. This act creates the Alabama Property Protection Act, which prohibits certain foreign individuals and governments from acquiring title or controlling interests in certain types of real property as of and after the effective date of the act.

What you should know: Please see Bulletin AL2023002. (Effective August 1, 2023).

Evidencing a Vacated Electronic Map or Plat

SB 150 / Act 2023-536. This act amends § 35-2-57 of the Code of Alabama to distinguish how a vacated electronic map or plat is to be reflected in the land records. A vacated map or plat, which is evidenced by an electronic or digital image of said map or plat, shall be reflected as vacated by a recorded certificate indicating the same.

What you should know: Previously a tangible or physical copy of a map or plat was noted as vacated by the clerk writing across the copy “vacated” and noting the recording information of the instrument of vacation. There should still be an instrument of vacation relating to an electronic or digital map or plat. (Effective September 1, 2023).

Wholesaling / Unfair Service Agreements

SB 228 / Act 2023-201. This act addresses wholesaling and concerns regarding “flip” transactions of residential property without disclosure to the involved parties in a transaction and assignment of equitable interests. It also addresses unfair service agreements (i.e., MV Realty service agreements) recorded in the land records. An “Unfair Service Agreement” is defined as:

A service agreement in which the services subject to the agreement are not performed within one year after the date upon which the agreement commences and provides any of the following:

a.  Purports to run with the land or to be binding on future owners of interests in the real property;
b.  Allows for assignment of the right to provide the service without notice and agreement of the owner of residential real estate;
c.  Purports to create a lien, encumbrance, or other real property security interest.

An “Unfair Service Agreement” does not include the following: 

1. Home warranty;
2. Insurance contract;
3. Option to purchase or right of refusal to purchase;
4. Maintenance or repair agreement by a homeowner’s association;
5. Agreements to manage residential real estate;
6. Declaration of covenants, conditions, or restrictions or an amendment thereof;
7. Mortgage loan;
8. UCC security agreement;
9. Utility services;
10. Mechanic’s or materialman’s liens.

What you should know: As to a buyer’s assignable equitable interest in real property under a purchase agreement, require a disclosure to the assignee/purchaser and to the title vested seller as to the nature of the buyer’s interest and intent to assign that interest as of a certain effective date. As to Unfair Service Agreements, it is questionable whether the terms of the act are effective as to pre-existing agreements less than a year old and already of record. It is recommended that any agreement recorded prior to August 1, 2023, be required to be released. (Effective August 1, 2023).

Notarial Acts

SB 322 / Act 2023-548. This act made several changes to the code sections related to notaries public by amending §§ 36-20-70, 36-20-71, 36-20-72, 36-20-73.1, 36-20-74, and 36-20-75. Two noteworthy changes include those related to the form and content of a notary act, as well as to the place of execution for any signature notarized by an Alabama notary public. The form and content of a notarial act in a recorded instrument is to include an oath, acknowledgment, and signature for the parties to the instrument along with the notary’s signature and seal. A signature acknowledged by an Alabama notary public must be executed within the state of Alabama following a positive identification by personal knowledge of the affiant or examination of photo identification issued by a governmental entity or agency.

What you should know: These changes lead to some inconsistencies in the law regarding acknowledgments and notarizations of signatures regarding land conveyances. First, the requirement of an oath in the form of the acknowledgment would suggest that an acknowledgment in a recordable instrument for the public records and court filings should include an acknowledgment of an oath by the signatory; however, the statutory forms of acknowledgments under § 35-4-29 have not been amended. The intent of this change was to affect documents not related to land title conveyances or encumbrances. Secondly, the location of execution of a signature requirement would appear to limit any notarization, including a remote ink notarization, to within the state of Alabama. (Effective September 1, 2023).

If you have any questions relating to this or other bulletins, please contact the Alabama State Office for assistance.

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