Alabama Real Estate Practices

All legal documents must be drafted by an attorney licensed to practice in the State of Alabama. Parties to a transaction can draft their own documents if they are doing so on behalf of themselves.

Title Opinions must be rendered by an attorney licensed to practice in the State of Alabama.

Searching, examining title, closing, and disbursing do not have to be handled by an attorney. Commencing 1/1/13, agents issuing commitments, policies and endorsements must be licensed and the signatory must be likewise licensed.

Cancellation/Commitment fee is not prohibited in this state. It is customary to charge this fee.

Under Alabama’s Residential Mortgage Satisfaction Act (3/1/2013) an affidavit of satisfaction may be signed by a title insurance company or by a licensed attorney acting as its agent. See SB 347; Alabama Code Section 35 – New (codification is pending). However, the authorization of the mortgagor(s) in the mortgage for which release is being sought must be first obtained.

General Warranty Deeds – commonly used in Alabama. Property can be conveyed to two or more Grantees as joint tenants with rights of survivorship or as tenants in common.

Statutory Warranty Deed – used in transactions in which the grantor desires to limit the warranty to the time in which the grantor has owned the property.

Quitclaim Deed – used only to clear any possible interest someone might have in the property. Alone, this conveyance does not create marketable/merchantable title and generally not insurable.

No (9-4-19)

A spouse not in title to the property must join in the conveyance/mortgage if the property is their homestead property.

Mortgage tax in Alabama is $1.50 per $1,000.00

(a) Owner’s Policy?
(b) Transfer Tax & Recording Fee?
(c) Survey Charges?
(d) Closing/Settlement Fees?

It is up to the buyer and seller through their contract negotiations.

Alabama’s new title insurance requirements took effect on 1/1/2013. Among the requirements are that the signatory must be a resident of the state and licensed by AL Department of Insurance; the issuing agent must also be licensed through the Alabama Department of Insurance and the business must have a physical place of business within the state. A title agent can be a sole proprietor who is a resident of the state. Agents who operate as an entity must be organized under Title 10A (or its predecessor, Title 10) of the Alabama Code.

Real estate taxes are paid in arrears and become due October 1 of each year and become delinquent on January 1 of the following year. Tax sales occur in the spring, usually in April or May, but each county conducts their sales at different times.

There is no minimum period required by either (A), (B) or (C). However the long-standing customary search periods are: for loan policies, a minimum 30 year search, although circumstances can require a lengthier search; for owner’s policies, a minimum 60 year search, although circumstances may require a lengthier search.

They are allowed in this state. Normally, the search and exam fee is combined into a single charge.

Who can be listed as the trustee on the Deed of Trust (e.g., residency and/or natural person requirements, etc.)? Can an underwriter or title agent be designated as the trustee, and, if so, is it customary?

Alabama is a mortgage state.

Standard exceptions are:

1.  Defects, liens, encumbrances, adverse claims or other matters, if any, created, first appearing in the Public Records or attaching subsequent to the effective date hereof but prior to the date the Proposed Insured acquires for value of record the estate or interest or mortgage thereon covered by this Commitment.

2.  Rights or claims of parties in possession not recorded in the Public Records.

3.  Easements or claims of easements, not recorded in the Public Records.

4.  Encroachments, overlaps, boundary line disputes, or other matters which would be disclosed by an accurate survey and inspection of the premises.

5.  Any lien, or right to a lien, for services, labor or material heretofore or hereafter furnished, imposed by law and not recorded in the Public Records.

6.  Any reappraisal, adjustment, and/or escape taxes which may become due by virtue of any action of the Tax Assessor, Tax Collector, or Board of Equalization.

7.  Taxes or special assessments which are not shown as existing liens by the Public Records.

8.  All taxes for the year (year of closing) and subsequent years, which are liens, but are not yet due and payable.

9.  Minerals of whatsoever kind, subsurface and surface substances, including but not limited to coal, lignite, oil, gas, uranium, clay, rock, sand and gravel in, on, under and that may be produced from the Land, together with all rights, privileges, and immunities relating thereto, whether or not appearing in the Public Records or listed in Schedule B. The Company makes no representation as to the present ownership of any such interests. There may be leases, grants, exceptions or reservations of interests that are not listed. 

None.

Policy forms and rates must be filed by each insurer with the Alabama Department of Insurance.

Deed tax in the state is $.50 per $500.00. Withholding is also required in certain circumstances when the grantor is either not a resident of Alabama or is not deemed a resident.

Yes, usury coverage is available. Usury statute is Code of Alabama (1975) Section 8-8-1 et seq. However the statute does not apply to loan transactions secured by real property and there is no interest rate cap.

If the seller is neither a resident or a deemed resident, and the sales price is $300,000 or more, 3 percent of the sales price is withheld and remitted to the AL DOR if purchaser is an individual. If purchaser is a business entity, then 4 percent of the sales price must be withheld and remitted to the AL DOR.

Conveyances and mortgages must be in writing and attested to by one witness. If a party cannot write their name but makes their mark in the alternative, then two witnesses are required. In either case, one witness may be the notary.