After 27 legislative days, 88 calendar days and one special session, the Alabama Legislature concluded its 2019 regular session on Friday, May 31. Notable legislation passed includes both the General and Education Fund budgets, reformation of the Alabama Board of Pardons and Paroles, a bill requiring seat belts in the backseat, the creation of a medical marijuana study commission, a civil asset forfeiture database, and anti-abortion measures. 

The budgets this year are record-setting – the largest ever for both. The 2021 General Fund budget, which funds the operations of state agencies and departments, totals $2.1 billion this year with increases for the Department of Corrections and state law enforcement to hire additional officers, as well as full funding of the $35 million state-portion for the Children’s Health Insurance Program (CHIP). State employees also received a 2% pay increase. Legislators are already expressing concerns about the 2022 General Fund budget, with increases from Prisons, Medicaid, and CHIP expected. 

The Education Trust Fund totals $7.1 billion this year with large increases for a variety of the state’s education entities. A few of the highlights include Alabama’s broadband grant program increased by $20 million, K-12 and community college educators received a 4% pay raise, Alabama’s exceptional First Class Pre-K program received a $26.8 million increase to expand operations, and all state universities received at least a 7% increase in funding. 

 

Alabama REALTORS® Public Policy Team

The Alabama REALTORS® Public Policy Committee worked diligently to protect private property rights and advocate for REALTORS®. This session, the Legislature filed a total of 1,070 bills – 643 in the House and 427 in the Senate. Of these bills, 196 became law and, as of drafting, an additional 157 passed both houses but are still being considered by the Governor during her ten-day pocket-veto period.[i]

The 2019 Public Policy Team monitored 121 of those bills; opposed harmful legislation and worked with bill sponsors and stakeholders when possible to offer friendly amendments and supported several pieces of legislation that passed this session. 

The bills related to real estate or real estate professionals are highlighted below. 

REALTOR® Supported New Laws

REALTOR® License Plate Fees to REALTOR® Foundation

The REALTOR® License Plate bill, SB 208, was signed into law and assigned Act No. 2019-138. 

SB 208, sponsored by Sen. Jimmy Holley (R-Enterprise), passed the House of Representatives on May 2, 2019. This bill allocates proceeds from the sale of REALTOR® car tags to the Alabama REALTORS® Foundation. The Foundation will support disaster relief efforts throughout our state, will provide for other benevolent efforts for REALTORS®, and will offer educational scholarships for children of REALTORS®. We are grateful to Senator Holley for carrying this bill in the senate, and for Rep. Kyle South (R-Fayette) handling the bill on the House floor, as well as for Rep. Anthony Daniels (D-Huntsville) helping to move the bill across the finish line. 

Homestead Exemption Filing Affidavit Created

HB 338, sponsored by Rep. David Faulkner (R-Birmingham), was signed into law by Governor Ivey and assigned Act No. 2019-320. This bill will assist home purchasers in the filing of homestead exemptions, by allowing them to fill an affidavit to then be filed with the local tax official to claim their homestead exemption. The law formerly required home purchasers to wait until a recorded deed arrived in the mail before claiming the exemption in the county tax official office; this often occurs in the middle of a move or renovation project, causing many home purchasers to forget or delay filing their exemption. The completion of the affidavit at closing, as provided for in the bill, will help prevent such delays and remove one item from the often-cumbersome new homeowner’s “to-do” list. Our thanks to Sen. Jabo Waggoner (R-Vestavia Hills) and Sen. Rodger Smitherman (D-Birmingham) for helping to move this bill in the Senate.

Rural Access to Broadband 

S.B. 90, sponsored by Sen. Clay Scofield (R-Guntersville) and H.B. 400, sponsored by Rep. Randall Shedd (R-Cullman) were two bills of major importance this session. Sen. Scofield’s bill expanded eligible grant areas for state and federal grants to fund broadband service. H.B. 400 authorized the installation and use of broadband and related communication capabilities by electric providers using their existing infrastructure. 

The Alabama REALTORS® joined with other leading trade associations and business groups in our state to form the Alabama Rural Broadband Coalition. The purpose of this coalition was to support several pieces of legislation to expand broadband services to rural and underserved parts of the state. 

These bills are going to significantly expand the internet capabilities of our state as a whole, which will in turn help bolster economic development and opportunity in those areas. That is great news for Alabama. 

Rural Growth – Opportunity Zones

HB 540, sponsored by Rep. Bill Poole (R-Tuscaloosa), passed the Legislature. Titled the Alabama Incentives Modernization Act, the bill is geared towards attracting new and expanding businesses in Alabama by modifying some currently existing tax credits, as well as establishing an Opportunity Zone (OZ) investment program and income tax incentives for technology companies to move their headquarters to Alabama. 

Supported by the Alabama REALTORS®, the bill provides extra incentives for OZ investment funds nationwide to invest in Alabama OZs. Detailed information on the OZ program can be found in this article published by the Legal Helpdesk. Essentially, OZs are areas designated by state governors that allow investors to take gains from the sale of stocks and other financial instruments and put those gains into projects (like real estate development) for a period of time in those areas - if the investments are kept in those areas for at least 10 years, the gain realized from the value in those investments is tax free. The incentives HB 540 provides encourage investors to choose Alabama OZs, rather than OZs in other states. These include deferrals on state capital gains taxes and state income taxes, and financial institution excise taxes are made eligible for an “impact investment credit” if the funds meet certain criteria (time investments are kept in Alabama, return on investment, etc.). The Alabama Department of Economic and Community Affairs (ADECA) will oversee operations of these funds. 

Applicant’s Information with Strengthen Alabama Homes Program Protected

A bill to protect the sensitive information of homeowners participating in the Strengthen Alabama Homes (SAH) Program became law. HB 363, sponsored by Rep. Chip Brown (R-Mobile), declares grant applications to the SAH Program to be confidential under Alabama’s Open Records Act. The SAH Program has supported homeowners in coastal Alabama by providing grants for wind-mitigation upgrades on residences. It is hoped that the program will be extended statewide. For those considering applying, the applicant’s name and the grant amount awarded are available to the public. Additional information can be found on the SAH Program website here.

Expanded Data on Insurance Losses from Storms

HB 106 authorizes the Department of Insurance (“the Department”) to create educational and informational programs and presentations for consumers and requires insurance companies to submit additional data in annual reports to the Department. The data must detail the direct incurred losses and the number of policies in force for non-hurricane wind and hail damage, as well as hurricane damage. Under current law, insurance companies must submit reports on fire damage and wind/hail damage. This legislation requires separation of non-hurricane and hurricane damage data, to better inform the Department and stakeholders regarding losses due to these storm events. 

Notice of Withheld Insurance Payments

The legislature passed a bill that will help homeowners when they make a claim on home insurance. HB 139, sponsored by Rep. K.L. Brown (R-Jacksonville), requires lenders holding proceeds from an insurance claim to notify the insured of all necessary requirements to satisfy before the lender will release the funds. The bill further provides a 10% interest penalty if the lender fails to provide adequate notice or to release the funds in a timely manner. 

Insurance Provides Roof Upgrades 

Another passed bill that impacts home insurance deals with fortified bronze roof endorsements. Sponsored by Rep. Chip Brown (R-Mobile), HB 362 requires home insurance companies to offer a fortified bronze roof endorsement to upgrade the roof of a non-fortified home when the roof must be replaced due to damage while covered. Effective January 1, 2020, the Alabama Department of Insurance is tasked under the law with developing implementing regulations. 

Roofing Contracts

SB 62, sponsored by Sen. Rodger Smitherman (D-Birmingham), changes the requirements for cancellation of a roofing contract. Current law allows a roofing contract to be cancelled by the 10^thday after the signing of a roofing contract when an insurer notifies the person that the claim is not covered.  Benefiting homeowners, this bill changes the law to five days after notice from the insured that the claim or contract is not covered, or the covered claim is insufficient to cover the contract.

Service Animal Bill

Sen. Coleman-Madison (D-Fairfield), sponsored SB 10, a bill relating to service animals and public accommodations. In general, SB 10 creates penalties for the fraudulent misrepresentation of pets as service animals in public spaces and accommodations and brings state law in line with federal law. Alabama REALTORS® was supportive of the legislation and monitored SB 10 as it moved through the process. After an unfriendly amendment was defeated by Alabama REALTORS® and others, the bill passed the Legislature and is now awaiting the Governor’s signature. 

Medicaid Lien Process Clarified

Amended by the Alabama REALTORS®, a bill updating procedures related to Medicaid liens passed both chambers. SB 76, sponsored by Sen. Arthur Orr (R-Decatur), requires individuals commencing probate proceedings to provide the Alabama Medicaid Agency with notice when the probate proceeding has been initiated. Medicaid liens can be placed on real property as collateral for when Medicaid patients are placed in an in-patient facility such as a hospital or nursing home to ensure that the Medicaid Agency receives reimbursement for services rendered.  The Alabama REALTORS® Public Policy Team was successful in working with senior Medicaid Agency officials on an amendment to the original bill that provides clear statutory guidance on how the Medicaid lien process works for real estate professionals, consumers, judges, lawyers, and members of the public.

Military Installation Redevelopment Authority

A bill to encourage redevelopment of abandoned military installations passed the legislature with a REALTOR® amendment. SB 410, sponsored by Sen. Tom Butler (R-Madison), allows municipalities or counties to establish a redevelopment authority for property that is next to an operational or non-operational military installation. The bill also gives the authority the power to issue bonds. Originally, the bill gave the power of eminent domain to any authority established under the bill. Alabama REALTORS® worked with the sponsor and other stakeholders to delete the power of eminent domain from the bill. 

Bills of Interest That Did Not Pass

Mortgage Recording Fee Increases 

Two bills that would have increased mortgage recording fees died in committee. HB 487, by Rep. Rafferty (D-Birmingham), and SB 189 by Sen. Coleman-Madison (D-Birmingham), would have increased the mortgage recording fee from $0.15 to $0.20 per $100 of the loan amount. SB 189 was considered by the Senate Government Affairs Committee, but due to strong opposition from the Alabama REALTORS® and other stakeholders, the bill did not receive a vote and was carried over. HB 487 received a public hearing but was not considered for a vote by the House committee. 

Lead-Based Paint Bill 

Alabama REALTORS® opposed a bill that could have greatly expanded liability for property owners for lead-based paint. HB 466, sponsored by Rep. Reed Ingram (R- Montgomery), would have amended the Alabama Lead Reduction Act to provide sweeping authority to the Alabama Department of Public Health to potentially conduct sweeping and intrusive inspections of a wide range of private properties across Alabama. 

Mandatory Property Insurance on Condos

Opposed by Alabama REALTORS®, HB 574 would have mandated property insurance for condominiums and attached housing like townhomes. Under the terms of the bill, condo and townhome owners would be required to maintain insurance at least equal to 150% of the actual value of the property.  Further, the bill would have given owners of attached housing the right to inspect adjacent buildings. The bill did not pass out of committee in the House.

Smoke Alarm Bill

H.B. 426, Rep. Joe Lovvorn (R-Auburn) was brought forward by the Alabama Fire Chiefs Association to raise awareness of the importance of fire safety in rental homes in low income rural areas of the state in response to an increase in fire related deaths where no smoke alarm was present. The Alabama REALTORS® and other stakeholders worked extensively with the sponsor, Rep. Joe Lovvorn (R-Auburn), and other stakeholders on HB 426. Ultimately, an unfriendly amendment was added that raised liability concerns and prevented the bill’s passage in the Senate. The bill failed to pass the Senate on the last day of session.

Tax Credit for Storm Shelters

Companion bills in the House and Senate would have created an income tax credit for the construction or purchase of a storm shelter that is attached to the taxpayer’s primary residence or the same property as their primary residence. After amendments, the final version of the bills had a credit for $3,000 or 50% of the cost of the shelter, whichever was less. The bills also allowed a taxpayer who buys or constructs the shelter on behalf of another to receive a credit of $4,500 or 75% of the cost, whichever was less. Supported by the Alabama REALTORS®, neither bill passed the house of origin. 

Occupational Taxes 

Failing on the last day of the session, SB 305 would have limited the ability of some municipalities to impose an occupational tax. Sponsored by Sen. Holley, the bill would have prohibited municipalities that do not currently have an occupational tax from imposing an occupational tax unless the tax is authorized by local law. 

Online Notary System

Sen. Clay Scofield (R-Guntersville) filed a bill to create an e-notary system in Alabama. Basically, the bill would allow notaries to carry out the same functions and powers via electronic methods. The bill did not garner sufficient support to pass this legislative session.

 Boating Safety Bill 

HB 520, sponsored by Rep. Ginny Shaver (R-Leesburg), would have enhanced boating safety by limiting boat speeds in certain situations. Specifically, the bill limited boat speeds to idle within 100 feet of various public-use locations like docks, restaurants, swimmers, and public beaches. According to the sponsor, the proliferation of boats with extremely large wakes has caused issues on Alabama’s bodies of water. Other boats must navigate the large waves, and lakes shore property owners deal with the inundation of docks and heightened erosion of shorelines caused by the large wakes. The bill did not make it to the House floor.

Tax Sale Process 
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The legislature failed to pass several bills related to properties sold for failure to pay taxes. Although the process is widely regarded as convoluted, stakeholders have yet to agree upon appropriate changes. Alabama REALTORS® have been engaged on this issue for some time and will continue to advocate for a clear process that protects property owners while encouraging timely payment of property taxes.

Other Relevant New Laws 

Education
 

The quality of the education system in an area has an impact on the area’s housing market. Several bills that will impact that state’s education system passed the Legislature. SB 397, sponsored by Sen. Del Marsh (R-Anniston), may change the state-level governance of Alabama’s education system. Instead of an elected State Board of Education, the Department of Education will be headed by a Commission on Elementary and Secondary Education, with members appointed by the Governor from each congressional district and two at-large. The bill also authorizes the Governor to appoint local educators and other officials as advisors to the Commission. The bill is a constitutional amendment to be voted upon at the next general election. 

Another new law is aimed at improving the state’s reading proficiency. HB 388, sponsored by Rep. Terri Collins (R-Decatur), will provide K-3 students who have reading deficiencies with additional reading resources and training. If a third-grade student does not meet specified reading standards, the student can be held back no more than twice. 

District Court Jurisdictional Threshold

The jurisdiction of Alabama Courts over a particular case is governed, in part, by the amount of money in controversy. SB 297, sponsored by Sen. Sam Givhan (R-Huntsville), increases the amount for circuit courts from $10,000 to $20,000, allowing the lower, district courts to hear cases involving up to $20,000. 

Lodging Taxes

The Legislature passed legislation that specifically exempts specified rooms from the state’s lodging taxes. SB 171, sponsored by Sen. Garlan Gudger (R-Cullman), specifically exempts from lodging taxes the rental of any room or space that is not furnished for overnight sleeping purposes. 

Conclusion

The Alabama REALTORS® Public Policy Team advocates on behalf of Alabama REALTORS® and private property rights all year long – whether before the Legislature or before the regulatory entities that impact your work and the rights of property owners. We appreciate the hard work of the Public Policy Committee and encourage you to look for additional news as the Legislature considers a special session to address the state’s prison system later this year.