June 8, 2015
by Rebecca Redmond
Sirote & Permutt, P.C. – USFN Member (Alabama)
The Alabama governor signed Senate Bill 124 (Act No. 2015-79) into law on April 23, 2015. The new legislation, which becomes effective on January 1, 2016, amends Sections 6-5-248, 6-5-252, and 8-1-172 of Ala. Code (1975), and provides for partial prospective operation. The key text of the new law effectively shortens the redemption period from one year to 180 days for “residential property on which a homestead exemption was claimed in the tax year during which the sale occurred.” For all non-homestead residential property, the redemption period remains one year. This includes all commercial property, as well as residential property where no homestead exemption exists. Since foreclosed properties in Alabama can be marketed and sold during the redemption period, the shortened redemption period should not have any material impact on the foreclosure and REO process.
The new legislation also adds a notice provision to Ala. Code § 6-5-248. It requires, for the first time, a direct notice of foreclosure to be sent to the mortgagors(s), advising that he/she/they has/have a right under Alabama law to redeem his/her/their property. This notification must be provided along with the publication notification that runs in newspapers, and must also be provided to the mortgagor(s) via certified mail to the property address at least 30 days prior to the foreclosure sale. This new notice requirement is found in § 6-5-248(h)(emphasis added). It provides as follows: “(h) The mortgagee who forecloses residential property on which a homestead exemption was claimed in the tax year during which the sale occurred shall give notice to the mortgagor who signed the mortgage in substance 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 shall 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 also shall be included in the notice required pursuant to Section 35-10-13. For foreclosed residential property on 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 in accordance with this subsection. A defective notice, or the failure to give notice, will not affect the validity of the foreclosure, including the transfer of title to the property. All actions related to the notice requirement must be brought within two years after the date of foreclosure, or the action shall be barred.” Ala. Code (1975) § 6-5-248(h).
As noted above, this new legislation does not become effective until January 1, 2016.
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