New Alabama Vacant Property Legislation May Impact REO Properties in Birmingham

By Andy Saag, Esq.
Tiffany& Bosco, P.A.*
USFN Member (AL, AZ, CA, FL, KY, NV, NM, OH, WV)

Executive Summary of HB315

On April 15, 2026, HB 315 became law in Alabama. The new law, which is effective October 1, 2026, authorizes, but does not require, Class 1 municipalities — which in Alabama means Birmingham — to require owners of vacant properties to register, maintain, and pay fees for buildings sitting empty for more than three months. The law allows for a registration fee of $250 with a 150% increase per year, capping at $1,000, and the law may be enforced through unannounced inspections and fines, with unpaid fines potentially resulting in a lien being placed on the property. Property owners are generally required to register within 30 days of a property being deemed vacant or assuming ownership, or within 90 days if ownership was acquired through foreclosure.

Why HB 315 May Matter to Foreclosure Buyers

If Birmingham adopts a vacant property registration program, as it is authorized to do, a servicer or investor that acquires a vacant property by foreclosure or deed in lieu of foreclosure inside city limits will be subject to the requirements of said program. The ordinance may allow registration within 90 days after assuming ownership, and the same 90-day window also applies to the first subsequent transferee after the property has been acquired by foreclosure or deed in lieu. That extra time is helpful, but it is not a safe harbor against liability. 

Just as important, HB 315 does not let a foreclosure purchaser start with a clean slate. The law requires a vacant-property ordinance to provide that subsequent good-faith purchasers, parties who foreclose, and parties who acquire title by deed in lieu of foreclosure assume the obligations of the prior owner. That means the act of taking title may also mean inheriting existing compliance problems, unresolved registration issues, or conditions already likely to trigger enforcement. 

The registration process itself can also be more burdensome than it first appears. The ordinance may require the owner to provide contact information, the property address, the date the property became vacant, the expected length of vacancy, and the names and addresses of known lienholders or servicing representatives. If the owner is not an Alabama resident, the ordinance may require designation of an in-state agent authorized to receive notices and service of process, or submission to Alabama jurisdiction in a form satisfactory to the program administrator. That is especially significant for out-of-state investors, lenders, and institutional buyers managing Birmingham properties from elsewhere.

Legal and Practical Risks for Foreclosure Purchasers

One of the biggest legal risks created by HB 315 is successor liability at the property level. Because the bill requires foreclosure buyers and other good-faith subsequent purchasers to assume the obligations of prior owners, a new owner may inherit a troubled asset that is already on the city’s radar. If the prior owner let the property sit vacant and deteriorate, the foreclosure purchaser may have to solve that problem immediately, even though they did not create it. 

A second major risk is missing the vacant-property registration deadline. Although foreclosure purchasers receive a longer 90-day period, many acquired properties will already satisfy the statute’s vacancy standard because the 90-day vacancy period can run before the foreclosure sale ever occurs. A buyer that waits too long to inspect, evaluate, and triage the property may lose valuable time and fall behind on registration obligations almost as soon as title transfers. 

HB 315 also creates a direct carrying cost risk through registration fees. The statute authorizes an initial annual registration fee of up to $250, with subsequent annual fees allowed to increase by as much as 150% of the previous year’s fee, capped at $1,000. The penalties may be even more serious than the fees. The law allows municipal fines of up to $1,000 per violation for failing to comply with ordinance requirements. Unpaid registration fees and fines may become liens on the property once a notice of lien is recorded in probate. In addition, if the owner does not secure or maintain the property after notice, the municipality may take corrective action and charge the owner its reasonable costs, and those costs may also become liens if properly recorded. That creates a compounding risk: registration fees, violation fines, municipal abatement costs, and title complications can all stack on top of each other. 

Out-of-state purchasers face an added compliance challenge. If ownership is held through a remote investment vehicle, loan servicer, or special-purpose entity, the owner will need reliable systems for receiving certified mail, monitoring local conditions, and responding quickly to notices. Otherwise, a missed notice can become a missed deadline, then a fine, and, eventually, a lien. For larger foreclosure operators, HB 315 turns local asset management into a legal compliance function, not just a property-preservation issue.   The statute does contain a modest protection for new buyers. Any lien created under the act is subordinate to prior mortgages, mechanic’s and materialman’s liens, and certain tax-related liens, and the municipality may release liens or waive accrued fees or fines when a vacant property is transferred to a good-faith purchaser. Even so, a foreclosure purchaser should not assume that relief is automatic. Due diligence will still matter, including checking recorded liens and engaging the city early if the property is already distressed.

Exemptions and Opportunities to Reduce Exposure

For non-government foreclosure purchasers, one useful exemption will likely be the one available when the owner files a statement of plans for restoring the property to productive use and occupancy during the 12 months after initial registration would otherwise be due. If the owner fails to begin restoration or occupancy by the end of that period, the waived fee may come due, but the administrator may extend the waiver for one more year if conditions outside the owner’s control significantly impeded progress. 

That means the law rewards active repositioning and punishes drift. A foreclosure buyer with a real rehab plan, listing strategy, or leasing effort may be able to reduce exposure. A buyer who acquires title but delays action may end up paying recurring fees and defending against enforcement without ever improving the property’s value.

Notice, Appeals, and Enforcement

HB 315 requires the ordinance to provide owners with prior notice and appeal rights. Before an adverse decision, certified-mail notice must be sent to the registered owner at least 10 days in advance using the address maintained in probate office records or tax records, if different. Appeals of violations or fines go to the applicable division of the municipal court, and a further appeal may be taken to circuit court within 30 days. The law also allows inspections of the interior and exterior upon at least 10 days’ prior notice after registration is effective or required, and at yearly intervals thereafter while the property remains in the registration database. 

For foreclosure purchasers, those procedural rights are important, but they only help if the owner has systems in place to use them. Someone must be monitoring title records, receiving notices, documenting the condition of the property, preserving evidence of repairs or marketing efforts, and responding within deadlines. Without that operational discipline, the statutory right to appeal may arrive too late to prevent a costly enforcement problem.

Practical Takeaways

The safest approach under HB 315 is to treat every newly acquired Birmingham foreclosure as a potential regulated vacant property from the moment title is obtained. If Birmingham adopts a vacant property registration program, buyers should quickly determine whether the building has been unoccupied for 90 consecutive days, whether there is visible evidence of neglect, whether prior obligations may already exist, and whether an exemption based on marketing, renovation, or restoration planning is available. They should also move quickly to secure and maintain the property, register it on time if required, appoint an Alabama-based agent if ownership is out of state, and create a documented plan for restoration, sale, or occupancy. The central practical lesson of the bill is that Birmingham has the ability to make vacancy expensive and inactivity costly. Foreclosure purchasers can still invest in distressed property, but the law strongly favors owners who act quickly and visibly to return those assets to productive use.

[1] The vacant property registration ordinance does not apply to property owned by the federal government, the State of Alabama, any political subdivision thereof, or a public corporation.

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