The Alabama Legislature’s 2015 Regular Session ended on June 4, when the House and Senate decided to close the session on its 29th legislative day. By all accounts, the session ended too early – not only could legislators have met for an additional legislative day on or before June 15, but they also adjourned before next year’s State General Fund Budget was signed into law. Yet, much was accomplished in the session. For example, next year’s Education Trust Fund Budget is the largest in the state’s history, and major reforms for the state’s prison and educational systems were enacted.
On the banking front, much of the association’s legislative successes can be traced to measures we helped stop from becoming law. As illustrated below, however, the association’s governmental affairs team played an integral part in the passage of several new laws.
Representatives and senators introduced a total of 2,147 bills or resolutions during the session. Of these, the Legislature passed 224 general laws (including proposed constitutional amendments). The association actively tracked, influenced, amended, and worked on the following eight bills that were enacted into law this session:
Act 2015-39, SB83 – Sponsored by Sen. Jimmy Holley (R-Elba), this bill prohibits the state, a county, or a municipality from condemning real property or otherwise using eminent domain to acquire mortgages or deeds of trust. The association worked alongside the Alabama Realtors Association to ensure passage of this law, which was designed to preemptively stop this type of condemnation activity before it was ever used by a governmental entity in Alabama.
Act 2015-79, SB124 – Sponsored by Sen. Greg Reed (R-Jasper), this bill reduces the time frame in which a person may redeem residential property that is foreclosed upon from one year to 180 days if the property owner claimed a homestead exemption in the tax year during which the foreclosure occurred. The act, which is effective for foreclosure sales that occur after Jan. 1, requires a mortgagee who forecloses residential property upon which a homestead exemption is claimed to provide certain notice to the mortgagor regarding redemption. The association drafted this bill and, along with the Alabama Realtors Association, shepherded its passage from start to finish, including negotiations with key Senate Democrats on several amendments that were necessary to secure their support.
Act 2015-292, HB241 – Sponsored by Rep. Mac McCutcheon (R-Huntsville), this bill completely reforms laws related to the formation and operation of homeowners associations created after Jan. 1. States across the country have reformed their homeowners association laws over the last few years. In some states, the laws provided an HOA lien with “super-priority” status, making it superior to first mortgages and other similar interests. Working with the Alabama Homebuilders Association and the Alabama Realtors Association, the association played an integral role in drafting this legislation and was successful in ensuring that language related to HOA liens was favorable to the banking industry.
Act 2015-312, SB222 – Sponsored by Sen. Greg Albritton (R-Bay Minette), this bill provides for the revocation by divorce or annulment of certain documents, such as revocable inter-vivos trusts, life insurance and retirement plan beneficiary designations, transfer-on-death accounts, and other revocable dispositions to the former spouse that a divorced individual established prior to the divorce or annulment. This bill was on the radar of the association’s Trust Division for almost a year. Working with the Alabama Law Institute, the association lobbied successfully for the bill’s passage.
Act 2015-318, SB321 – Sponsored by Sen. Bobby Singleton (D-Greensboro), this bill further defines the crime of drag racing and increases penalties associated with being convicted of the crime of drag racing. As introduced, a vehicle used in a drag race could have been immediately seized by a law enforcement officer and sold to a third party, with the sale proceeds retained by the law enforcement agency. With our help, language was included in the bill to ensure that lienholders would receive notice of any impoundment or seizure proceedings prior to any sale of the vehicle.
Act 2015-470, HB458 – Sponsored by Rep. Ron Johnson (R-Sylacauga), this bill made wholesale changes to state laws related to unclaimed or abandoned motor vehicles. Led by the Alabama Department of Revenue, the association was part of a coalition that was involved in the drafting and amending of this legislation from start to finish. Though the legislation went through multiple revisions, the association successfully protected lienholders’ interest every step of the way.
Act 2015-484, SB327 – Sponsored by Sen. Cam Ward (R-Alabaster), this bill increases a debtor’s individual exemption to $15,000 (currently $5,000) for homestead and $7,500 (currently $3,000) for personal property. These numbers, which are essentially inflation-adjusted from the last time they were changed (1982), are to be adjusted in future years to reflect changes to the Consumer Price Index. As introduced, the homestead exemption would have increased to $30,000 and the personal property exemption would have increased to $10,000. Moreover, there was some discussion of eliminating a banks’ ability to obtain a waiver of these exemption levels from a debtor. The association worked vigorously, and successfully, to lower the exemption levels and protect the ability to waive the exemptions.
Act 2015-494, SB220 – Sponsored by Sen. Bill Hightower (R-Mobile), this bill allows a county or municipality to adopt programs to finance improvements to commercial properties in designated areas for the purpose of increasing energy efficiency and resilience to storm-related events. As a condition for accepting public financing, and only upon the consent of prior lenders, the governmental entity would be allowed to place a high priority lien on the property, which would remain on the property until the loan was paid off. When this bill was introduced, it not only applied to residential and commercial properties, but it also would have allowed counties and municipalities to obtain a “super priority” lien on any such properties that used this public financing program. Such a system would have essentially eliminated the secondary mortgage market for properties in counties or municipalities operating this special financing arrangement. Thanks to diligent work by the association, residential properties were completely written out of the bill, and no county or municipality can attach a lien on a commercial property pursuant to this act without first obtaining the consent of a prior lender.
The Legislature passed a State General Fund Budget for next fiscal year, but Gov. Bentley vetoed the budget, and the Legislature adjourned before the veto could be overridden. Consequently, the Legislature will meet in special session sometime this summer, in time to pass next year’s State General Fund Budget before the fiscal year begins on Oct. 1. All indications are that the special session will begin in August.
Additionally, please make sure to check out the upcoming edition of the association’s quarterly magazine, Banking Traditions, for additional information on special sessions, Act 2015-79, and legislation that the association actively worked to defeat during the regular legislative session.
Important Dates to Remember
- February 2, 2016: Legislature Begins 2016 Regular Session
- March 1, 2016: Presidential Preference Primary Election
- March 1, 2016: Statewide Primary Election
- April 12, 2016: Primary Runoff Election
- May 16, 2016: Last Possible Day of 2016 Regular Session
- November 8, 2016: General Election
