Capitol Notes: Week Four

FEBRUARY 2, 2018 — Two bills of importance to Alabama banks made significant advancements during week four of the 2018 Legislative Session.

The first bill, Senate Bill 60, was unanimously approved by the Senate on Thursday afternoon. Sponsored by Sen. Clay Scofield (R-Arab), the legislation allows a county commission to select its public depository at any point during the year rather than only during the first week of December. Notably, all other public depositors are currently able to select a depository institution at any point during the year. Drafted by the Alabama Bankers Association, the bill is also supported by the Association of County Commissions of Alabama. An agreed-upon amendment was added to the bill on the Senate floor that made a technical clarification to the law; the same amendment had previously been added to the House version of this bill, House Bill 100 sponsored by Rep. Will Ainsworth (R-Guntersville). The Senate bill was referred to the House County and Municipal Government Committee, which favorably reported House Bill 100 two weeks ago.

The second bill, House Bill 90, was favorably reported by the Senate Banking and Insurance Committee on Wednesday afternoon. Sponsored by Rep. Kerry Rich (R-Guntersville), the legislation makes two technical changes to the law related to the “right of redemption” period for foreclosed, homesteaded properties. Three years ago, an association-supported law cut the one-year redemption period for these properties in half, and required a notice be sent via certified mail to the homeowners informing them of their redemptive rights. Complications around proving whether that notice was properly sent, however, effectively nullified the change in the law. This bill, which fixes these problems, was drafted by the Alabama Land Title Association and is publicly supported not only by the Alabama Bankers Association but also by the Alabama Association of Home Builders and the Alabama Association of Realtors. Once approved by the full Senate, the bill will go to Gov. Ivey’s desk for her signature.

As always, Capitol Notes provides readers with a brief summary of legislation that might impact Alabama’s banking industry. Those summaries are as follows:

House Bill 90 by Rep. Kerry Rich (R-Albertville) and Senate Bill 30 by Sen. Clay Scofield (R-Arab) make technical changes to an association-supported law passed in 2015 related to the right of redemption for homesteaded properties. Current law caps the redemption period for these properties at 180 days, while the redemption period for all other types of properties is one year. In exchange for the shorter redemption period, legislators in 2015 required that a property owner be notified via certified mail of his redemption rights. These bills merely stipulate that even if this notice is defective, the redemption period is the same as it is for all other types of properties (i.e., one year). It also states that being able to prove the notice was mailed is a defense to a claim that the notice was never received. Both bills were favorably reported by the Senate Banking and Insurance Committee this week, and now await action by the full Senate.

House Bill 100 by Rep. Will Ainsworth (R-Guntersville) and Senate Bill 60 by Sen. Clay Scofield (R-Arab) are association-drafted bills aimed at correcting an issue in state law that was discovered last year. With the exception of county commissions, all public depositors are allowed to elect their qualified public depository at any time, meaning a local school board could theoretically deposit its public funds in Bank A on a Monday, only to draw them out and deposit them in Bank B the next day. With county commissions, however, the qualified public depository must be elected the first week of every December and used for the entirety of the subsequent year. These bills simply allow county commissions, like all other public depositors, to elect their depository at any time. Senate Bill 60 passed the Senate on Thursday and was subsequently referred to the House County and Municipal Government Committee. It is expected to consider the bill soon.

House Bill 117 by Rep. Paul Beckman (R-Prattville) would specify that a civil action to recover debt on an open-end credit plan, including credit card or similar revolving debt, would be required to be commenced within six years. Proponents of this legislation believe that this bill merely cements current law, though opponents say that, under certain circumstances, the appropriate statute of limitations is three years. The House Financial Services Committee sent this bill to its Regulations Subcommittee for further study.

House Bill 183 by Rep. Paul Beckman (R-Prattville) and Senate Bill 227 by Sen. Greg Albritton (R-Atmore) is the Uniform Trust Decanting Act (UTDA). Drafted by the Alabama Law Institute, the UTDA allows a trustee to reform an irrevocable trust document within reasonable limits that ensure the trust will achieve the settlor’s original intent. The act prevents decanting when it would defeat a charitable or tax-related purpose of the settlor. Approved in 2015 by the Uniform Law Commission, Alabama would be the sixth state to adopt the UTDA. The House Financial Services Committee favorably reported the House bill out of committee last week. It now awaits action by the full House.

House Bill 181 by Rep. Matt Fridy (R-Montevallo) and Senate Bill 152 by Sen. Rodger Smitherman (D-Birmingham) is the Uniform Voidable Transfers Act (UVTA), another Alabama Law Institute/Uniform Law Commission bill. In short, the UVTA, which would replace Alabama’s version of the Uniform Fraudulent Transfers Act, strengthens creditor protections by providing remedies for certain transactions by a debtor that are unfair to the debtor’s creditors. Both bills have been favorably reported out of committee and now await action by the full House and the full Senate.

House Bill 248 by Rep. Kyle South (R-Fayette) and Senate Bill 201 by Sen. Trip Pittman (R-Montrose) is the Alabama First-time Home Buyer Savings Account Act, which allows first-time home buyers to establish a first-time home buyer savings account to save funds for a down payment and closing costs for the purchase of a home. The holder of one of these special accounts would be provided with an annual state income tax deduction of up to $6,000 (or $12,000 for joint accounts) for up to five years. The House version of this bill was favorably reported out of committee this week. The Alabama Bankers Association, working with the Alabama Association of Realtors, added a technical amendment to the bill that will make it easier for these accounts to be administered by the banking industry.

House Bill 273 by Rep. Patricia Todd (D-Birmingham) and Senate Bill 242 by Sen. Linda Coleman-Madison (D-Birmingham) doubles the Mortgage Record Tax and allocates the revenues to the Alabama Housing Trust Fund, which has never before received funding from this tax (or from the state), as well as to the state, the counties, and the probate judges, each of which already received a portion of the Mortgage Record Tax. This legislation has been introduced in each of the past few sessions, but it has never advanced out of committee.

Senate Bill 53 by Sen. Clyde Chambliss (R-Prattville) requires the closing statement used to finalize real estate transactions to delineate, if applicable, the amount of the real estate appraisal fee that went to an appraisal management company. While the association has no position on the fee disclosure provisions of this legislation, it strongly objects to modifying the closing statement. Sen. Chambliss understands our concerns and has agreed to work with us on a solution.

Senate Bill 92 by Sen. Arthur Orr (R-Decatur) revises Alabama law related to unemployment compensation by basing the maximum amount of unemployment benefits on a variable rate. The rate would vary based on the state’s unemployment rate, meaning a recipient would receive benefits for a longer duration during tough economic times and a shorter duration during positive economic times. According to the National Federation of Independent Businesses, Alabama would be the sixth state to pass this bill (or something similar) and the state’s unemployment compensation trust fund would likely realize a savings of over $50 million annually. The Senate passed this bill last week. It now awaits action by a House committee.

As of the end of the eighth legislative day, representatives and senators have introduced 647 bills – 370 in the House and 277 in the Senate – and 186 resolutions. Of those 833 measures, 32 have been signed into law as of this writing.

The 2018 Regular Session can last for no more than 30 legislative days and must end on or before April 23.

The Legislature will reconvene for the ninth legislative day on Feb. 6.

Questions or comments? Contact Jason Isbell, vice president of legal and governmental affairs, at