MONTGOMERY, Ala., March 5, 2021, Montgomery, Ala. — The fifth week of the 2021 Regular Session saw the introduction and advancement of several pieces of legislation important to the association.
On Tuesday, legislation was introduced in the House and Senate that would govern how financial contracts tied to LIBOR would operate after the publication of LIBOR is discontinued, which is currently slated for the end of the year. Rep. Danny Garrett (R-Trussville) and Sen. Dan Roberts (R-Mountain Brook) are the bill sponsors. The legislation is based on a similar bill filed in the New York Legislature that the Federal Reserve Bank of New York took a lead role in drafting. In short, once LIBOR is no longer available, this bill allows financial institutions to utilize other interest rate benchmarks as an alternative to LIBOR, so long as those benchmarks had been deemed acceptable by federal and state banking and credit union regulators.
Also on Tuesday, legislation was introduced by Rep. Merika Coleman (D-Birmingham) and Sen. Shay Shelnutt (R-Trussville) that provides trustees with a simple method for being released from service to a trust. Under current law, trustees seeking to be released from service must either file a formal account with the court or obtain signed releases from every beneficiary. This bill allows a trustee to send trust accounting information to every beneficiary along with a request to be released. If no written objection is received within 45 days, the trustee is released. Alabama would follow several other states in adopting this legislation.
There was some movement on one other bill of note this week, as Sen. Sam Givhan (R-Huntsville) advanced his legislation authorizing a process known as remote ink notarization, or RIN. This new-to-Alabama notarization method was introduced last year in one of Gov. Ivey’s emergency Executive Orders, and Givhan’s legislation essentially codifies portions of those orders.
Bills of importance to the banking industry include the following:
HB147 by House Financial Services Committee Chairman Chris Blackshear (R-Phenix City) and SB181 by Senate Banking and Insurance Committee Chairman Shay Shelnutt (R-Trussville) is the Elderly and Vulnerable Adult Financial Protection Act of 2021. These bills give financial institutions full discretion to refuse or delay a financial transaction whenever financial abuse of an elderly or vulnerable adult customer is reasonably expected. Introduced last year, these bills garnered unanimous support in both chambers, but were unable to pass into law after the session abruptly ended because of COVID-19. Senate Bill 181 has passed the Legislature and has been delivered to Gov. Ivey. It will become law upon her signature.
HB196 by Rep. Matt Simpson (R-Daphne) and SB35 by Sen. Greg Albritton (R-Atmore) makes technical changes to the Alabama Uniform Trust Decanting Act, a law passed in 2019 that provides a method for reforming or modernizing an irrevocable trust. Both bills have been passed by the House Financial Services Committee, putting the Senate bill one vote away from the Governor’s desk.
HB216 by Rep. Craig Lipscomb (R-Gadsden) is the Alabama Consumer Privacy Act, a law giving consumers various rights related to the collection of personal information by businesses. Modeled after a California law, the legislation imposes onerous burdens on businesses of all types, including financial institutions. The association had a meeting with the sponsor earlier this week outlining concerns about the bill, and the sponsor assured us that he did not plan to pursue the legislation.
HB293 by Rep. David Faulkner (R-Mountain Brook) is the Qualified Dispositions in Trust Act, which would authorize the creation of self-settled trusts in Alabama. Drafted by the Alabama Law Institute, this bill could theoretically expand opportunities for financial institutions providing trust-related services. On the other hand, this bill could provide debtors with an additional option of shielding assets from creditors. The bill, which was amended with the help of the association, has passed out of committee and should be on the House floor soon.
HB457 by Rep. Chris Pringle (R-Mobile) expands the Alabama Residential Mortgage Satisfaction Act to include mortgages securing commercial agricultural properties. This is the second year Pringle has introduced this legislation. The bill defines “commercial agricultural properties” as property located in this state that is used primarily for the growing of plants, trees, or animals primarily for a for-profit business and not for recreational purposes.
HB470 by Rep. Andy Whitt (R-Harvest) and SB275 by Sen. Sam Givhan (R-Huntsville) would allow documents to be remotely notarized under certain conditions. Drafted by a coalition of trade groups including the association, the Alabama Association of Realtors, and the Alabama Land Title Association, this bill codifies the “Remote Ink Notarization” provisions of Gov. Ivey’s Emergency Executive Orders. In short, it sets up guidelines that would allow a notary public to witness the signature of a document using videoconferencing platforms. The Senate bill passed out of committee this week and is in position to be voted on by the full Senate.
HB474 by Rep. Merika Coleman (D-Birmingham) and SB282 by Sen. Shay Shelnutt (R-Trussville) would amend the Uniform Trust Code to create a third option for a Trustee to use when seeking to be released from his or her service to a Trust. Under this option, release would be granted if no beneficiary or interested party objected to the release in writing within 45 days of receiving a notice of the release and an accounting of the Trust from the previous two years. The Senate bill was approved by a Senate committee this week and is in position to be voted on by the full Senate. The House bill will be in the Financial Services committee next week.
HB475 by Rep. Danny Garrett (R-Trussville) and SB279 by Sen. Dan Roberts (R-Mountain Brook) provides for how certain financial contracts would be governed after the publication of LIBOR is discontinued later this year. The Senate bill was approved by a Senate committee this week and is in position to be voted on by the full Senate. The House bill will be in the Financial Services committee next week
Through 12 legislative days, Representatives and Senators have introduced 813 bills – 506 in the House and 307 in the Senate – and 157 resolutions. As of this writing, 46 have been signed into law.
The regular session can include no more than thirty legislative days and must end on or before May 17, 2021.
The House and Senate will return to Montgomery for the 13th legislative day on Tuesday, March 9.
Look for this update to be published each week during the regular legislative session and at other times as necessary. This update is written by Jason Isbell, an attorney in the Governmental Solutions practice group at Maynard Cooper & Gale, Alabama’s largest law firm. Along with his colleagues at the firm, Jason is a governmental affairs consultant for the association. Jason can be reached at firstname.lastname@example.org or at (334) 782-1219.