Today, the 2023 Regular Session of the Alabama Legislature came to a close as they reconvened at 1:30. This session, which marked the first year of a four-year quadrennium, was one to remember, with over 35 new legislators and the interruption of a special session. Massive budgets, supplemental funding, tax reductions, tax rebates, and the revitalization of economic incentives were all on the table this year. The Alabama REALTORS® experienced an eventful session as well, featuring a highly attended REALTOR® Day, an inaugural breakfast to support our legislators, state officers, and staff, the successful passage of a major bill, and a victorious defense against unfavorable legislation. Continue reading for highlights from the 2023 legislative session.

876 bills were filed this session – 524 in the House and 352 in the Senate. This number, of course, does not include other legislative activities like resolutions and confirmations but does include companion bills and local bills. Of the 876 bills, over 259 were signed into law as of yesterday, and 109 await the Governor’s signature. 

The majority of the initiatives set by the governor and legislative leadership passed and have been or will be signed in some form. The budgets are the only required tasks of the legislature, and this year’s budgets were record-breaking, totaling over $15 billion when including the supplemental bills for both education and the General Fund. The 2024 education budget was $8.8 billion and the General Fund $2.8 billion. 

Several initiatives were included in the budgets. For example, the Governor’s promised tax rebate ultimately passed but was decreased to $150 per individual and $300 per joint filer from the proposed $400 and $800. In addition to the tax rebate, a unanimous decision led to a tax cut on the state's sales tax on food. The bill will reduce the 4% current rate to 3% this year and a possible further 1% reduction if growth in tax receipts hits certain benchmarks. Another bill passed that excludes overtime pay from the 5% state income tax. The bill has a $25 million cap. 

A few of the other projects funded include $179 million to a K-12 capital grant fund for school construction projects, $354 million to an educational opportunities reserve fund (special education savings account),  $30 million for distressed colleges (i.e., Birmingham-Southern), $50 million in a savings account, $40 million to pay off four state bonds early, $18 million to finish the Taylor Hardin mental health project in Tuscaloosa, $5 million to Mobile’s new airport, $20 million to the State Port authority, and $5 million for Montgomery’s Maxwell Gateway project.

Another leadership initiative focused on K-12 education and school choice. One bill in particular expands the Alabama Accountability Act, which is a tax-deductible donation-funded scholarship program aimed at assisting low-income students in leaving schools with poor scores. Among other things, the bill increases the income threshold for qualifying students, increases scholarship amounts, and increases the tax credits allowed per year.  

The Alabama REALTORS® advocated strenuously on behalf of real estate professionals and private property rights. These efforts are guided by the Alabama REALTORS® Policy Statements. The Statements are substantially renewed every four-year term (or quadrennium) and updated annually as issues arise. The public policy team uses the Statements as a guide, directing the REALTOR® positions on legislation and other governmental actions. You can view a copy of the Alabama REALTORS® 2023 to 2026 Policy Statements here. 

The Alabama REALTORS® public policy team reviewed all 876 bills, as well as numerous amendments, and tracked 245 of the bills in some capacity. The 13 bills opposed did not pass or received amendments that removed the problematic nature of the bill. Of the two REALTOR® bills filed, one successfully passed, while the other, focused on work-force housing, jumpstarted the conversation as intended. Only one of the 13 bills supported by Alabama REALTORS® did not pass or have a companion bill pass, and one of those may pass today 

Wholesaling and Long-term Listing Agreement Bill: A REALTOR®-backed bill addressing two important issues that are unfair to homeowners in Alabama became law. The first issue addressed is long-term right to list agreements, where companies were offering incentives to homeowners in return for a 40-year listing agreement on a home. The listing agreements are then recorded as liens against the property. Under the bill, any agreement to list a home that is recorded, or purports to run with the land or create a lien, cannot exceed one year. The second issue addresses the wholesaling of residential property and requires disclosure to the seller and prospective buyers by a wholesaler. This does not prevent the parties from agreeing otherwise but provides protections to unsuspecting homeowners and homebuyers. Commercial and other property types are excluded from the legislation. The bill provides punitive damages for violations of each issue. 

Workforce Housing Incentives:Housing shortages plague our nation and our state. REALTORS® backed a bill intended to start the conversation about the need for more workforce housing in Alabama. The legislation sought to address the shortage of housing for Alabama’s workers by providing a tax credit to incentivize developers to build more affordable housing units. Under the bill, the tax credit program would be managed by the Alabama Housing Finance Authority, and projects would be awarded in cooperation with the Alabama Department of Commerce. The developments would provide income restricted housing for workers who make no more than 60% of the Adjusted Median Income within a community. The non-refundable credit would deduct from state tax liability and also utilize any available federal dollars. The Workforce Housing Tax Credit achieved the objective of spurring discussion on the issue and will be brought again next year. 

Economic Incentive Bills: The four-bill package renewing Alabama’s economic incentives passed as the major, non-budget accomplishment of the session. One of the bills renews the incentives – the Alabama Jobs Act, for a number of years. The second bill, called the SEEDS Act, provides grants to fund site development. The third bill creates more transparency by requiring the publication of data related to the economic incentives, while the last bill aims to supercharge growth in Alabama’s innovation economy and support small businesses in rural areas. The Alabama REALTORS® supported the bills as a major component of Alabama’s efforts to attract new industry and expand new industry in the state. 

AREC Sunset Bill: The bill renewing the Alabama Real Estate Commission for an additional year passed. As required by the Alabama Sunset Law, each licensing body is subject to review and audit by the Alabama Department of Examiners of Public Accounts, which then reports any findings to the Alabama Legislature for the renewal or termination of the licensing body. Most licensing agencies or departments are renewed by the legislature in four-year increments. This year, the Real Estate Commission was renewed for one year for the third time in three years. 

Property Tax Valuation Notice Timeline: Supported by the Alabama REALTORS®, a bill setting common sense deadlines on property tax valuation notices passed and is on the governor’s desk. HB 491 sets July 1 as the deadline for county tax officials to mail out revised valuation notices. These notices inform property owners about changes in property valuation for the purpose of property tax assessment. Also, the bill provides additional time to pay the property taxes when a valuation is appealed and the decision by the local Board of Equalization is pending. 

Financial Literacy Course Requirement:  A new act signed into law by Governor Ivey will require financial literacy classes for high school students. The act requires high school students to complete a course on financial literacy and money management before graduating high school. Supported by the Alabama REALTORS®, the bill is a wonderful opportunity to improve the personal finance acumen of Alabamians, knowledge that will be of great benefit when these students begin saving to buy a home.

Brownfield Re-development Bill: In relation to the economic incentive bills, one bill has been enacted with the objective of stimulating economic development in areas known as brownfields, which are previously utilized industrial sites. The newly enacted law aims to enhance the appeal and viability of these sites for future development. The bill incorporates various measures, including the expansion of liability limitation provisions for parties potentially accountable for contamination if they willingly participate in a clean-up program. Furthermore, the bill establishes a brownfield remediation reserve fund dedicated to the remediation of brownfields and introduces brownfield redevelopment districts to promote the reuse of these properties. Alabama REALTORS® supported the bill as a smart and measured way to put old properties back into use, spurring economic development, new jobs, and the need for homes.  

Mortgage and Deed Recording Fee IncreaseFails: Proposed for several years, a bill that aimed to double the tax on recording mortgages, deeds, and similar instruments from 15 cents to 30 cents per 100 dollars did not pass. The Alabama REALTORS® opposed the bill, considering it a tax increase on prospective property buyers and an added burden at a time when affordability is already a significant concern. Although the bill advanced with an incorrect committee vote, it did not progress further in the legislative process.

Electronic Security Board – REALTOR® Amendment: A bill amending the electronic security board license laws passed with a REALTOR® amendment. The bill deals with locksmiths and electronic security system installers, and the REALTOR® amendment added an exemption for owners, property managers, and their agents from needing a license as long as they are not advertising themselves as locksmiths. This exemption aims to provide flexibility for these individuals and acknowledges their role in managing properties without requiring them to obtain a locksmith license.

Electrical Contractors Board:For the third consecutive year, the Alabama REALTORS® public policy team requested an amendment to a bill that would enhance the licensure requirements and penalties for electrical contractors. As drafted, the bill would have eliminated an owner exemption which allows owners of property to perform routine maintenance on his or her property. An amendment exempting owners and property managers, and their full-time, part-time or contract employees, from having an electrical contractor’s license in certain settings was successfully added to the bill. The amendment allows property managers to provide basic electrical work, like changing light fixtures and switches, and allows licensed plumbers and HVAC contractors to connect appliances or equipment when working under their respective licenses. The bill passed the House but did not pass out of Senate committee. 

Home Inspector Liability Limitation: REALTORS® successfully opposed a bill aiming to further insulate home inspectors from claims by homeowners. Advocates for the bill stated that legislation is needed because home inspectors are seeing an increase in claims by homeowners against them and believe inspectors are being asked to provide “warranties” for homes. The Alabama REALTORS® and the Alabama Home Builders opposed the effort as further insulating home inspectors from almost any accountability or claims by homeowners for the negligence of an inspector. The bill did not make it out of committee.

Foreign Country Alabama Land Ownership Limits: A new law bans North Korea, Iran, Russia and China from owning certain agricultural land in Alabama. The Alabama REALTORS® worked with the bill sponsors to narrow the scope of the legislation to agriculture and timber property and add language exempting real estate licensees from liability under the bill. The REALTOR® language was incorporated into the substitute bill. Further amendments expanded the bill from China to include the countries of North Korea, Iran, and Russia. One concern was the applicability to legal immigrants and businesses owned by these individuals. The final version of the bill removed any applicability to individuals, except for members of the political parties in the four countries. 

Property Tax Sale Changes Fail: The Alabama REALTORS® public policy team engaged all year on a property tax sale bill that would have made significant changes to Alabama’s tax sale statutes dealing with the sale of property for failure to pay taxes. While the bill aims to clarify some issues with the tax sale statutes, including provisions dealing with an Alabama Court of Civil Appeals decision, the bill protects tax sale purchasers over property owners, and exacerbates an already problematic process. Negotiations over the bill reached an impasse, and the bill was carried over for the year. The state is moving away from the tax sale process, with more and more county tax officials moving to tax liens as a more friendly process to property owners. 

Centralized Mailbox Ban:A bill banning local governments from requiring the installation of centralized or cluster mailboxes passed the legislature. Supported by the Alabama Homebuilders Association, the bill is aimed to limit a push by municipalities in some areas of the state that increases costs and complications on new development. 

Voluntary Dam Safety Program: Trimmed down from the broad program pushed a few years ago, a bill creating a voluntary dam safety program passed and was signed by the governor. Reviewed by the Alabama REALTORS® public policy team prior to being filed, the bill requires any state-owned dam to be put in a safety program and allows privately-owned dams to be added at the request of the owner. The bill also exempts the many dams in the state that fall under federal regulation (e.g., Martin Dam). Due to the voluntary nature of the program, the bill does not impact private property owner with dams on their property. 

Additional Judgeships Created: A bill focused on relieving some of the stress on backlogged courts passed the legislature last week. SB 39, sponsored by Sen. Sam Givhan (R-Huntsville), adds circuit and district judgeships in several areas of the state, focused on areas that have seen high population increases recently. Backlogs in court systems create hurdles for Alabamians by causing costly delays in the adjudication of cases, which can be extremely lengthy in some parts of the state. This is especially true in areas where population increases have resulted in increasing caseloads. The bill aims to relieve the congestion by creating eight additional circuit judgeships in the Sixth, Eleventh, Nineteenth, Twenty-third, Twenty-eighth, and Thirty-seventh Judicial Circuits, as well as five additional district judgeships in Baldwin County, DeKalb County, Mobile County Shelby County and Madison County. The election of the new judgeships would be split between the 2024 and 2026 General Elections.

Indemnification Agreements Limitation In Contractor Contracts:The Alabama REALTORS® and other business groups opposed a bill that would limit the ability to contract and negotiate indemnification agreements between contractors and sub-contractors. Advocates for the legislation believe that subcontractors are being unfairly asked to sign indemnification agreements by general contractors and as a result are being included in frivolous lawsuits or for issues for which the sub-contractor is not responsible. Trial lawyers frequently file lawsuits, using a “shotgun” approach that names any and all known contractors and subcontractors in a construction defect case or related litigation. As the lawsuits move forward, unresponsible parties are released from the lawsuit through negotiated settlements and/or dismissals. Opponents of the legislation have advocated that the legislation diminishes the right to for parties to negotiate contracts at arm’s length and would lead to more litigation within the construction and real estate industries to the detriment of property owners. The bill did not pass. 

Madison County Impact Fees:The Alabama REALTORS® joined other groups in opposing a bill that would have charged a 1% impact fee on new development in Madison County. Many local governments attempt to use impact fees to pay for infrastructure, especially in areas of high growth. The effects of these impact fees are drastic, increasing costs of development which is passed onto homeowners in the form of more expensive homes. The bill did not move. 

Ad Valorem Advisory Committee Created:The Alabama REALTORS® joined other business groups in opposing legislation that would have brought the manuals governing how a county tax official evaluates property for ad valorem taxes under the Administrative Procedures Act. The bill was amended to create an advisory committee that provides non-binding feedback of county tax officials to the Alabama Department of Revenue. REALTORS® and others opposed the original bill as creating too much red-tape for a process that maintains uniformity across the state. The bill passed in its amended form. 

Retail Theft Crimes Created:Retail theft is a major problem in the United States. Retail advocates successfully pushed a bill that creates two different crimes for retail theft in a bid to tamp down on the rampant crime. One such crime is retail theft and has staggered penalties based on the items and amounts stolen. The second crime is aimed at organized retail theft and has steeper penalties for multiple thefts organized by multiple parties. The bill awaits the governor’s signature. 

Historic Tax Credit Program Change:One bill may still pass that makes small changes to the Historic Tax Credit Program. The amounts remain unchanged at $20 million annual allocation and $200 million from 2017 to 2027 after amendments stripped an increase to $40 million annually. In its current form, the bill increases the age of the buildings from 60 to 75 years, adds the chair of the House and Senate education committee to the Historic Tax Credit Evaluating Committee and adds specific factors to be considered by the Evaluating Committee when evaluating projects, among other things. The bill passed on the last day of session and awaits the governor’s signature.

Thank you to all of our members who participated this legislative session, whether at REALTOR® Day, reading Capitol News and Notes, or otherwise. We could not do this without you. As always, your Alabama REALTORS® public policy team will continue to advocate for REALTOR® interests and private property rights.