The Alabama Property Protection Act of 2026 (formerly SB 292, now Act 2026-536) was designed to strengthen protections against real estate fraud involving seller impersonation and fraudulent conveyance, especially of vacant land. The Act creates a process for reporting and investigating potential property fraud, including recovery options for victims of fraud, adds verification responsibilities for various professionals throughout the sale or lease of a property, and increases criminal penalties for fraudulent sales.

This article is for information only and does not constitute legal advice. If you need legal advice, please seek guidance from retained counsel.

Licensee Requirements

The Act focuses on verifying identity and ownership at multiple steps throughout a transaction. These requirements are triggered only when both of the following are true: (1) the real estate licensee does not know the purported seller; and (2) the licensee and the purported seller are not meeting in person. In those situations, the licensee must obtain a copy of government identification from the seller, as well as documentation confirming the seller owns the property. If the licensee does not receive these documents, they are prohibited from listing the property for sale or lease.

Another important change is record keeping. If a licensee completes the required identity and ownership verification steps, they must be able to prove it. Licensees are required to maintain documentation of compliance with these requirements for five years.

High Risk Transactions Will Face More Scrutiny

The Act also increases scrutiny on higher risk transactions. Vacant land, non-owner-occupied property, and property which is unencumbered by a mortgage will require additional verification prior to closing. In those situations, the settlement agent must confirm identity and ownership before the transaction can be completed.

Stronger Criminal Penalties for Fraudulent Activities

The Act also increases criminal penalties for fraudulent activity involving residential real property. When a person, with intent to defraud, lists, advertises, or causes the listing or advertisement of residential real property for sale, knowing that the purported seller lacks legal title or authority to sell the property, they can be charged with a Class D felony. If the person receives funds related to the sale or defrauds a true owner who is 70 years old or older, they can be charged with a class C felony.

Consumer Complaint and Enforcement Process

A major addition under the Act is a formal complaint, investigation, and recovery process through the Alabama Securities Commission (“ASC”). A consumer who believes they are a victim of a fraudulent conveyance can file a complaint directly with the ASC. The ASC is then authorized to investigate the claim and determine whether fraud occurred.

If fraud is found, the ASC has broad authority to act. It can invalidate the fraudulent conveyance and issue orders to restore ownership to the rightful property owner. It may also impose civil penalties and/or may compensate the owner for economic losses, depending on the findings. Owners are compensated through a newly established consumer recovery fund, which is funded through enforcement actions, penalties, and forfeitures (rather than being funded through taxpayer appropriations). For example, any profits obtained through a fraudulent conveyance may be required to be forfeited to the state, and failure to comply with a forfeiture order can result in additional penalties.

Expedited Quiet Title Process

Further, the Act establishes an expedited quiet title process in for fraudulent conveyances. This is intended to streamline the court process for clearing fraudulent transfers from the record and restoring clear title to the rightful owner. After the ASC issues a final order regarding a fraudulent conveyance, the complainant receives a copy. The complainant can file the order in circuit court to enforce the decision and restore title. In practical terms, this creates a faster administrative pathway to address fraud before it becomes a lengthy court dispute.

Online Listings and MLS Platforms

The Act also recognizes the role that online listing platforms, including Multiple Listing Services (“MLSs”), play in real estate transactions. MLSs and other online listing platforms must have procedures in place to reduce the risk of fraudulent listings, whether for sale or for lease. When a listing originates with a consumer (instead of a real estate licensee), the listing platform must verify the individual’s identity and property ownership status.

Additionally, the Act gives property owners the ability to request that an online platform remove any photos of the interior of the property from public display. The online platform must verify the requestor’s identity and ownership status, and is required to remove the interior photos within 30 days of the verification.

Property Owner Notification System

Finally, the Act creates a framework to expand a property owner notification system which currently exists in some Alabama counties, including Autauga, Baldwin, Coosa, Covington, Jefferson, Madison, Marshall, Mobile, and Montgomery. The free service allows property owners to enroll to receive notifications for any land record (such as a deed, lien, or mortgage) that is recorded with the local probate court in connection with their name or property. The Act allows any county to voluntarily opt in to offer this property notification system to its property owners. The system would be funded by the ASC, which may also offer fraud prevention training and assistance to any municipal, county, or state entity upon request, and offer fraud education for property owners.

Bottom Line

The Act is ultimately about protection. It helps protect property owners from fraudulent conveyances, and it protects licensees from unknowingly participating in fraudulent transactions. For licensees, the takeaway is simple: verify identity, confirm ownership, and document your steps. If something feels off, especially with remote sellers or vacant land, take additional steps to confirm that everything is proper before moving forward.

September 15, 2026 at 10:00 AM

AAR's Legal Team will provide information about the Alabama Property Protection Act, which goes into effect on October 1, 2026, and discuss changes to AAR's Legal Forms resulting from the law.