October 2026 Judicial Update

AAR’s Legal Team monitors state and federal appellate courts to bring you takeaways from cases that could impact your clients/customers or your business. Below are recent cases involving property rights, tax sales, contracts, and other issues affecting the real estate industry.

11th Circuit Court of Appeals

Comparable Sales Matter in Property Valuations

In Mill Road 36 Henry LLC, et al v. Commissioner of Internal Revenue (11^th Cir. 2026), a group involved in investing in real estate claimed an $8.9 million tax deduction after donating a conservation easement. The deduction was based on an appraisal valuing the property at more than $224,000.00 per acre before the easement. The Tax Court rejected that valuation, relying instead on similar properties in the same county and a recent sale involving the property itself, and valued the easement at $900,000.00

The Eleventh Circuit upheld that decision, including a 40% penalty imposed for grossly overstating the property’s value. The court also agreed that the property was held for sale as part of the owners’ real estate investment business, which further limited the available deduction. The case is a good example of why property valuations should be grounded in the actual market. A much higher valuation based on a proposed use or less comparable sales can carry consequences beyond simply having the value adjusted later.

Failure to Notify Insurer of Litigation May Result in Loss of Coverage

In Auto-Owners Insurance Co. v. Johnson (11^th Cir. 2026), the Eleventh Circuit affirmed a district court’s ruling that homeowners were not entitled to insurance coverage after failing to notify their insurer of threatened and pending litigation. The case arose from a dispute between neighbors over yard debris allegedly left on adjoining property. Although the homeowners received a letter threatening litigation and were later sued, they failed to notify their insurance company. The district court determined that their failure to comply with the notice requirements of their homeowner’s and umbrella insurance policies relieved the insurer of its duty to defend or indemnify them. When a dispute could lead to litigation, it is important for homeowners to review their homeowner’s insurance and any applicable umbrella policy and promptly notify their insurer as required by those policies.

Fulfillment of Option to Purchase Contracts
The Alabama Supreme Court recently considered Lee and Boles v. Vest(Ala. 2026), a case involving a lease agreement that included an option to purchase. Vest was a tenant of Lee and Boles who wished to exercise their right to purchase the property at the end of the tenancy, as allowed by the lease agreement. After experiencing issues obtaining a cashier’s check to provide the closing agent with the money due, Vest provided the closing agent with a personal check for the funds. The parties later mutually agreed to extend closing and the closing agent requested that Vest instead provide a cashier’s check or wire the funds. On at least 3 occasions, Vest asked the closing agent the whereabouts of their personal check and whether it had been destroyed. However, they never received a response and eventually put a stop payment on the check. Around the same time, the closing agent indorsed the check to Lee for deposit and turned the file over to Lee. Vest continued to express their willingness to continue with the sale, but desired to have an attorney involved with the deal. Lee and Boles then sent Vest a letter informing them that the option to purchase had expired. Vest sued Lee and Boles for specific performance, and while the suit was pending the Circuit Court ordered that Vest pay monthly rent to be held in escrow. The Circuit Court ordered that the parties proceed with the sale, and that the rent being held in escrow be applied to the total owed by Vest, and the Alabama Supreme Court affirmed. In the event a party to a property sale believes that the contract has been breached, the safest practice is to continue complying with all contractual terms and consult an attorney about possible next steps.
In another options contract matter, LaTonya McCain v. James Sneed and Vernetta Smoot(Ala. 2026), the Alabama Supreme Court considered a dispute involving a lease agreement with an option to purchase the property. Under the agreement, the tenants paid monthly rent of $825, made an initial payment of $10,800, and agreed to make annual payments of $3,000 toward a total purchase price of $114,00. When a dispute arose between the parties, the trial court ordered the landlord to transfer ownership of the property to the landlord and transfer ownership of the property to tenants, treating their monthly rent payments as payments toward the purchase price. However, the agreement specifically stated that only the initial payment and annual payments would count toward the purchase price. The Alabama Supreme Court held that the monthly rent payments could not be credited toward the purchase price because the agreement terms did not apply rent payments toward the purchase price. Although the tenants were entitled to receive the property under an earlier ruling, the Court determined that they still owed the landlord $79,200 of the agreed purchase price. This case emphasizes the importance of clearly distinguishing between rent payments and payments toward the purchase price in lease agreements that include an option to purchase. Unless the agreement provides otherwise, tenants should not assume that their monthly rent payments will reduce the amount owed to purchase the property.

Alabama Court of Civil Appeals

Due Process in Revoking an Appraiser's License

In Pullum v. Alabama Real Estate Appraiser’s Board and Attorney General of the State of Alabama (Ala. Civ. App. 2026), the Alabama Court of Civil Appeals considered a case involving an appraiser whose license was revoked. The Real Estate Appraiser’s Board based much of its decision to revoke Pullum’s license on prior violations. However, it did not notify Pullum that those prior violations were being considered and therefore, Pullum didn’t have an opportunity to respond to or rebut those prior cases. Pullum appealed the revocation to the Circuit Court, arguing that his lack of awareness that the Board was considering his prior violations deprived him of due process. The Circuit Court agreed and referred the case back to the Real Estate Appraiser’s Board to reconsider, this time providing him with proper notice. Pullum appealed the Circuit Court’s decision to the Alabama Court of Civil Appeals, arguing that because the matter had already been in front of the Real Estate Appraiser’s Board once, it could not be reconsidered and he was instead due to have his license reinstated. The Court of Civil Appeals agreed that Pullum had been deprived of due process at the original revocation hearing but disagreed that the effect of that deprivation was to reinstate his license. Instead, the Court of Civil Appeals affirmed the Circuit Court’s order that the Real Estate Appraiser’s Board was to re-hear the matter. Although Courts will protect due process rights in administrative hearings, a violation of those rights does not necessarily invalidate the underlying allegations or prevent an administrative board from reconsidering the matter.

Eleventh Circuit Court of Appeals

Gregory Brian Myers v. U.S. Bank National Association, et al(11^th Cir. 2026).
Pablo Dario Castillo v. Fernando Colmenares (11^th Cir. 2026).
Doshynko Sullivan v. FP Glenwood, LLC, et al(11^th Cir. 2026).
Tawana L. Carter v. Wells Fargo Bank (11^th Cir. 2026).
Victor Padilla, et al v. Nationstar Mortgage, LLC (11^th Cir. 2026).
Cynthia Sanders-Bey et al v. HSBC Bank USA, National Association, et al (11^th Cir. 2026).
In re: BAMC Development Holding, LLC(11^th Cir. 2026).
Allen Martin v. EasyKnock LLC, et al (11^th Cir. 2026).
Mohamed Asker v. Bank of America, N.A., et al (11^th Cir. 2026).
Victor Warren Properties, Inc. v. Betty Dickerson (11^th Cir. 2026).
James Bussey v. McCalla Raymer Leibert Pierce, LLC, et al (11^th Cir. 2026).
In re: Johnson & Dixie, LLC (11^th Cir. 2026).
Darin Whitchurch, et al v. Michael Danny Mulket, et al (11^th Cir. 2026).
Samuel Ghee IV v. Alabama Power Company, et al (11^th Cir. 2026).
Kimberly Galvin v. Moliere Dimanche, Jr. (11^th Cir. 2026).
Aymara Sorhegui v. Park East Homeowners Association, et al(11^th Cir. 2026).
Berkshire Hathaway Homes v. Aarazae Vinson (11^th Cir. 2026).
Joshua Jordan v. Bob Henriquez(11^th Cir. 2026).
Varondria Williams, et alv. Edwards J. Fay, et al (11^th Cir. 2026).
Access Point Financial, LLC v. Charles Everhardt (11^th Cir. 2026).
Jeevan Malhotra v. Ajit Kumar, et al (11^th Cir. 2026).
Wells Fargo Financial System Florida, Inc. v. 5307 CWELT-2008 LLC (11^th Cir. 2026).
Tracey Brown v. Neil Gordon (11^th Cir. 2026).
Shaunda Sanders, et al v. Elmington Property Management, LLC, et al (11^th Cir. 2026).
Kimberly Jones, et al v. Carrington Mortgage Services, LLC, et al(11^th Cir. 2026).

Alabama Supreme Court

Alabama Court of Civil Appeals

Henri N. Beaulieu, Jr. v. Jay Whitworth and Sean Kevin Lando (Ala. Civ. App. 2026).
Cynthia Bachus v. Jessia Myers Kennington (Ala. Civ. App. 2026.)