The Alabama Appellate Courts have issued several legal opinions lately that touch on real estate principles, which AAR’s Legal Team has summarized below. As a reminder, although it is important for brokers and licensees to be aware of these issues, an attorney should always be consulted when one has a legal question or wishes to initiate legal action.

The Alabama Supreme Court considered an appeal of an unlawful detainer that originated in Jefferson County. In Murray v Porter, a property owner filed an unlawful detainer action in the Jefferson County Circuit Court to regain possession of a commercial property for which rent was overdue. The Circuit Court sided with the property owner and granted a judgement in her favor. However, the Alabama Supreme Court reversed that judgement because under Alabama law, an unlawful detainer action must first be filed in the District Court. As such, because the unlawful detainer action here was first filed in Circuit Court, the Alabama Supreme Court instructed the Circuit Court to invalidate its judgment in favor of the property owner. This case highlights the importance of getting an experienced attorney’s assistance in filing legal actions to ensure all procedural rules and law are followed.

The Alabama Supreme Court recently considered two different cases related to the right of redemption after a tax sale: Williams v Mari Properties andMorrison v May.

Williams v. Mari Properties dealt with a home that was sold to the State of Alabama at a 2003 tax sale. In 2016, the State sold the home to a subsequent purchaser, who in turn sold the home to Mari Properties in 2017. A few months after the 2017 sale, the original homeowner’s heir, Williams, filed a petition to redeem the property, which the probate court eventually granted. Mari Properties ultimately appealed the case to the Alabama Supreme Court.

Mari Properties’ argument was simple: Williams’ request for redemption shouldn’t have been granted because it was filed too late. The law about statutory redemption, Alabama Code § 40-10-120, says that a property “may be redeemed at any time before the title passes out of the state or, if purchased by any other purchaser, may be redeemed at any time within three years from the date of the sale by the owner. . .” Williams argued that this provision meant she could file for redemption either while the state still held title or within three years of the sale by the state to another owner. However, the Alabama Supreme Court found that Williams’ interpretation of the law was incorrect. The Court clarified that only one of the options listed under the law can apply to a given property. So, if a given property is sold to the state at the tax sale, then it can be redeemed anytime while the state still possesses the title. If, however, at the tax sale the property is sold to someone other than the state, then the redemption petition must be filed within three years of that sale. In this case, since the property was sold to the state, Williams would’ve had to file for redemption while the state still possessed the title (prior to the 2016 sale). After the state sold the property in 2016, Williams no longer had the option of requesting statutory redemption.

Morrison v May was related to judicial redemption under Alabama Code §§ 40-10-82 and -83. The case began with two adjacent lots. One lot contained the majority of a home, while the other lot contained the rest of the home and the home’s driveway. The lot with most of the home was subject to a mortgage. State taxes were not paid on either lot, and the lot which was not subject to a mortgage was sold to the state at a tax sale. The plaintiff, Morrison, purchased that lot from the state, not realizing that part of the home and the driveway were situated on her lot. The lot which had been subject to a mortgage was foreclosed upon, sold to Fannie Mae, and then sold to the defendants, the Mays. A while after each party had purchased their property, they became aware of the fact that part of the Mays’ home and Mays’ driveway sat on Morrison’s lot. Morrison sued the Mays to have them removed from her land and the Mays countersued to redeem the property under Alabama Code §§ 40-10-82 and -83.

The Alabama Supreme Court ruled in favor of Morrison, basing its decision on the 3-year timeframe to redeem a property provided under Alabama Code §§ 40-10-82 and -83. Here, the State sold the property to Morrison in 2013, but the Mays did not file their counterclaim until 2019, well beyond the 3-year limit. The Mays noted that Alabama Code § 40-10-82 provides an exception that there is “no time limit for recovery of real estate by an owner of land who has retained possession” and attempted to argue that this exception applied to them. However, the Court rejected this argument because, although the Mays were partially in possession of the land, they were not the owners, and therefore not included under the exception.^[1]

The Alabama Supreme Court issued an opinion in Cooper v Durham about how damages are to be calculated when a party breaches a purchase agreement for the sale of real property. In that case, a home was listed for sale on Facebook Marketplace. After the buyer, Durham, viewed the home and exchanged several text messages with the seller, Cooper, the two signed a purchase agreement that Durham found on the internet and completed without the help of a real estate agent or attorney. Durham was financing the purchase through an FHA loan, which was contingent upon the property appraising for equal to or above the contractually-agreed-upon price of $236,000. The property was appraised for $238,500, but that amount was contingent upon a storage shed located on the property either being repaired or removed. Cooper informed Durham that he could not afford any costs related to the shed, and Durham stated he would come by the property on a particular date to decide how to proceed with the shed. However, Durham did not go to the property on that date. Two days later, Cooper sent Durham a text message informing him that he would be terminating their purchase agreement. Durham sued Cooper, requesting both that the Court require that Cooper follow through with the contract and that Cooper pay damages to Durham. While the lawsuit was pending, Durham submitted a new appraisal of the property which reflected a value of $315,000.

The trial court granted Durham’s request for damages, awarding him $79,000. The court arrived at this amount by calculating the difference between the second appraised value of the property and the contractually agreed upon price. Cooper disagreed with this approach, arguing that damages for a breach of a land sale contract should instead be the difference between the contractually agreed upon price and the appraised value at the time of the breach.^[2] Durham agreed that Cooper’s suggested approach would be appropriate if the buyer had breached the contract, but argued that the approach the trial court took is required when the seller is the breaching party.

Ultimately, the Alabama Supreme Court sided with Cooper. The Court pointed to Alabama’s well-established caselaw that “the measure of damages for the breach of a contract for the sale of land is the difference between the contract price and the market value at the time of the breach.” Radetic v Murphy, 71 So.3d 642, 649 (Ala. 2011). This standard of calculating damages applies whether the breaching party is the buyer or the seller. As such, the case was sent back to the trial court for damages to be re-calculated.

The Alabama Supreme Court also weighed in on the notice requirement to make tax sales valid in Espinosa v Chamblin. Chamblin purchased a residence from Woods. The taxes for that property were assessed in Woods’ name both for the assessment which occurred slightly before the sale and for the assessment which occurred nine months after the sale. When both assessments went unpaid, the County advertised a tax sale of the property, but did so using Woods’ name, rather than Chamblin’s. The property was sold to the State at the tax sale, which then sold it to an LLC, which then sold it to Espinosa. Espinosa was given a tax deed and took possession of the property.

Chamblin sued Espinosa and requested that the Circuit Court declare the tax sale void. He argued that because the notice of the tax sale was to Woods, he was not given notice, and therefore the sale was invalid. The trial court agreed with his argument and invalidated the sale, and Espinosa appealed. The Court pointed to previous cases that established that one of the basic requirements of giving notice of a tax sale is that the notice is directed to the true owner, not to a previous owner.

The Alabama Court of Civil Appeals recently issued an opinion that clarifies some principles related to land use certificates. In Ret. Sys. of Alabama v Baldwin Cnty. Planning and Zoning Dep't et al, RSA was granted a land use certificate to expand The Grand Hotel, located in Point Clear in Baldwin County. In response, the Point Clear Property Owner’s Association (“PCPOA”) appealed the decision to the Baldwin County Board of Adjustment (the “Board of Adjustment”), and the Board of Adjustment found that the land use certificate should not have been granted. The Baldwin County Circuit Court affirmed the Board of Adjustment’s decision and RSA appealed to the Court of Civil Appeals. The Court of Civil Appeals agreed with the Circuit Court and Board of Adjustment that the land use certificate was correctly invalidated and affirmed their decision. 

The Court clarified several points of law with this case that are relevant to real estate professionals and owners. One point of law is related to the circumstances under which a land use certificate may be appealed. RSA argued that land use certificates that were granted could not be appealed because Alabama law only permitted appeals of certificates that were denied. The Court disagreed, stating that the plain language of Alabama Code §§ 45-2-261.11 and 18.2.6 “provide a right to appeal to any person aggrieved by any decision of the county zoning administrator.” See RSA v Baldwin Cnty. Planning and Zoning Dep’t at 15 (emphasis added).

A second point of law relates to how parcel boundary lines are defined for the purpose of zoning regulations. In the area in question, zoning regulations required a 40-foot setback on the front yard and a smaller setback on the side yard. RSA argued that only one side of their property should be considered the “front yard” for these purposes. However, PCPOA submitted evidence that Baldwin County had historically interpreted the “front yard” regulations as applying to any side of the property that abutted a body of water. The Court noted that Alabama law allows Boards of Adjustment to interpret their own regulations, provided their interpretation is reasonable, and the longer that a certain interpretation stands, the more credibility it is to be given by the court. Here, the Court found that the Board of Adjustment’s long-standing interpretation of what constitutes a “front yard” was reasonable and therefore should be used.

The Alabama Supreme Court recently issued an opinion related to prescriptive easements. An easement is a legal ability to use another person’s land for a particular purpose. For example, an easement can give someone the right to cross over their neighbor’s property to gain access to a nearby highway, as was the case in Smith et al. v Stowe and Norfolk Southern Railway Co.

In this case, Stowe owned a landlocked piece of land that was bordered to the south by active railroad tracks and bordered on all other sides by other properties. One of her neighbors, the Smiths, owned a property with a private access road extending from their property over the railroad tracks and to a local highway. The Smiths’ property also contained a private farm-to-market road that extended from their access road to Stowe’s property. Stowe and the previous owners of her property had been allowed by the Smiths to use both the farm-to-market and access roads for more than twenty years. However, when the Smiths learned Stowe planned to build a house on her property, they stopped allowing Stowe to use their roads. In response, Stowe petitioned the Jackson County probate court to grant her the right to use both roads. Specifically, she requested that the court grant a prescriptive easement, which is a type of easement that exists when one party has used the other party’s property over an extended period.^[3] The probate court granted Stowe’s request and the Smiths appealed. The Jackson Circuit Court upheld the probate court’s findings, granting Stowe nonexclusive prescriptive easements over both roads and requiring that Stowe pay both the Smiths and Norfolk Southern for the use of their properties. The Smiths appealed again.

The Alabama Supreme Court affirmed the Circuit Court’s findings on a few grounds. The Court began its discussion by noting that its analysis of a request for an easement varies depending on whether the property of the person requesting the easement is landlocked or not. Specifically, if the property is not landlocked, the requestor typically must prove all the factors needed for the easement. However, if the property is landlocked, then one of the factors must instead be proven by the opposing property owner. In this case, since Stowe’s property was landlocked, the Court applied the factors used for landlocked properties, which were in favor of Stowe. Additionally, the Smiths raised a few arguments related to Stowe’s theoretical ability to use different, more distant means of ingress/egress or to build her own dedicated access road. However, the Court rejected these arguments because Alabama law prefers the use of the nearest and/or most convenient existing right-of-way when building a new right-of-way would be cost-prohibitive, as in this case.

^[1]The Mays also asserted a different exception under the law which the Court rejected on the same grounds.

^[2] In this case, that difference was $2,500.

^[3]In Alabama, prescriptive easements have several requirements, including that they must have been in use for 20 years or more.