Stiff v. Equivest: Alabama Governor Signs Senate Bill 111 Regarding Tax Sales Held Inside

Nelson Mullins previously wrote about the Alabama Legislature’s passage of Senate Bill 111, which was intended to resolve issues raised by the Alabama Supreme Court’s June 2020 opinion in Stiff v. Equivest Financial, LLC. On Thursday, Alabama Governor Kay Ivey signed the bill into law, which has now been enrolled by the Alabama Secretary of State as Alabama Act No. 2021-175.

The Act amends the language of Ala. Code § 40-10-15 to allow for tax sales to be conducted “on the premises of or within the courthouse or courthouse annex.” This expands the language from the prior version of Section 40-10-15, which required tax sales to be held “in front of the door of the courthouse.” It was this language that led the Alabama Supreme Court to conclude in Stiff that a tax sale occurring inside the courthouse was void.

The Act is not only intended to allow future tax sales to be held inside, but is also intended to cure any defects in previous tax sales caused by the Supreme Court’s opinion in Stiff. Section two of the Act directs that it is “retroactive to validate any prior sale of land for taxes conducted in accordance with this act.” This will give tax sale purchasers an argument that tax sales held inside are valid, regardless of the Supreme Court’s interpretation of the prior version of Section 40-10-15.

Parties challenging tax sales under Stiff will have an uphill battle to convince courts that the retroactivity provision of the Act does not apply. In Alabama, retroactive application of taxation statutes is generally accepted so long as the Legislature had a rational basis for enacting the legislation.[1] Alabama courts generally must consider curative acts passed to clarify or cure issues in prior law.[2]