Ala. Admin. Code r. 80-10-17-.05

Current through Register Vol. 43, No. 1, October 31, 2024

Section 80-10-17-.05 - Lien For Assessment Under Code of Ala. 1975, Sections2-19-120 et seq.-Validity And Priority Against Certain Persons

(1) Purchasers, holders of security interests, mechanic's lienors, and judgment lien creditors. The lien imposed by Section 2 of these regulations shall not be valid as against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor until notice thereof which meets the requirements of subsection (6) has been filed by the Commissioner or his delegate, and shall not be perfected as against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor until the date such notice is filed.

(2) Protection for certain interest even though notice filed. Even though notice of a lien imposed by Section 2 of these regulations has been filed, such lien shall not be valid:

(a) SECURITIES. With respect to a security (as defined in subsection (5)(d)):

1. As against a purchaser of such security who at the time of purchase did not have actual notice or knowledge of the existence of such lien; and

2. As against a holder of a security interest in such security who, at the time such interest came into existence, did not have actual notice or knowledge of the existence of such lien.

(b) MOTOR VEHICLES. With respect to a motor vehicle (as defined in subsection (5)(c)), as against a purchaser of such motor vehicle, if:

1. At the time of the purchase such purchaser did not have actual notice or knowledge of the existence of such lien; and

2. Before the purchaser obtains such notice or knowledge, he has acquired possession of such motor vehicle and has not thereafter relinquished possession of such motor vehicle to the seller or his agent.

(c) PERSONAL PROPERTY PURCHASED AT RETAIL. With respect to tangible personal property purchased at retail, as against a purchaser in the ordinary course of the seller's trade or business, unless at the time of such purchase such purchaser intends such purchase to (or knows such purchase will) hinder, evade, or defeat the collection of any assessment under this title. The purchase of cotton crops is not tangible personal property purchased at retail.

(d) PERSONAL PROPERTY PURCHASED IN CASUAL SALE. With respect to household goods, personal effects, or other tangible personal property (excluding cotton crops) purchased (not for resale) in a casual sale for less than $250, as against the purchaser, but only if such purchaser does not have actual notice or knowledge (A) of the existence of such lien, or (B) that this sale is one of a series of sales.

(e) PERSONAL PROPERTY SUBJECT TO POSSESSORY LIEN. With respect to tangible personal property subject to a lien securing the reasonable price of the repair or improvement of such property, as against a holder of such a lien, if such holder is, and has been, continuously in possession of such property from the time such lien arose.

(f) REAL PROPERTY TAX. With respect to real property, as against a holder of a lien upon such property, if such lien is entitled to priority over security interests in such property which are prior in time, and such lien secures payment of ad valorem tax.

(g) REAL PROPERTY SUBJECT TO A MECHANIC'S LIEN FOR CERTAIN REPAIRS AND IMPROVEMENTS. With respect to real property subject to a lien for repair or improvement as against a mechanic's lienor but not to exceed $5,000

(h) CERTAIN INSURANCE CONTRACTS. With respect to a life insurance, endowment, or annuity contract, as against the organization which is the insurer under such contract, at any time:

1. Before such organization had actual notice or knowledge of the existence of such lien; or

2. After such organization had such notice or knowledge, with respect to advances required to be made automatically to maintain such contract in force under an agreement entered into before such organization had such notice or knowledge.

(3) Priority of interest and expenses. If the lien imposed by Section 2 of these regulations is not valid as against a lien or security interest, the priority of such lien or security interest shall extend to:

(a) Any interest or carrying charges upon the obligation secured;

(b) The reasonable charges and expenses of an indenture trustee or agent holding the security interest for the benefit of the holder of the security interest;

(c) The reasonable expenses, including reasonable compensation for attorneys, actually incurred in collecting or enforcing the obligation secured;

(d) The reasonable costs of insuring, preserving, or repairing the property to which the lien or security interest relates;

(e) The reasonable costs of insuring payment of the obligation secured; and

(f) Amounts paid to satisfy any lien on the property to which the lien or security interest relates, but only if the lien so satisfied is entitled to priority over the lien imposed by Section 4 of these regulations, to the extent that any such item has the same priority as the lien or security interest to which it relates.

(4) Place for filing; form.

(a) PLACE FOR FILING. The notice referred to in subsection (1) shall be filed:

(b) REAL PROPERTY. In the case of real property, in the probate office of the county in which the property subject to the lien is situated; and

(c) PERSONAL PROPERTY. In the case of personal property, including, but not limited to cotton crops, whether tangible or intangible, in the office (i) in which a financing statement would be filed to perfect a security interest with respect to such property pursuant to the Alabama Uniform Commercial Code, or (ii) of the Secretary of State, if a financing statement would not be required to be filed to perfect a security interest with respect to such property; provided, however, if the property is a motor vehicle (as defined under subdivision (5)(c) of this section), the assessment lien shall be perfected in the same manner as a security interest is required to be perfected with respect to such motor vehicle.

(d) FORM. The form and content of the notice referred to in subsection (a) shall be prescribed by the Commissioner or his delegate. Such notice shall be valid notwithstanding any other provision of law regarding the form or content of a notice of lien.

(5) Definitions. For purposes of this section, the following terms shall have the following meanings, respectively, unless the context clearly indicates otherwise:

(a) SECURITY INTEREST. Any interest in property acquired by contract for the purpose of securing payment or performance of an obligation or indemnifying against loss or liability. A security interest exists at any time (A) if, at such time, the property is in existence and the interest has become protected against a subsequent judgment lien arising out of an unsecured obligation, and (B) to the extent that, at such time, the holder has parted with money or money's worth.

(b) MECHANIC'S LIENOR. Any person who has a lien on real property (or on the proceeds of a contract relating to real property) for services, labor, or materials furnished in connection with the construction or improvement of such property. For purposes of the preceding sentence, a person has a lien on the earliest date such lien becomes valid against subsequent purchasers without actual notice, but not before he begins to furnish the services, labor, or materials.

(c) MOTOR VEHICLE. A self-propelled vehicle which is registered for highway use under the laws of any state or foreign country.

(d) SECURITY. Any bond, debenture, note, or certificate or other evidence of indebtedness, issued by a corporation or a government or political subdivision thereof, with interest coupons or in registered form, share of stock, voting trust certificate, or any certificate of interest or participation in, certificate of deposit or receipt for, temporary or interim certificate for, or warrant or right to subscribe to or purchase, any of the foregoing; negotiable instrument; or money.

(e) ASSESSMENT LIEN FILING. The filing of notice (referred to in subsection (1)) of the lien imposed by Section 2 of these regulations.

(f) PURCHASER. A person who, for adequate and full consideration in money or money's worth, acquires an interest (other than a lien or security interest) in property which is valid against subsequent purchasers without actual notice. In applying the preceding sentence for purposes of subsection (1) of this section:

1. A lease of property;

2. A written executory contract to purchase or lease property;

3. An option to purchase or lease property or any interest therein; or

4. An option to renew or extend a lease of property, which is not a lien or security interest shall be treated as an interest in property.

(6) Special rules.

(a) ACTUAL NOTICE OR KNOWLEDGE. For purposes of this article, an organization shall be deemed for purposes of a particular transaction to have actual notice or knowledge of any fact from the time such fact is brought to the attention of the individual conducting such transaction, and in any event for the time such fact would have been brought to such individual's attention if the organization had exercised due diligence. An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routine. Due diligence does not require an individual acting for the organization to communicate information unless such communication is part of his regular duties or unless he has reason to know of the transaction and that the transaction would be materially affected by the information.

(b) SUBROGATION. Where one person is subrogated to the rights of another with respect to a lien or interest, such person shall be subrogated to such rights for purposes of any lien imposed by Section 2 of these regulations.

(c) DISCLOSURE OF AMOUNT OF OUTSTANDING LIEN. If a notice of lien has been filed pursuant to subsection (4), the commissioner or his delegate is authorized to provide by regulations the extent to which, and the conditions under which, information as to the amount of the outstanding obligation secured by the lien may be disclosed.

Author: Robert J. Russell

Ala. Admin. Code r. 80-10-17-.05

New Rule: Filed February 12, 2004; effective March 18, 2004.

Statutory Authority:Code of Ala. 1975, §§ 2-2-8; 2-19-128; 2-18-135(c); Title 2, Chapter 19, Article 6.