Retroactive Legislation May Not Impair Vested Property Rights – Recovery of Excess Funds from Tax Sale


Douglas and Shiloh Creek, LLC v. Roper, et al., [Ms. 1200503, June 24, 2022] __ So. 3d __ (Ala. 2022). The Court (Bolin, J.; Parker, C.J., and Wise, Bryan, Sellers, Mendheim, Stewart, and Mitchell, JJ., concur; Shaw, J., concurs in the result) reverses summary judgments entered by the Shelby Circuit Court dismissing claims against Shelby and Calhoun County officials seeking to recover excess funds from a tax sale. The Court first explains that “[f]ollowing a tax sale, the minimum-bid portion of the purchase price paid by the purchaser at the tax sale is distributed to the various taxing authorities who are entitled to receive the taxes owed on the property. If the tax sale generates funds in excess of the minimum-bid amount, those excess funds are held by the county treasurer for distribution pursuant to § 40-10-28, Ala. Code 1975.” Ms. *3. The Court concludes that

[T]he right of a property owner to recover excess funds that are generated from a tax sale is a vested right that existed at common law. Property rights are vested rights…. The excess funds stand in the place of the property and are representative of the owner’s vested ownership interest in the property. Accordingly, an owner has a vested interest in the excess funds that result from a tax sale. Because an owner has a vested interest in the excess funds resulting from a tax sale, the amendments to § 40-10-28 – which burden the owner’s vested right to the excess funds by imposing upon the owner the often expensive and uncertain requirement of redeeming the property before claiming the excess funds – cannot be applied retroactively to prevent an owner from claiming the excess funds.

Ms. **35-36, citing Alabama Ins. Guar. Ass’n v. Mercy Med. Ass’n, 120 So. 3d 1063 (Ala. 2013). The Court emphasizes that “regardless of whether the legislature expressed an intent that a statute have retroactive application, retroactive application of a statute turns on whether the statute affects substantive or procedural rights). See also Ex parte F.P., 857 So. 2d 125, 137 (Ala. 2003) (‘An act that is expressly retroactive will be given retroactive effect unless it impairs vested rights.’).” Ms. *36, n. 6.

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