USA – ALABAMA Law and Practice Contributed by: Adam J. Sigman, Crystal H. Walls, Nathan Stotser, Katie Sinclair and Courtney Dow, Dentons
2.3 Effecting Lawful and Proper Transfer of Title Transfer of title is generally effectuated by a deed, usually taking the form of a general warranty deed, statutory warranty deed (Section 35-4-271) or quit - claim deed. In commercial transactions, the most common form of deed is the statutory warranty deed. Other forms of conveyancing and/or transfer or occu - pancy instruments include: • ground leases; • leases; • judicial decrees vesting title to real property; • foreclosure deeds; • tax deeds; • sheriff’s deeds; and • deeds in lieu of foreclosure. Conveyancing instruments must be recorded in the office of the judge of probate for the county in which the property resides (Section 35-4-50). Alabama uses a hybrid “race-notice” system where a purchaser takes priority over all prior purchasers of which they have no notice at the time they record their convey - ance – eg, see Nelson v Barnett Recovery Corp , 652 So 2d 279, 281 (Alabama Court of Civil Appeal 1994) regarding Section 35-4-90. 2.4 Real Estate Due Diligence In commercial transactions, due diligence typically involves: • review of title and survey matters; • physical property inspection; • financial and other property records inspection; and • review of relevant zoning, permitting or platting requirements. It may also include an examination of the property’s environmental condition. Lawyers are typically assigned review and/or cure of title and survey matters, and are often involved in addressing permitting and platting requirements as well as the resolution of environmental matters, if applicable. The allocation of attorney versus client
responsibility continues to vary considerably based on the client’s size and needs. 2.5 Typical Representations and Warranties Purchase and sale agreements (PSAs) may vary from those providing for the sale of property in its “as is, where is” condition, with no representations to PSAs containing significant representations and warranties, such as the following: • the seller’s ownership of title; • the seller’s authority to sell the property; • that no violations of law are present on the prop - erty; • that the property has no tenants in possession (except as noted); • the seller’s warranty to satisfy mechanics’ liens; • environmental matters; • zoning and permitting status; and • the absence of pending litigation and condemna - tion. Alabama law provides for an implied warranty of fit - ness and habitability for the sale of new residential property; however, the doctrine of caveat emptor gen - erally applies – see Sims v Lewis , 374 So 2d 298, 303 (Alabama 1979). A buyer’s customary remedies for a seller’s misrep - resentation are based on the contract’s terms. The seller’s liability for such a breach can be negotiated and is often capped at a specific dollar amount, which varies. 2.6 Important Areas of Law for Investors Foreign companies are not required to register with the state unless they are considered to be transact - ing business in Alabama (Section 10A-1-7.01). Foreign companies must, however, comply with all federal laws relating to the transfer of property to a foreign investor, including the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), etc. Additionally, foreign investors should consider the tax implications of such a transaction when purchasing real estate (see 8. Tax ). Recent changes to Committee on Foreign Investment in the United States (CFIUS) regulations have had some impact in Alabama.
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