Alabama real estate: buy or sell with a local AXEN agent
Alabama is a buyer-beware state. A seller does not owe you a list of what is wrong with the house, so the questions you ask in writing are the questions that get answered. Then there is the homestead exemption, which is not automatic, and the termite bond, which usually transfers. Here is what is the same everywhere in Alabama, and where to search homes.
Alabama cities we cover
Tap a city for its local guide or the newest homes for sale there.
What every Alabama buyer and seller should know
Alabama is a buyer beware state
For a used home the seller does not have to hand you a defect list. The rule is caveat emptor, from Cato v. Lowder Realty. Three things break it: the seller or agent knows of a defect that hurts health or safety and you cannot see it, you ask a direct question before closing, or a fiduciary duty exists. Agents can also be disciplined for hiding a known defect.
Two state taxes hit the paperwork
Alabama Code 40-22-1 sets the deed tax at $0.50 per $500 of value, or any part of $500, and 40-22-2 sets the mortgage tax at $0.15 per $100 of the loan. Both get paid at the county probate office before the paper can be recorded. Who pays is set by your contract, not by law.
Deeds are lawyer work, even if the table is not
Alabama does not force a lawyer to sit at your closing. But drawing a deed or mortgage for a fee is the practice of law here, and a title company was held to cross that line in a state Supreme Court case. So most closings use a closing attorney, or a title agency working with one.
Know your class, and file for homestead
Single-family owner-occupied homes are Class III, taxed on 10% of fair market value. Farm and forest land is also Class III and can be taxed on 10% of its current use value instead of market value, if you apply. Almost everything else, including a rental house, is Class II at 20%. The homestead exemption is not automatic. You claim it with your county revenue commissioner or tax assessor. Own and live there on October 1, and file by December 31 for that year.
Tax bills run October to January
Taxes are due October 1 and go delinquent if they are not paid before January 1. Unpaid bills move to probate court in February and can reach a tax sale by May. At closing, taxes get split between buyer and seller by custom, not by law.
Farm and timber land can carry a hidden bill
Owners can ask the county to tax land on its current use instead of market value, applying between October 1 and January 1. If the land is later switched to a use that does not qualify, or sold and switched within two years, the county charges rollback tax for the three prior years using the higher of the sale price or market value.
Check the builder's licence on new construction
The Alabama Home Builders Licensure Board licenses residential builders when the job costs more than $10,000, and roofers over $2,500. Building without one is a Class A misdemeanor. Look the licence up free on the Board's site before you sign anything. There is also a Homeowners' Recovery Fund for some claims.
Septic permits and HOA records
A septic system needs a permit from the county health department under state health rules. Ask the health department for the permit file before closing. For HOAs, the Alabama Homeowners' Association Act covers associations created on or after January 1, 2016, or older ones that opted in. A buyer can request budget, assessment and reserve records in writing and pay a reasonable cost.
Closing costs in Alabama: who pays what
Who pays what in Alabama. The deed and mortgage taxes are set by law. Who writes the check, and everything else, is set by your contract.
| Buyer pays | How it works |
|---|---|
| Deed tax | $0.50 per $500 of value, or any part of $500. |
| Mortgage tax | $0.15 per $100 of the loan, or any part of $100. |
| Recording at the probate office | Per page, set by your county. Jefferson and Mobile charge very differently. |
| Closing or settlement fee | A flat fee from the closing attorney or title agency. |
| Title search and lender's policy | Charged by the title company at rates filed with the state. |
| Owner's title policy | Priced off the purchase price. Optional, but standard. |
| Survey | A flat fee from a licensed surveyor. |
| Home inspection and termite letter | Flat fees. Only a permitted pest firm can issue the termite report. |
| Wind, hail and flood insurance | Quoted by the insurer. Flood may be required by your lender. |
| Seller pays | How it works |
|---|---|
| Deed tax, if your contract puts it on you | $0.50 per $500 of value. Alabama law does not assign it. |
| Loan payoff and release recording | Your payoff plus the county fee to record the release. |
| Closing attorney or settlement fee | A flat fee. |
| Owner's title policy, where custom puts it on you | Priced off the sale price. |
| Termite bond transfer | A fee set by the pest company. The bond can often move to the buyer. |
| Repairs from the inspection | Whatever the two sides put in writing. |
| HOA document or transfer fee | The reasonable costs the association is allowed to charge. |
| Tax proration | Split by the days each side owned the home that tax year. |
Recording fees differ a lot by county, and who pays the deed tax, the title policy and the closing fee is local custom with no statute behind it. The wind mitigation discount is required by state law but the law sets no percentage, so do not rely on a number you read somewhere. Ask your AXEN agent what applies in your county before you sign.
How a Alabama home purchase runs
From signed contract to recorded deed, most Alabama sales run 30 to 45 days. Step 4 is the one that protects you here.
Get pre-approved →-
Sign the contract. Both sides sign and the earnest money goes to the holding broker or closing agent.
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Open title and order the search. The closing attorney or title agency pulls the chain of title at the probate office. Days 1 to 10.
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Inspections and the termite letter. Home inspection first, then the wood infestation report from a permitted firm. Usually 7 to 14 days.
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Ask your direct questions in writing. This is how a buyer gets out from under buyer beware in Alabama. A direct question has to be answered honestly. Do this before closing, and keep the answers.
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Repair talks. You ask, the seller agrees, refuses or credits. A few days.
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Appraisal, survey and loan work. Your lender orders the appraisal. The survey and the flood zone check happen here. Days 10 to 30.
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Title clearing and payoffs. The closer fixes liens, gets payoff letters and orders the HOA and tax figures. Days 20 to 35.
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Closing. Papers signed, money sent, deed signed. Deed preparation is lawyer work by law.
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Recording. The deed and mortgage go to the county probate judge with the deed tax and mortgage tax paid. Same day to a few days.
Alabama by region
Alabama runs from the Tennessee Valley to the Gulf, and the cost drivers change as you go south. Tap a city for homes for sale there.
North Alabama and the Tennessee Valley
Aerospace, defense and auto plants drive this corner. Land near the river and along older county roads often means septic, so pull the health department file.
Birmingham metro and west
The state's biggest metro plus its largest suburb, with Tuscaloosa to the west. A lot of newer HOA neighborhoods, so the January 1, 2016 HOA rule matters here.
Central and East Alabama
The state capital and the Auburn university area. Historic districts around Montgomery can qualify for Class III treatment as historic buildings and sites.
South Alabama and the coast
A port city, beach towns and the Wiregrass farm belt. Wind, hail and flood coverage drive cost near the water. Dothan has more farm and timber land, so current use and rollback tax come up.
AXEN Realty in Alabama
Every AXEN agent in Alabama works under a licensed managing broker: Calandria Knox (AXEN Realty, LLC, firm license 000173041-0); Calandria Knox (AXEN Realty Partners, LLC, firm license 000175756-0). See every state on the state brokers page.
Buying? Start with the home buying guide and get pre-approved.
Selling? Read the home selling guide and get your home value.
Moving here? Read buying in a new state.
Real estate agent? Changing brokerages in Alabama: your new broker files it; state fee: $25. See how to transfer an Alabama license, the switching checklist, advice for new agents and how keeping 100% works.
Alabama real estate questions
Does an Alabama seller have to fill out a disclosure form?
No. Alabama has no required statewide seller disclosure form for a used home. The law is buyer beware. The seller has to speak up only about a known health or safety defect you cannot see, or when you ask a direct question. So put your questions in writing.
What is a termite bond, and can I get the seller's?
A termite bond is a contract with a pest company to treat and, on some plans, repair. Many Alabama bonds transfer to a buyer for a fee. Ask for the bond, the last renewal receipt and the treatment history, and get the transfer in writing before closing.
What is the termite letter?
It is the Official Alabama Wood Infestation Inspection Report. Only a certified, permitted pest control operator can issue it. It reports visible signs of active or past wood-destroying insects, and lenders often require it. It is not a warranty that the house is clear.
Do I need a lawyer at my closing?
Not always in the room. But drawing your deed or mortgage for a fee is the practice of law in Alabama, so a licensed attorney has to do that part. Most closings run through a closing attorney or a title agency working with one.
How much is the deed tax?
Alabama Code 40-22-1 charges $0.50 for every $500 of value, or any part of $500, and the mortgage tax is $0.15 for every $100 borrowed. Both are paid at the county probate office when the papers are recorded. Your purchase contract decides who writes the check.
When do I file for homestead?
You have to own and live in the home on October 1, and file the claim with your county revenue commissioner or tax assessor by December 31 for that year. It is not automatic. Missing it does not change how your home is classed. It means the exemption never comes off your bill, which is up to $4,000 of assessed value off the state part and up to $2,000 off the county part.
I heard there is a 7% cap on Alabama property taxes. Is that real?
Yes, for now. An act passed in 2024 caps yearly increases in taxable assessed value at 7% for Class II and Class III real property, through the year beginning October 1, 2027. The cap drops off when the property sells, changes class, or gets major new construction. It survives a transfer between spouses or family members for little or nothing, including at death, and a redemption after a foreclosure or tax sale.
Is flood insurance required near the coast?
It depends on the flood zone and your lender. Federally backed loans require flood coverage in a Special Flood Hazard Area. A new policy usually waits 30 days, but that wait is waived when it is bought in connection with a loan closing. Wind and hail is a separate policy.