§ 8-42-3 — Application of Chapter; Liens; Unfair Service Agreements

(a) For purposes of this section the following terms have the following meanings:
(1) RECORDING. Presenting a document to a county judge of probate for official placement in the public land records.
(2) RESIDENTIAL REAL ESTATE. Real property located in this state which is used primarily for a dwelling and contains one to four dwelling units.
(3) SERVICE AGREEMENT. A contract under which a person agrees to provide services in connection with the purchase or sale of residential real estate.
(4) SERVICE PROVIDER. An individual or entity that provides services to another party under a service agreement.
(5) UNFAIR SERVICE AGREEMENT. A service agreement in which the services subject to the agreement are not performed within one year after the date upon which the agreement commences and provides any of the following:
a. Purports to run with the land or to be binding on future owners of interests in the real property.
b. Allows for assignment of the right to provide the service without notice and agreement of the owner of residential real estate.
c. Purports to create a lien, encumbrance, or other real property security interest.
(b) This chapter does not apply to any of the following:
(1) A home warranty or other type of similar product that covers the cost of maintenance of a major housing system, such as plumbing or electrical wiring, for a set period of time from the date a house is sold.
(2) An insurance contract.
(3) An option to purchase or right of refusal to purchase real estate.
(4) A maintenance or repair agreement entered into by a homeowners’ association in a common interest community.
(5) Agreements to manage residential real estate.
(6) A declaration of any covenants, conditions, or restrictions created in the formation of a homeowners’ association, a group of condominium owners, or other common interest community, or an amendment to the declaration.
(7) A mortgage loan or commitment to make or receive a mortgage loan.
(8) A security agreement under Alabama’s Uniform Commercial Code, relating to the sale or rental of personal property or fixtures.
(9) Water, sewer, electrical, telephone, cable, or other regulated utility service providers.
(c) This section does not impair the rights granted by a mechanic’s or materialman’s lien under Division 8 of Article 5 of Chapter 11 of Title 35 or by another judicially imposed lien.
(d) If a service agreement is unfair under this section, it is unenforceable.
(e) If a person enters into an unfair service agreement with a consumer, that agreement shall be deemed a deceptive act under the Deceptive Trade Practices Act, commencing with Section 8-19-1.
(f)(1) No person shall record or cause to be recorded an unfair service agreement, or notice or memorandum of an unfair service agreement in the state.
(2) If an unfair service agreement is recorded in this state, it shall not provide actual or constructive notice against an otherwise bona fide purchaser of the residential real property to which it pertains, or against a creditor with a security interest in the residential real property to which it pertains.
(3) A service provider who records or causes to be recorded an unfair service agreement or notice or memorandum thereof in this state is liable to an affected party in the amount of ten thousand dollars ($10,000) in statutory damages.
(g) If an unfair service agreement, or notice or memorandum of an unfair service agreement, is recorded in the state, any party with an interest in the residential real property to which it pertains may take either or both of the following actions:
(1) Apply to the circuit court in the county where the recording exists to seek a court order declaring the agreement is void and of no effect.
(2) In addition to the statutory damages described in subdivision (f)(3), recover actual damages, plus costs and attorney fees as may be proven against the service provider who recorded the agreement.

Legislative History

(Act 2023-201, §3.)