Closing on Alabama land costs the price plus a set of fees, and each one has a source. The state taxes the deed at $0.50 per $500 and any recorded mortgage at $0.15 per $100. The county probate office charges to record each paper. Then come the title search and insurance, a survey, the closing attorney or title company, and a split of the year's property tax. Your contract decides who pays which.
There's an old line among land sellers that the price is only where the check starts. Buyers who had shaken hands on a number were still surprised by the rest of the settlement statement. None of it is hidden. Much of it is written into state law or posted by the county. It's public. It's just not in one place.
Alabama Taxes the Deed at 50 Cents per $500
The first line comes from Section 40-22-1 of the Code of Alabama. It says a deed can't be received for record until a privilege tax is paid. The rate is $0.50 "for each $500 or fraction thereof in value of property conveyed." That works out to $1 for every $1,000 of price.
The deed also has to come with proof of the actual purchase price, or the property's value if it wasn't sold. Shelby County's recording page links the Real Estate Validation Form used for that. The probate judge then certifies the tax paid on the deed itself. That stamp is how the figure ends up in the public record, and how to look up the deed shows how to read it on someone else's sale.
Financed buyers get one break. The same section limits the tax to "the value in excess of any mortgages or vendor's lien" on which the mortgage tax has been paid. In plain terms, the part of the price covered by a recorded mortgage drops out of the deed tax. The mortgage pays its own tax.
A Recorded Mortgage Carries Its Own Tax at 15 Cents per $100
Section 40-22-2 covers mortgages, deeds of trust, and similar papers that secure a debt. None of them can be recorded until a tax is paid. For a debt over $100, the rate is "$.15 for each $100 of such initial indebtedness or fraction thereof." That's $1.50 for every $1,000 borrowed.
The tax runs on the amount borrowed. Seller financing counts too. The section says a deed that recites unpaid purchase money is treated as a mortgage for that unpaid amount, and the mortgage tax is collected on it. If the seller is carrying part of the price, ask how that debt will be recorded. How to pay for vacant land covers what to read in an owner-financed deal.
What Does This Look Like on a $60,000 Shelby County Tract?
This is an illustration with made-up numbers. Use it to follow the math, and get your real figures from the closing office. Say you've agreed to $60,000 for a tract in Shelby County. The math uses the state rates above.
Paying cash:
- Deed tax: $60,000 divided by $500 is 120. At $0.50 each, that's $60.
- Mortgage tax: none, because there's no mortgage.
Financing with a $45,000 recorded mortgage:
- Deed tax: only the $15,000 above the mortgage counts. That's 30 units of $500, or $15.
- Mortgage tax: $45,000 divided by $100 is 450. At $0.15 each, that's $67.50.
- Together, the two taxes come to $82.50.
The financed buyer pays $22.50 more in state taxes on the same tract. The deed stamp on that sale will show $15, which is one reason a deed tax can understate a price by a wide margin.
This math runs each time a taxed deed is recorded. Among Shelby parcels with a transfer date on file, 32.9 percent show a last transfer in the five years before our October 2026 export, per the Shelby County numbers. That's a recorded instrument, though not always a sale.
The Probate Office Charges to Record Each Paper
The taxes go to the state and the county. Recording fees pay the probate office for putting your paper on record, and each county sets its own. Shelby County's overview of recording fees lists these charges on a deed:
- a $3 filing stamp
- a $10 index fee
- $3 for each page
- a $6 mental health fee
- $1 for each grantor or grantee beyond two
A mortgage carries the same stamp, index, page, and mental health charges, plus its tax. Back to the illustration. Say the deed runs three pages with two names. It costs $28 to record before the deed tax. A twelve-page mortgage would cost $55 before its tax. Those page counts are guesses for the arithmetic, so ask the closing office for the real ones.
Add it all up and the government's share is modest. The cash buyer in the illustration pays $88 in taxes and recording fees. The financed buyer pays $165.50. The lines below can run larger, and they vary more from one office to the next.
Title Insurance Comes as a Lender's Policy and an Owner's Policy
Before closing, a title company or closing attorney searches the county records. They look for mortgages, liens, judgments, and gaps in the chain of deeds. The search and the insurance premium often appear as separate lines.
There are two kinds of policy. The CFPB says "most lenders require you to purchase a lender's title insurance policy, which protects the amount they lend." That one is written for the bank. The owner's policy is the one that covers you. The CFPB's page on what owner's title insurance is calls it a choice that "can help protect your financial investment." You can usually shop for the title provider separately from your loan, the CFPB adds.
On a cash purchase there's no lender's policy. The owner's policy is the only title insurance in the deal, and only if you buy it.
Read the commitment's exceptions before you close. That's the list of what the policy won't cover. A survey exception and an old mineral reservation are two items that can show up there on rural land.
The Survey, the Closing Fee, and the Tax Split Fill Out the Statement
A boundary survey is billed by the surveyor. The price depends on the acreage, the ground, and how hard the old corners are to find. A lender sometimes asks for one. Cash buyers decide for themselves, and our survey note explains why it's worth having. Get the quote in writing.
The closing attorney or title company charges for preparing papers, running the closing, and handling the money. Some offices list one settlement fee. Others split it into document preparation, courier, and wire fees. Ask for an itemized estimate early.
Property tax shows up as a credit or a charge. The Alabama Department of Revenue says property taxes "are due October 1, and are delinquent after December 31." That bill covers the tax year that began the October before. Because the tax is paid behind, a settlement statement often splits the year's tax between buyer and seller by the day. Property tax on vacant land walks through that bill.
A loan brings its own costs, such as an appraisal and an origination charge. The CFPB's compliance guide for the federal disclosure rule lists loans secured by vacant land among those covered. On those loans the lender gives you a Closing Disclosure "at least three business days before you close." A cash closing has no lender form. The closing office prepares its own settlement statement.
The Contract Decides Who Pays Each Line
Sections 40-22-1 and 40-22-2 set the taxes and say when the probate office collects them. Neither one says whether the buyer or the seller pays. That's set by the purchase contract. When the contract is silent, local habit fills in, and habit differs by county, by closing office, and by deal. If someone tells you "the buyer always pays that," treat it as an opening position.
Settle it before you sign. Read the contract's closing cost section with these questions in hand:
- Who pays the deed tax and the fee to record the deed?
- Who pays for the title search, and who buys the owner's policy?
- Is a survey needed, and who orders it?
- How will the property tax be split, and who pays the next bill?
- Who picks the closing attorney or title company?
Then ask the closing office for an estimated settlement statement a few days before closing. Hold it next to the contract and check each line. A charge you never agreed to is worth asking about while you still have a pen in your hand.
A LandScout plan puts a tract's owner of record, parcel number, and county appraised value in one place before you reach a contract. The pricing page lists what each plan includes.
Agree on the price, then agree in writing on everything that comes after it.