Skip to content
ClosingCodeClosingCode
ENES

Alabama · Ala. Code §§35-9A-201, 35-9A-205Alabama tenant security deposits when selling a rental: both seller and buyer are on the hook

Unless otherwise agreed, an Alabama landlord who sells in good faith to a bona fide purchaser is relieved of liability for events after written notice of the sale to the tenant, but remains liable for all security the tenant can recover and all prepaid rent (Ala. Code §35-9A-205(a)). The holder of the landlord's interest when the tenancy ends is bound by the deposit rules (§35-9A-201(h)): the deposit, capped at one month's rent except for pets, changes to the premises or increased liability risks, is refunded or itemized within 60 days after the tenancy ends and possession is delivered, or the landlord pays double the original deposit (§35-9A-201(a)–(c), (f)).

The rules

  1. 1. Seller (§35-9A-205(a))

    Relieved after written notice to tenants, but still liable for deposits and prepaid rent.

  2. 2. Buyer (§35-9A-201(h))

    The owner when the tenancy ends is bound by the deposit rules.

  3. 3. Cap (§35-9A-201(a))

    One month's rent, plus amounts for pets, changes or added risk.

  4. 4. Return (§35-9A-201(b)–(f))

    Refund or itemized list within 60 days, or double the deposit.

What the TC can do

  • Collect each lease, deposit amount and prepaid rent in a rent roll before closing.
  • Ask the closing agent to credit the buyer for deposits and prepaid rent.
  • Prepare the seller's written notice of the sale to each tenant.

Questions about Alabama tenant deposits at sale

Is the Alabama seller still liable for tenant deposits after selling?

Yes, unless otherwise agreed the selling landlord remains liable for the security and prepaid rent (Ala. Code §35-9A-205(a)).

Is the buyer bound too?

Yes, whoever holds the landlord's interest when the tenancy ends is bound by the deposit rules (Ala. Code §35-9A-201(h)).

Related guides

Add the rent roll, the deposit credit and the tenant notices as tasks in ClosingCode.

Start free trial

Source: Code of Alabama §§35-9A-201 and 35-9A-205 (alison.legislature.state.al.us, read October 28, 2026).

General information, not legal advice. ClosingCode is software; it is not a law firm or brokerage. This guide is not a substitute for the advice or services of an attorney.