Understanding Alabama Homeowners Association Law: A Helpful Overview

Alabama HOA Laws Overview

Homeowners Associations (HOAs) are governed by a complex mix of statutory and common law principles in Alabama. While these associations are common throughout the state, many homeowners may be unfamiliar with the specific laws that apply to them and simple procedural protections that they can use to protect themselves. This post is designed to help homeowners understand the framework of Alabama HOA laws—and what rules and limitations are placed on HOAs and their boards.
Alabama Code § 35-20A-101 through § 35-20A-505 are the statutes found in Chapter 20A of Title 35 of the Alabama Code specifically aimed at regulating the actions of HOAs. The Alabama Planned Community Act applies to community associations that are created after January 1, 2010 and includes protections regarding association powers, interference from developers, assessments, budget procedures, and financial records. However, an association that was created before January 1, 2010 would not be governed by Chapter 20A of Title 35. Therefore, while existing associations that were created before 2010 must follow the laws that govern associations prior to 2010, associations formed before then must also comply with Chapter 20 of Title 35.
The Alabama Nonprofit Corporation Laws, found in Title 10A Chapter 3, are found in Chapter 3 of Title 10A of the Code. These laws apply to non-profit corporations, such as incorporated homeowners’ associations. While these laws do not apply to unincorporated associations, these unincorporated associations are bound by the common law. While associations formed as non-profits are governed by laws applying specifically to non-profit associations, the common law is less clear concerning unincorporated associations. In general, these unincorporated associations must follow traditional agency laws, which require each agent to act in the interest of the group as a whole.
For our purposes, it is also important to note that each HOA has its own declaration that sets the specific rules and powers applicable to the association. These declarations give associations the authority to enact their own rules concerning rules such as voting and meeting requirements, assessment procedures, and architectural controls through written covenants. For the remainder of this post, we will primarily be discussing the laws applicable to non-profit corporations.
HOAs typically hold regular meetings of its members to elect board members, approve the budget, and discuss other items. Electronic communications are common in today’s world, and while the law does not explicitly state whether electronic meetings are allowed , some forms of electronic communication are generally permissible. Electronic voting and e-mail notifications may be allowed under some circumstances, but only if expressly allowed by the declaration. E-mail notifications are generally acceptable if every homeowner voluntarily provides his or her e-mail address and opts in for notifications. Although there is no case law directly on point, the Alabama statutes allow for electronic signatures, so electronic votes may also be permissible.
However, electronic communications have their limits and procedural protections must still be met. Because board meetings are often open to all homeowners, you should be aware of the possible requirements for physical attendance. For example, the law generally provides a requirement that homeowners’ meetings, including annual meetings, be held in Alabama. In addition to being a requirement under the law, meetings held in Alabama make it easier to determine the proper county’s circuit court to enforce the restrictions.
Various requirements also govern the resolutions enacted by the associations. Generally, notice must be provided to the members and any new rules should be published, unless members voted to waive the requirement.
Covenants bind all homeowners to their associations. However, Alabama law also provides that owners cannot be bound by covenants not recorded in the probate court. This requirement makes it easy for owners to search for any additional restrictions placed on their property, such as covenants in a declaration, by reviewing the probate court’s real property records. With these restrictions in mind, it may be possible to amend the declaration if the owner can show that the board does not comply with the covenants and restrictions. If the failure to comply is procedural, the amendment would only need to meet the vote requirements in the declaration.
Elected boards are expected to act in the best interests of their members. Their actions are generally considered valid if they are within the power granted by the declaration and other governing documents.
The common law requires that boards exercise their powers equitably. Boards must also account for their actions if they misappropriate funds or otherwise commit fraud. All directors and officers have a duty to act in good faith, which requires that they make decisions that are of interest to the entire association and terminate inappropriate relationships with developers, if applicable.
Members can enforce their powers through civil litigation or through mandatory arbitration under some circumstances.

Formation and Structure of HOAs

Homeowners association covenants are recorded with the appropriate probate court, but Alabama law no longer requires a formal process to establish a homeowners association. Instead of formal "creation" through recording of a Declaration, covenants generally provide that future homeowners will automatically become members of and be bound by the association at the time of acquisition of property. Upon becoming an owner, membership shall be initially and automatically allocated based on the number of lots owned by the original developer. In other words, the developer owns all the common area and assembles all properties to be developed. Covenants usually provide that the developer will control the homeowners association until the last lot is sold.
If a subdivision is laid out, however, the developer must plat the property and record it in the appropriate probate court. This plat must contain the appropriate utility and infrastructure easements. What many people do not realize is that a plat reservation typically includes reservations of development rights such as easements for utilities, roadways, drainage, utilities, tree and lighting easements, conservation easements, drainage easements, construction easements, mail kiosk easements, utility easements, parking easements, decorative sidewalk easements, decorative amenity facility easements, decorative yard easements, future pool facility easements, emergency access easements, but does not typically include easements for the maintenance and repair of storm water detention areas, bio-retention facilities and swales, and lagoons.
Most owners do not consider the ramifications of reserving such rights. If a developer retains a drainage reservation, future property owners may be required to maintain the drainage easements even where no regular maintenance has occurred, and failure to comply could expose them to substantial damages if there are future drainage related problems while the drainage reservation exists. Likewise, a developer can reserve any characterization of utility and right-of-way easements that are not currently utilized or necessary for the operation, replacement or relocation of utility, drainage or other infrastructure facilities that may be required at a later date. Giving such right, title and interest to a developer would allow the developer to pre-empt future owners from undertaking any development of improvements or landscaping within such reservations.
HOA covenants typically provide that each lot owner shall have an undivided interest in the common area, subject to the right of the HOA to establish maintenance, access, and use regulations over the common areas. The HOA’s maintenance responsibilities typically include the maintenance of (x) landscaping, sidewalks, reserves, trees, lawns, fences, walls, roadways, easements, buffer areas and all other areas the HOA deems necessary or advisable for the general benefit of the property or the common areas, and (y) any improvements that the HOA deems necessary to provide exterior maintenance of any residence or residential lot as provided in the covenants. The HOA is empowered to manage the activities and affairs of the association and be obliged to perform such duties as the board of directors designates or necessitates pursuant to the covenants or regulations, the laws or applicable legal requirements in the state of Alabama.

HOA Rules, Covenants, and Bylaws

HOA covenants are vital in Alabama, as they establish the rules that govern the otherwise private community. They may outline covenants, conditions and restrictions (CC&R’s) and set forth specific obligations for residents, including paying home associations fees, maintaining property in an acceptable manner, and even setting forth deed restrictions on the use of property. However, there are limits to what can be included within these agreements under Alabama law.
Bylaws are rules created by the governance structure of a community association to set forth how the community will operate and who is in charge. For example, bylaws may delineate the method for electing officers and the composition of the board and establish how meetings will be conducted. These documents spell out the rights of members, the responsibilities of the officers and managers, and the rules for collecting dues and enforcing obligations.
Both of these documents need to be reviewed carefully so that you understand your legal obligations and how they will be enforced.

Homeowner Rights and Obligations

Homeowners in Alabama have certain rights guaranteed by the law, but they also have specific responsibilities to their fellow homeowners and their community. Perhaps the most important right homeowners possess is the right to vote at association meetings. Under the Alabama Nonprofit Corporation Act, a quorum is a majority of the directors – or homeowners if there are no directors – then all other questions are voted upon by a majority of those members who are present and voting, unless otherwise provided by the Nonprofit Act or by the declaration. So, with a quorum, any question at a meeting shall be decided by a majority of those members present at the meeting in person or by proxy.
For example, with respect to approving the annual budget or setting the assessments, the act provides that each unit having reservation rights and whose reservation period has expired, regardless of whether the unit owner has succeeded to the right, shall be deemed to have voted in favor of the action unless the unit owner has previously objected and withdrawn such objection prior to the time of the action.
The Alabama Nonprofit Act also ensures that homeowners have access to the books and records of the association. The records of the association shall be made available for inspection upon request to any member or member’s agent or attorney as follows: Members have an affirmative duty to pay their assessments. As an owner in an HOA, you should expect assessments to be used judiciously and only for the purposes for which they are intended, and when used, explain to the membership why the funds were expended.
If the fees are not sufficient to cover expenses, it is usually the right of the board to increase them as needed to cover expenses. Every homeowner is responsible for payment of these costs.
Alabama courts have long recognized the enforcement of deed restrictions is subject to the balancing test. Homeowners must abide by deed restrictions or HOA rules that apply to all members of an association. When it becomes necessary to enforce a deed restriction or rule, the courts will weigh the equities in the case and may enforce restrictions on a finding that the violation is so visible or so inappropriate as to directly harm the public interest or public order, or the fun or recreation of others who are legally entitled to use the property, in a way that is out of proportion to the benefit gained by the right of use. However, the severity of a sanction imposed for violation of a covenant will be reviewed by the court upon a finding of arbitrariness, capriciousness or gross abuse of discretion.
Common sense tells us that if restrictions are not uniformly enforced, a challenge against their enforcement may be successful. It is, however, subject to the balancing test as discussed above.

Resolving Conflicts within a HOA

Disputes between homeowners and HOAs are an unfortunate fact of community association living. Bad neighbors may argue with each other over issues such as noise, dogs or parking. A violation of the CCRs regarding maintenance of yards or your house might get a nasty letter from the HOA. Sometimes there is a difference of opinion over whether the board is properly handling the business of the association. The important thing to remember is disputes are not the end of the world – they’re just the normal give and take needed to keep the neighbors talking. Also mediation can often help resolve disputes. Sometimes mediation is required by the CC&Rs and sometimes it makes good sense to voluntarily enter into the process before things get out of hand.
In Alabama, the Mediation Law at section 6-6-1 (a), Code of Alabama provides: "In any civil action, nothing shall authorize or require any trial court, judge, or other person to refer any case to mediation without the express consent of all parties. In all arbitral matters, however, the parties shall be deemed to have waived any right to mediation unless the parties to that matter make express provision for mediation in their agreement to arbitrate."
Unless the parties have presented sufficient evidence to satisfy the court that a party has violated state law or the declaration , the court shall enforce the mandatory dispute resolution process provided for in the community association’s declaration. When the parties to the dispute have failed to participate in this process in good faith, the court shall allow the matter to be resolved by further legal process (i.e., the court’s normal calendar).
If mediation is successful, a written settlement agreement reflecting the newly agreed-to terms must be signed by the parties and is enforceable as a court order. If mediation is unsuccessful, the parties are allowed to pursue their case in court.
Arbitration is another common way to resolve disputes. Many people have experienced arbitration without knowing it because certain contracts, such as insurance policies, require arbitration as a means of dispute resolution. Unlike mediation, decisions are binding. In fact, mediation has been described as "facilitated negotiation" and is similar to a "give and take" session to work out differences between the parties. Arbitration, on the other hand, is a process that is more like a "mini-trial." When the parties can’t agree on who is right, a third-party private judge (the arbitrator) may be appointed to make the decision, which is final and cannot generally be appealed.

Oversight and New Changes in HOA Regulations

In Alabama, there is no state oversight into the operations of HOAs. There is no Alabama homeowners association department, agency, or authority collecting civil penalties against homeowners associations and/or board members for violating the Alabama Homeowners Association Act and/or Declarations constituting the HOA. The Alabama Department of Revenue does have a website for the registration of the HOA in order that the HOA can comply with tax filing requirements, but this is the extent of the state regulating HOAs.
There has been a recent Court of Civil Appeals decision that held in a case entitled "Henninger v. Northwood Gardens Homeowner’s Association" that a County District Court Judge must at least conduct an evidentiary hearing before assessing attorney fees as part of the costs awarded to a prevailing party in actions arising under the Alabama Homeowners Association Act. The Court also noted that these actions do not have to be brought in Circuit Court and can be attempted in District Court. However, given the amount of attorney fees and litigation expenses that are typically involved in matters brought under the HOA Act, District Court may not be the appropriate court to adjudicate these matters.

How to Handle Issues with Your HOA

Communication is key to working harmoniously with your HOA. As a rule of thumb, always follow the Golden Rule when interacting with your fellow members. When you have an issue, first check the documents. Almost every concern has a corresponding provision in the documents. At the end of the day, your HOA is comprised of your neighbors. Your HOA board and committees are made up of those who, like you, live in the community. Your concerns will be heard better if you follow the basic guidelines below:

• Review your governing documents before calling the property manager or board about a concern. Generally, the answer to your question can be found in your declaration of covenants, by-laws, the rules & regulations, or other governing documents.
• When you have a concern or issue with another homeowner, they are often receptive to a phone call or face-to-face discussion. Most people do not appreciate communication by email or text unless it is kept to the pertinent facts.
• Avoid emails or texts that copy everyone on the board or all homeowners about an issue. Sending multiple people official correspondence containing your views on a matter will immediately polarize the situation.
• Attend the monthly HOA meeting and be prepared to discuss your issue directly on the official record.
• If you are not comfortable speaking at a public meeting, send a concise letter to the board and/or management company requesting that your concerns be added to the agenda. Be sure to request to be placed on the agenda or receive a response (there is no requirement under Alabama law for the board to respond).

Conclusions and Additional Resources

In conclusion, understanding Alabama homeowners association (HOA) laws is vital for both homeowners and association board members. These laws set a framework for governing the various aspects of neighborhood living, from maintenance responsibilities to rules enforcement and financial management. By familiarizing themselves with the pertinent legal texts that govern HOA operations in Alabama, individuals can make informed decisions and avoid potential disputes.
For homeowners who are new to the community, getting involved in association meetings and familiarizing yourself with the bylaws is essential. Such engagement will give you a better sense of the rules and provide a clearer understanding of how different issues are handled within your specific HOA .
For board members, following the established procedures and maintaining transparency with homeowners is critical. This will not only help ensure compliance with Alabama HOA laws but will also promote a positive environment within the community.
Additional resources can be found in the following legal references:
Alabama Code Title 35. Property. Chapter 20. Alabama Homeowners’ Association Act
Alabama Community Association Law, by Craig Hersch & Michael T. Messenger
National Association of Realtors® – A Guide to Homeowner Association Bylaws
Professional Association Management of Alabama (PAMOA) – A Guide to HOA Law in Alabama
Further legal assistance may also be useful, as many local attorneys specialize in HOA law, helping associations navigate the complex laws and regulations.