Alabama HOA Fines: No Dollar Cap, but a Hearing With Counsel First

The Alabama Homeowners' Association Act was enacted as Act 2015-292 and is codified at Ala. Code §§ 35-20-1 through 35-20-14. It does not reach every Alabama subdivision. Section 35-20-3(a) applies the chapter to developments whose declaration was recorded in the office of the judge of probate on or after January 1, 2016, and to associations formed before that date only where a majority of the members elected to be governed by it. Section 35-20-3(b) excludes commercial, industrial, and other nonresidential developments, any association regulated under Chapter 8 or Chapter 8A of Title 35, which are the two condominium chapters, and real estate cooperatives, time-share developments, and campgrounds. If your covenants were recorded in 1998 and the membership never voted to opt in, the procedure below is not statutory law in your neighborhood and the declaration stands on its own.

The fining power is conditional twice over. Section 35-20-11(a) opens with the words "to the extent authorized by the declaration and governing documents," so a board with no covenant authority to fine has no statutory authority either. The Act supplies no fallback power. Section 35-20-5(c)(4) separately requires the organizational documents of every association formed under the chapter to contain reasonable rules for the use, maintenance, repair, replacement, or modification of the common areas, "including penalties for violations," which is where the fine schedule for a post-2016 Alabama association is normally written.

The second condition is the amount. The only ceiling in Alabama law is the word "reasonable" in § 35-20-11(a)(2). The Legislature wrote no per-violation cap, no daily-accrual cap, and no aggregate cap, and it did not tie penalties to the amount of the annual assessment. Reasonableness is left to the circuit court, and § 35-20-4(b) supplies the standard against which a board is measured: "Every duty governed by this chapter imposes an obligation of good faith in its performance or enforcement."

The procedure is unusually protective on one point and silent on several others. Before a penalty is assessed, the member must be afforded the opportunity to be heard and to be represented by counsel before the board of directors. Alabama is one of the few states that writes a right to bring a lawyer into the association hearing room into the statute itself. What the Act does not supply is a minimum advance-notice period for that hearing, a written violation notice, or a cure period, so those come from the declaration and bylaws rather than from § 35-20-11. Note the contrast in subsection (b)(2): when the board proceeds against a tenant rather than a member, the statute does require notice to the tenant and the member and an opportunity to be heard.

Suspension is a separate power with its own limit. Under § 35-20-11(a)(1) the board may suspend a member's right to use facilities or services provided directly through the association for nonpayment of assessments, but only "to the extent that access to the member's lot is not denied." A pool key, a clubhouse booking, or an amenity card can be pulled. A gate code or road access that is the way into the home cannot.

Collection is where the money actually moves. Section 35-20-11(c) makes the amount of any penalty an assessment for purposes of § 35-20-12, and § 35-20-12(a) declares a lien on every lot for unpaid assessments arising from the date the assessment is due, with written notice of the assessment and lien to be given to the lot owner by personal delivery or first class United States mail. Within 12 months from the date the assessment becomes due the association must record a statement of lien in the probate office of the county where the lot sits, verified by an officer or director with personal knowledge, describing the lot, naming the association and the owners, and stating the unpaid amount, the date of the assessments, and any other interest and costs claimed. At least 30 days before recording, the association must give the owner written notice by certified mail that the statement will be recorded.

That lien is strong but not first in line. Section 35-20-12(b) gives it priority over all other subsequent liens and encumbrances except state and county ad valorem taxes, municipal improvement assessments, UCC fixture filings, mortgages, and deeds of trust securing an indebtedness. To enforce it the association files a verified complaint in a court of competent jurisdiction in the county where the lot is located, attaching a copy of the statement of lien. The court may then order a sale after notice published once a week for three successive weeks in a newspaper published in the county, or in an adjoining county if none is published locally, giving the time, place, and terms of sale and a description of the lot.

An Alabama association that fines a member without first offering a hearing at which the member may appear with counsel has not satisfied § 35-20-11(a)(2), and the penalty is exposed on that ground alone in any collection action. Where the fine stands, the association's remedy is the § 35-20-12 lien: written notice of the assessment by personal delivery or first class mail, certified-mail notice 30 days before recording, a verified statement of lien recorded in the probate office within 12 months, and then a verified complaint in the circuit court of the county where the lot lies.

The court can order the lot sold after three successive weekly newspaper publications. A member who believes the penalty is unreasonable, that the declaration never authorized it, or that the association acted in bad faith raises that in the circuit court action, since the Act creates no administrative appeal and names no state agency to police association fines. Section 35-20-4(c) directs that the chapter's remedies "shall be liberally administered so that the aggrieved party is put in as good as a position as if the other party had fully performed," which cuts both ways.

Boards should also note § 35-20-11(b): a tenant's violation lets the board suspend the tenant's amenity access, fine the tenant directly after notice to both tenant and member, or exercise any right against the tenant the member as landlord could have exercised under the lease.