Alabama HOA Foreclosure: 30 Days Notice, 12 Months to Record, and Only a Court May Order the Sale

Which statute governs is the first question, and Alabama has three answers. The Alabama Homeowners' Association Act, Ala. Code §§ 35-20-1 to 35-20-14, is the one behind § 35-20-12. Section 35-20-3(a) applies it to all developments subject to a declaration providing for a homeowners' association recorded in the probate office on or after January 1, 2016, and to an association formed before that date only if a majority of its members elects to be governed by the chapter. Section 35-20-3(b) then excludes commercial, industrial and other nonresidential developments, any association subject to Chapter 8 or Chapter 8A of Title 35, and real estate cooperatives, time-share developments and campgrounds. A subdivision whose covenants were recorded in 2004 and which has never voted to opt in is therefore outside § 35-20-12 entirely, and its remedies come from the declaration itself.

Under the Act the lien is automatic but the enforcement is deliberate. Section 35-20-12(a) declares a lien on every lot for unpaid assessments from the date the assessment is due as fixed by the board at an annual meeting after notice under Chapter 3 of Title 10A, except as the declaration or governing documents provide otherwise, and requires written notice of the assessment and lien to the lot owner by personal delivery or first class mail. Section 35-20-12(b) then places that lien behind a long list: it has priority over 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. Alabama gives a homeowners' association no super-priority over a mortgage, so in practice a first mortgage holder is ahead of the association.

The recording step is where associations run out of time. Section 35-20-12(c) gives the association 12 months from the date any assessment becomes due to record a statement of lien in the probate office of the county where the lot is located, verified by an officer or director with personal knowledge, and it must contain five items: a description of the lot, the name of the association claiming the lien, the name of the owner or owners, the amount of unpaid assessments together with the dates of those assessments, and the amount of any other interests and costs claimed. Section 35-20-12(d) requires at least 30 days' written notice by certified mail before that recording, to the owner or other person obligated for the lien as shown on the association's books, saying the statement will be recorded.

Enforcement is judicial from start to finish. Section 35-20-12(e) requires an action in a court having jurisdiction in the county where the lot is located, begun by a verified complaint attaching a copy of the statement of lien and alleging the facts entitling the association to the lien, in accordance with the Alabama Rules of Civil Procedure. Section 35-20-12(f) puts the sale in the court's hands, not the association's, and fixes the notice: publication once a week for three successive weeks in a newspaper published in the county where the lot is located, in every county if the lot spans more than one, or in an adjoining county's newspaper if none is published locally, with the notice stating the time, place and terms of the sale and describing the lot.

Unpaid fines reach the same machinery. Section 35-20-11(c) provides that the amount of any penalty assessed by a board under that section shall be considered an assessment for purposes of § 35-20-12, so a fine that goes unpaid can end up in the statement of lien alongside dues.

Condominiums are governed instead by the Alabama Uniform Condominium Act of 1991. Section 35-8A-316(a) gives the association a lien on a unit for assessments, other money due, and fines imposed on the unit owner, and allows that lien to be foreclosed "in like manner as a mortgage on real estate" provided the declaration conforms to Article 1A of Chapter 10 of Title 35 and subject to Article 14A of Chapter 5 of Title 6, with reasonable advance notice to the unit owner and all lienholders of record. Section 35-8A-316(b) then gives a condominium association something the homeowners' association Act withholds: priority over a prior recorded first security interest to the extent of the common expense assessments, based on the periodic budget adopted under § 35-8A-315(a), that would have become due in the six months immediately preceding the association's suit or the mortgagee's foreclosure, excluding the association's costs and attorney fees, and further limited by Act 2018-403 where the mortgage is owned or guaranteed by Freddie Mac, Fannie Mae or Ginnie Mae. Recording the declaration is itself record notice and perfection under § 35-8A-316(d), so no lien claim need be filed, and § 35-8A-316(e) extinguishes the lien unless enforcement proceedings begin within three years after the full amount became due. Section 35-8A-102(a) applies § 35-8A-316 even to condominiums created before January 1, 1991, as to events occurring after that date.

Older condominiums that stayed under §§ 35-8-1 to 35-8-22 follow § 35-8-17, where the lien is effective only from the time a verified claim of lien is recorded, is subordinate to tax liens, any mortgage of record and any earlier recorded lien, and may be foreclosed by an action in the association's name in the same manner as a mortgage foreclosure, with the association free to bid the unit in at the sale unless the declaration or bylaws forbid it.

For an owner, the practical remedies are the deadlines. If the association records a statement of lien without having sent the certified-mail notice at least 30 days beforehand, or records it more than 12 months after the assessment became due, § 35-20-12(c) and (d) have not been satisfied and that is a defense to raise in the enforcement action the association must file under § 35-20-12(e). Because § 35-20-12(f) puts the sale in the hands of the court in which the action is pending, an Alabama homeowners' association has no power of sale of its own: it cannot advertise and sell a lot the way a mortgagee can, and an owner has a courtroom in which to contest the amount before any sale is ordered.

Publication defects are checkable too, since the notice must run once a week for three successive weeks and must state the time, place and terms of the sale along with a description of the lot. For a condominium owner the leverage is different: § 35-8A-316(h) entitles a unit owner, a mortgagee, a person under contract to buy and a prospective lender to a written statement of assessments levied against the unit, and if the association fails to mail or furnish it within 10 business days of receiving a written request delivered to its registered office, the association's lien against the unit is released for the amount of the assessment as of that date, though the owner's underlying debt survives.

The association may charge a fee of no more than twenty-five dollars ($25) for that statement if the condominium instruments so provide. Section 35-8A-316(g) requires any judgment or decree in such an action to include costs and reasonable attorney's fees to the prevailing party, which cuts both ways.