Alabama HOA Budget Approval

Section 1: Overview, how HOA budgets are approved in Alabama

Alabama runs two different systems for approving a homeowners' association budget, and which one applies turns on the kind of community involved. For condominiums created on or after January 1, 1991, the Alabama Uniform Condominium Act sets a statutory negative-option process: the executive board adopts a proposed budget, and that budget takes effect unless a majority of the unit owners reject it at a ratification meeting. Planned-community homeowners' associations work differently. No statute sets a budget-approval threshold for them; their budgets answer to the recorded declaration and to the corporate formalities of the Alabama Business and Nonprofit Entity Code. Condominiums created before January 1, 1991 fall under the older Alabama Condominium Ownership Act, where the recorded declaration and bylaws — not any deemed-ratification rule — govern budget approval. Alabama also leaves a size-based off-ramp open: a condominium with four or fewer units and no reserved development rights may elect to be governed by the predecessor act, which takes it out of the negative-option mechanism. These lines place Alabama in the middle of the national picture. Its condominiums follow the negative-option model used across the Uniform Common Interest Ownership Act family, while its planned communities sit in the declaration-only camp common to states without a comprehensive planned-community statute. The table and sequence that follow lay out the exact mechanic, the controlling sections, and the obligations that surround the budget cycle.

Section 2: The budget approval mechanism

The table and subsections below describe the statutory mechanism for condominiums created on or after January 1, 1991 under the Alabama Uniform Condominium Act. Planned-community homeowners' associations have no statutory budget-approval mechanism (see Section 2C).

2A. Quick-Reference Budget Mechanics Table

2B. The budget approval sequence for post-1991 condominiums

The mechanism runs in a fixed order. First, the executive board prepares and adopts a proposed budget. Under § 35-8A-302(a)(2), the board holds the power to "adopt and amend budgets for revenues, expenditures, and reserves and impose and collect assessments for common expenses from unit owners," and board adoption — not a member vote — triggers the budget cycle.⁸ Second, within 30 days after adoption, the board must give every unit owner a copy of the budget and set a date for a ratification meeting.¹ Third, the board must schedule that meeting "not less than 10 nor more than 50 days after delivery or mailing of the budget to the unit owners."¹

What happens at the meeting is the defining feature. Under § 35-8A-303(c), "[u]nless at that meeting a majority of all the unit owners present in person or by proxy or any larger vote specified in the declaration reject the budget, the budget is ratified, whether or not a quorum is present."¹ This is negative-option ratification, not an affirmative member vote. Owners never vote to approve the budget; it passes automatically unless enough owners turn out and affirmatively reject it. Two features make rejection hard in Alabama. The statute measures the rejection threshold against the owners present, not the entire ownership, and it requires no quorum to ratify, so a sparsely attended meeting still ratifies the budget. This mechanism applies only to condominiums created on or after January 1, 1991.

If the owners do reject the proposed budget, the result is continuity rather than paralysis: "the periodic budget last ratified by the unit owners shall be continued until such time as the unit owners ratify a subsequent budget proposed by the board."¹ The association keeps its funding base. It operates on the prior ratified figure while the board prepares a revised proposal.

One trap deserves attention. Alabama did not adopt the dollar-threshold small-condominium exemption found in the underlying uniform act. The only size-based off-ramp lives in § 35-8A-102(d): a condominium with no more than four units and not subject to any development rights "may be created pursuant to this chapter or pursuant to Sections 35-8-1 to 35-8-22," with "the declaration of condominium" declaring which chapter governs.² A four-or-fewer-unit condominium whose declaration elects the predecessor act would not face the negative-option mechanism. Managers of very small Alabama condominiums should confirm which chapter the declaration selects before assuming the ratification process applies.

Ratifying the budget is not the same as levying the assessment. Once the budget is ratified, the association levies common-expense assessments against the units "in accordance with the allocations set forth in the declaration pursuant to section 35-8A-207," as § 35-8A-315 directs.³ Ratification fixes the spending plan; the assessment is the per-unit charge that carries it out.

2C. Planned communities, pre-1991 condominiums, and the corporate-law overlay

Planned-community homeowners' associations have no statutory budget-approval mechanism. Alabama enacted the Alabama Homeowners' Association Act (Ala. Code § 35-20-1 et seq., Act 2015-292) for associations created under a declaration recorded on or after January 1, 2016, but that statute imposes no budget-approval threshold and no deemed-ratification rule.⁹ It requires only that an association's organizational documents "shall provide for" the "[p]reparation and submission of the annual budgets of the association to the members," and it leaves the actual approval process to the declaration and bylaws.⁹ Pre-1991 condominiums sit under the predecessor Alabama Condominium Ownership Act, which makes the association "responsible for the administration and management of the condominium property" and lets it "assess and collect funds" for common expenses through its officers and governing board. That statute carries no negative-option budget mechanism; the recorded declaration and bylaws govern approval.¹⁰

For an incorporated association of either kind, the Alabama Business and Nonprofit Entity Code (Ala. Code Title 10A) supplies the corporate scaffolding: board action, meeting and notice requirements, and recordkeeping at the entity level. A planned-community association formed on or after January 1, 2016 "shall be organized as a nonprofit corporation pursuant to Chapter 3 of Title 10A, and shall be governed in all respects as a nonprofit corporation."⁹ Title 10A is a corporate-formality code, not an HOA budget statute. It tells an incorporated association how to hold a valid board or member meeting, but it sets no budget-approval threshold. In practice, that means the declaration is the entire budget rulebook for a planned community. No statutory fallback exists to import, so whatever approval steps the declaration specifies — including any member-approval or notice requirement — are the controlling rules.

Section 3: Budget-adjacent obligations

Reserves in the budget

The 1991 Act does not require a condominium budget to fund or study reserves. It defines common expenses to include "any allocations to reserves" and lets the board adopt budgets "for revenues, expenditures, and reserves," but it sets no mandatory reserve level and no study schedule; that depth lives in the declaration.⁵ Planned-community reserves answer to the declaration as well.

Special assessments

The 1991 Act does not route special assessments through a separate statutory ratification vote. The negative-option mechanism in § 35-8A-303(c) applies to the periodic budget, and § 35-8A-315 directs how common-expense assessments are allocated, but neither section imposes a distinct owner-approval threshold for special assessments; that threshold, where one exists, comes from the declaration.⁴ For planned communities, the declaration governs special assessments entirely.

Assessment increase limits

No statutory cap applies to annual assessment increases for any community type. The 1991 Act sets no percentage ceiling, and the negative-option mechanism is itself the only statutory check on a condominium budget increase: owners may reject the proposed budget at the ratification meeting.³

Financial review, audit, and disclosure tied to the budget cycle

The 1991 Act does not mandate an audit. It requires the association to "keep financial records sufficiently detailed to enable the association to comply with Section 35-8A-409," and § 35-8A-409 requires a selling unit owner to furnish a purchaser, on request, a certificate that includes "[t]he current operating budget of the association" along with "[t]he most recent regularly prepared balance sheet" and income-and-expense statement.⁶ That resale disclosure is the principal statutory point at which the budget surfaces outside the ratification cycle.

Section 4: Recent legislative and judicial activity

Recent bills

No bill enacted or introduced in the 2024, 2025, or 2026 Alabama regular sessions amends the budget, assessment, or reserve provisions of either the Alabama Uniform Condominium Act (Ch. 35-8A) or the Alabama Homeowners' Association Act (Ch. 35-20). Lawmakers last substantively amended the condominium act's budget-cycle text in Act 2018-403, the source of the current 10-to-50-day ratification-meeting window.¹¹ They amended the Homeowners' Association Act's organizational-document section (§ 35-20-5) more recently, in Act 2023-177, but that amendment added no budget-approval threshold; the budget-submission requirement remains a documentary obligation rather than a statutory approval rule.⁹

Recent appellate rulings

Alabama's appellate courts have not reshaped condominium budget law from the bench. One recent decision is worth noting for how it frames an assessment dispute — and where it tells associations to start.

Active legislative debates

No active proposal to enact a comprehensive Alabama planned-community statute, or to amend the condominium or HOA Act budget, reserve, or assessment provisions, was identified as of the last verification date.

Section 5: National positioning and related coverage

Alabama straddles two of the three national budget models. Its post-1991 condominiums use negative-option ratification — the model in the Uniform Common Interest Ownership Act family and in 1980-Uniform-Condominium-Act regimes, where the budget passes unless owners reject it. That contrasts with affirmative-approval states, where owners must vote yes for a budget to take effect. Alabama's planned communities, by contrast, sit in the third category, the declaration-only context, where no statutory threshold exists and the recorded covenants alone set the process. A multi-state operator expanding into Alabama will find the condominium mechanism familiar if it already works in UCIOA states, but it should treat planned communities differently: no statutory fallback exists to lean on, and each association runs from its own declaration. Momentum toward a comprehensive planned-community budget statute is absent; the Homeowners' Association Act addresses formation, records, and liens, but leaves budget approval to the governing documents.

Federal frameworks — including the Fair Housing Act, the Americans with Disabilities Act, the Fair Debt Collection Practices Act, the Servicemembers Civil Relief Act, and the FCC's OTARD rule — apply to Alabama associations regardless of the state budget framework.

1. Ala. Code § 35-8A-303(c) (board members and officers; budget ratification), current text as amended by Act 2018-403 ↩
2. Ala. Code § 35-8A-102 (applicability; four-or-fewer-unit election in subsection (d)) ↩
3. Ala. Code § 35-8A-315 (assessments for common expenses) ↩
4. Ala. Code § 35-8A-316 (lien for assessments, including special assessments) ↩
5. Ala. Code § 35-8A-302(a)(2) (board power to adopt budgets including reserves; no reserve mandate); § 35-8A-103(5) (common expenses include allocations to reserves) ↩
6. Ala. Code § 35-8A-409 (resales; current operating budget and financial statements in certificate); § 35-8A-318 (association records) ↩
7. Ala. Code § 35-8A-104 (variation by agreement) ↩
8. Ala. Code § 35-8A-302(a)(2) (powers of unit owners' association) ↩
9. Ala. Code § 35-20-5 (Alabama Homeowners' Association Act; organization, nonprofit-corporation requirement, and budget submission), Act 2015-292 as amended by Act 2023-177 ↩
10. Ala. Code § 35-8-9 (Alabama Condominium Ownership Act; duties and responsibilities of association) ↩
11. Act 2018-403 (amending sections of the Alabama Uniform Condominium Act, including § 35-8A-303 and § 35-8A-409) ↩
12. Alabama Association of Realtors, "December 2024 Judicial Update" (Dec. 19, 2024), summarizing Howard Ross v. West Wind Condominium Ass'n, No. CL-2023-0829 (Ala. Civ. App. Nov. 8, 2024); docket confirmed at Alabama Court of Civil Appeals decisions index ↩