Alabama's larger homestead exemption shrinks what an HOA judgment can actually reach
Alabama's larger homestead exemption shrinks what an HOA judgment can actually reach
2026-09-10 · Alabama · Legislation
An association that wins a money judgment for unpaid assessments still has to collect it, and Alabama has just made the debtor's house harder to reach.
HB 96 became Act 2026-203, signed on March 5, 2026 and effective June 1, 2026.1 It passed the House 94–0 and the Senate 33–0. It amends Ala. Code §§ 6-10-1, 6-10-2, 6-10-38 and 6-10-40, raising Alabama's homestead exemption in bankruptcy cases, with a further increase for seniors and the disabled.
Why this reaches associations
The homestead exemption is the slice of value in a debtor's principal residence that unsecured creditors cannot take. It does not touch consensual liens or, generally, properly perfected statutory liens — but it governs what an unsecured money judgment can reach.
That distinction is the whole story for a community association, because associations routinely hold both kinds of claim against the same owner.
An assessment lien — under Ala. Code § 35-20-12 for homeowners associations, or under the lien machinery of the Uniform Condominium Act of 1991 for condominiums — is a lien on the unit or lot, and its treatment is a separate question governed by lien law and priority. A judgment for fines, for attorney fees not covered by the lien, or for amounts falling outside the association's lien rights is unsecured, and that is where the homestead exemption operates.
What it changes for boards and managers
Nothing about this act changes what an owner owes. It changes what an association can realise on part of what it is owed, and the practical consequences run to collection strategy.
Perfection matters more than it did. The gap between a properly recorded assessment lien and an unsecured money judgment just widened. An association that lets the lien lapse, records it defectively, or pursues a money judgment instead of enforcing the lien is choosing the remedy the exemption bites.
The economics of suing for a small balance changed. Where an association's realistic recovery on a money judgment was already thin, a larger exemption can move it to nil. The cost-benefit of filing suit at all is worth re-running with counsel — particularly for fine-driven balances, which are the least likely to be inside the association's lien rights.
Senior and disabled owners are a distinct category now. The act provides a further increase for seniors and the disabled. In Alabama communities with concentrated older ownership — which describes a good deal of the coast — that is a meaningful share of the membership, and it should inform how a board approaches a delinquency that is genuinely a hardship rather than a refusal.
Two related 2026 collection developments
This is one of three enacted changes in the window that touch how an Alabama association's recorded claims behave.
Act 2026-536, effective October 1, 2026, amends the probate procedure for nullifying a false or fraudulent recorded instrument — requiring written notice to the filer with a 14-day response window — and authorises free county services that alert owners whenever a document is recorded against their property. An association's lien filing becomes visible to the owner on the day it is recorded, in participating counties.
Act 2026-407, effective October 1, 2026, amends § 11-40-69 in the Class 2 municipal lien context (Mobile) to include adjoining homeowners as interested parties entitled to notice of municipal lien foreclosures, with a bidding preference — and names among interested parties “the holder of the benefit or burden of a real covenant that burdens the real property.” That reaches an association holding covenant rights.
The wider frame
It is worth noting where these changes are coming from. Across the 2025 and 2026 Regular Sessions, no enacted Alabama act amended any section of the Homeowners' Association Act, the Uniform Condominium Act of 1991, or the older Condominium Ownership Act.
Every development above sits in exemption law, in probate procedure, or in municipal lien law. An association tracking only Title 35, Chapters 8, 8A and 20 would have seen a completely static two years while the practical terms of its collections work moved three times.
What to watch next
The exemption increase applies from June 1, 2026, so its effect shows up in bankruptcy filings and collection outcomes from the second half of 2026 onward rather than in any published guidance.
The specific interaction worth watching is between the increased exemption and association lien priority in Alabama bankruptcies. Alabama's condominium and HOA lien provisions do not carry the limited “super-priority” found in states that adopted the Uniform Common Interest Ownership Act — Alabama did not adopt UCIOA — so association claims already sit further back than many practitioners assume. How that plays against a larger homestead exemption is a question for the bankruptcy courts, and we are not going to predict it.
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