Alabama reorganised the chapter that catches unincorporated neighbourhood associations
Alabama reorganised the chapter that catches unincorporated neighbourhood associations
2026-09-10 · Alabama · Legislation
Alabama has created a new kind of nonprofit association designed to be governed by software. The reason it belongs in a community-association column is not the software — it is which chapter of the Code the Legislature put it in.
SB 277 became Act 2026-325, signed on April 1, 2026 and effective October 1, 2026.1 It passed the Senate 32–1 and the House 93–0, sponsored by Senator Lance Bell.
What it creates
The act adds a new Article 2 to Chapter 17 of Title 10A — twenty-eight new sections, §§ 10A-17-2.01 through 10A-17-2.28 — establishing the decentralized unincorporated nonprofit association as an entity form.
Such an association has separate legal existence, capacity to acquire and convey property, to sue and be sued, to contract and to be served. Its internal governance may use distributed ledger technology and algorithmic means to validate records and make organisational decisions. The act provides for member liability limits, administrators, indemnification, insurance, recordkeeping, dissolution, winding-up and mergers, and permits profit-making activity so long as profits further or are set aside for the association's common purpose.
The part that touches existing associations
Chapter 17 of Title 10A is the Alabama Unincorporated Nonprofit Association Act — the default governing law for a neighbourhood association that never filed a certificate of incorporation.
To make room for the new material, the act designates the existing §§ 10A-17-1.01 through -1.18 as Article 1. In the same session, Act 2026-495 separately amended § 10A-17-1.02.
So the chapter that catches unincorporated Alabama associations was both reorganised and amended in a single session, by two different acts.
What it does not do
Being precise here matters more than being interesting, because this is the kind of act that attracts overstatement.
This is not HOA legislation. It is entity-formation legislation aimed at decentralised organisations. Nothing in it addresses assessments, covenants, architectural control, board elections, records access or any other subject of community-association governance.
It changes no substantive right of any existing unincorporated Alabama association. Renumbering the existing sections as Article 1 is structural. An unincorporated neighbourhood association's powers, its members' liability, and its capacity to hold property are governed by the same provisions they were before, now under an article heading.
It is opt-in. Nothing converts an existing association into the new form. An association that wanted to adopt it would have to do so deliberately.
Why it is still worth a board knowing about
Two reasons, both practical.
Citations move. Governing documents, legal opinions and title work that cite Chapter 17 sections by number are unaffected — the numbers did not change — but anyone reading the chapter fresh will now encounter an Article 1 / Article 2 structure where there was none. That matters mainly to whoever next drafts or reviews an unincorporated association's documents.
The chapter is under active legislative attention. Two acts touched it in one session after years of quiet. For the substantial number of Alabama neighbourhood associations that never incorporated — and there are more than most people assume, particularly older subdivisions and voluntary-membership associations — Chapter 17 is their governing law. It is now a chapter worth watching rather than one that can be assumed static.
The distinction that actually matters for Alabama associations
This act is a useful occasion to restate something that catches Alabama boards out regularly: whether an association is incorporated determines which body of law governs it, and the two bodies are now diverging.
An incorporated association is a membership nonprofit corporation under Title 10A, Chapter 3A. As of August 1, 2026, that chapter abolishes member derivative actions outright, gives a membership nonprofit a new ground on which to deny a records request, and repeals the financial-statements-for-members section — all by Act 2026-495. It also carries a one-time opt-out available only until December 31, 2026.
An unincorporated association is governed by Chapter 17, which none of those changes reach.
An Alabama board that does not know which it is cannot answer a member's records request correctly. The answer is on file with the Secretary of State, and checking it takes minutes.
What to watch next
The act's House companion, HB 483, died in committee; the Senate version carried. We are aware of no Alabama community association organised or reorganised under the new decentralized form, and would not expect one soon — the form is aimed at a different constituency.
The thing to watch is whether Chapter 17 receives substantive amendment in the 2027 session. The Alabama Law Institute's annual Business and Nonprofit Entities Code revision has now reached Title 10A in each of the last two sessions, and it is the vehicle through which changes of this kind arrive.
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