Alabama • Reserve study / underfunding
Is your Alabama condo's reserve underfunded — and does the state require funding?
A reserve study can read as reassuring while quietly showing your Alabama building is years behind on saving for its roof, elevators, or façade. What matters is how funded the reserves actually are — and what Alabama requires.
The short answer
Alabama does not require a reserve study and does not require the association to fund it. Neither the condo act nor the HOA act mandates reserves; coastal boards often run pay-as-you-go and fund repairs by special assessment. A thin reserve is the most common reason a special assessment lands later, so the study-versus-actual-balance gap is the number that matters. CondoSignal reads your reserve study and budget against Alabama's rules. Free.Alabama at a glance
Reserve study
Not required
No state mandate
Reserve funding
Not required
Underfunding is legal here
Super-lien
Yes
Six months of assessments — but capped to whatever Fannie/Freddie/Ginnie allow when those entities back the mortgage (Act 2018-403)
Resale disclosure
Cancellation right
Voidable until the resale certificate is delivered and for 5 days after (condos, § 35-8A-409); 7 days on developer sales
What Alabama requires
Neither the condo act nor the HOA act mandates reserves; coastal boards often run pay-as-you-go and fund repairs by special assessment. Whether a thin reserve is merely risky or actually out of compliance depends on that rule — which is the first thing to establish.
Why underfunding becomes an assessment
No statutory cap (§ 35-8A-315). On the Gulf Coast, $5K–$50K insurance/deductible specials are routine; past-due interest can run to 18%. The 'percent funded' figure in the study, compared to the actual reserve balance, tells you how exposed you are.
What it means for collection and resale
The GSE carve-out (§ 35-8A-316) often reduces the effective priority to little or nothing, so it's a weak super-lien in practice. The condo certificate discloses assessments, financials, and insurance; HOAs have no statutory resale certificate or cancellation right.
Your rights in Alabama
As a Alabama owner, your reserve information and any approved special assessments should appear in the association's budget and resale disclosures (voidable until the resale certificate is delivered and for 5 days after (condos, § 35-8a-409); 7 days on developer sales). None of this is legal advice — confirm against the current statute and a licensed professional in your state.
What to check
- Find the reserve study's 'percent funded' figure.
- Compare the recommended contribution to what's budgeted.
- Confirm whether Alabama mandates reserve funding — it doesn't, so the board can legally run reserves thin.
- Check the remaining life of the roof, elevators, and façade.
- Remember delinquent-owner debt carries a super-lien in Alabama (Six months of assessments — but capped to whatever Fannie/Freddie/Ginnie allow when those entities back the mortgage (Act 2018-403)), which raises everyone's risk.
- Look for a reserve catch-up or a recent special assessment.
- Check the study's date — an old study understates today's costs.
Sources
- Ala. Code § 35-8A-316 — lien for assessments (GSE carve-out)(High)
- Ala. Code § 35-8A-313 — insurance requirements(High)
- Ala. Code § 35-8A-409 — resales of units(High)
Educational only — not legal, financial, or engineering advice. Confirm against the current statute and, where it matters, a Alabama-licensed professional.
Related guide
Alabama reserve studies — the full guide →This page answers what to do right now. For how reserve studies works in Alabama — the law, the process, and what to check before you buy or sell — read the full state guide.
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“The board approved a $15,000-per-unit special assessment for façade repairs, payable over 12 months.”
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