Creation

• Alabama homeowners associations are non-profit corporations. A developer of a new subdivision creates one to manage development; this may happen as soon as local government approves the development or after owners start buying their homes. The association board uses homeowners' membership dues to maintain common areas such as recreation facilities, private roads and landscaping. The developer, as the initial owner of much of the community, will often sit on the board and appoint other members, at least in the early development phases.
  
  

Disclosure

• The Alabama statutes, as of the date of publication, have no provisions requiring that associations disclose how they spend or account for the owners' dues. Groups such as the Alabama Concerned Homeowners Alliance say this is a problem because developers can staff the board with business associates, shut out homeowners and maintain total control over how the dues are spent. The alliance says such boards often act in the developer's interest rather than the community's.
  
  

Problems

• Critics of the current system say as long as a developer controls an association, there's nothing to stop her depositing association dues into her business accounts. As homeowners have no authority to check the association's books, there's no way to know whether developers are handling the dues properly or mismanaging funds. In some cases, the financial problems have gone further: One developer allegedly used the neighborhood's swimming pool and clubhouse as the collateral for a loan to his company. Homeowners have no legal right to that information either.
  
  

Battles

• In response to 2009 homeowner complaints, Alabama legislators began discussing the issues with developers and homeowners. Homeowners pointed out that several states, such as Virginia, require associations to open their books to residents, and Alabama requires condominium associations do so. In 2011, the state government was still debating the issue. Steve Cawthorn, a Huntsville real-estate agent, told WAFF-TV he'd been on a state task force for developing disclosure laws, but the state dissolved the task force before it held any meetings.