CHAPTER 17. UNINCORPORATED NONPROFIT ASSOCIATIONS

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1 CHAPTER 17. UNINCORPORATED NONPROFIT ASSOCIATIONS " 10-3B-110A Short title. "This chapter together with applicable provisions of Chapter 1 may be cited as the Alabama Unincorporated Nonprofit Association Act Law. This section is derived from section 10-3B-1. It has been rewritten to include a reference to Chapter 1 (the Hub). As re-written it tracks the short title provisions of other entity specific chapters and replicates section 10A (i). " 10-3B-210A Definitions. In this chapter: "(1) "Member" means a person who, under the rules or practices of a nonprofit association, may participate in the selection of persons authorized to manage the affairs of the nonprofit association or in the development of policy of the nonprofit association. "(2) "Nonprofit association" means an unincorporated organization consisting of two or more members joined by mutual consent as an association for a stated common, nonprofit purpose. However, joint tenancy, tenancy in common, or tenancy by the entireties does not by itself establish a nonprofit association, even if the co-owners share use of the property for a nonprofit purpose. "(3) "Person" means an individual, corporation, business trust, estate, trust, partnership, association, joint venture, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. "(4)(3) "Nonprofit purpose" shall be any purpose for which a nonprofit corporation could be organized under the Alabama Nonprofit Corporation Act, as amended, and where no part of income or profit is distributable to its members, directors and officers. 547

2 "(5) "State" means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or insular possession subject to the jurisdiction of the United States. This section is derived from section 10-3B-2. Definition for the term person has been omitted in deference to the Hub definition (section 10A (73)) as has the definition of the term state (section 10A (87)). " 10-3B-310A Supplementary general principles of law and equity. "Principles of law and equity supplement this chapter unless specifically displaced by a particular provision of it. This section is derived from section 10-3B-3, without change. " 10-3B-410A Governance. "(a) A nonprofit association may adopt written rules for its regulation, management, governance and dissolution. "(b) As to matters not addressed by written rules, the following rules shall apply: "(1) A member of a nonprofit association shall be entitled to participate in the governance of the association. A majority of the votes cast on a matter by members present and voting at a properly called meeting shall govern as to that matter. "(2) As to any matter not determined by vote, the association may take action in accordance with its settled practices. "(c) A member acting on behalf of the association shall discharge his or her duties in a manner the member reasonably believes to be in the best interest of the association. 548

3 This section is derived from section 10-3B-4, without change. " 10-3B-510A Real and personal property; nonprofit association as legatee, devisee, or beneficiary. "(a) Unless prohibited or otherwise limited by its written rules or governing documents, a nonprofit association in its name may acquire, hold, encumber, or transfer an estate or interest in real or personal property. "(b) Unless prohibited or otherwise limited by its written rules or governing documents, a nonprofit association may be a legatee, devisee, or beneficiary of a trust or contract. "(c) Real and personal property in Alabama may be acquired, held, encumbered, and transferred by a nonprofit association, whether the nonprofit association or a member has any other relationship to Alabama. This section is derived from section 10-3B-5, without change. " 10-3B-610A Statement of authority as to real property. "(a) A nonprofit association shall execute and record a statement of authority to transfer an estate or interest in real property in the name of the nonprofit association. "(b) An estate or interest in real property in the name of a nonprofit association may be transferred by a person so authorized in a statement of authority recorded in the office of the probate judge of probate of the county in which the real property is located. "(c) A statement of authority shall set forth: "(1) The name of the nonprofit association; "(2) The address in Alabama, including the street address, if any, of the nonprofit association, or, if the nonprofit association does not have an address in Alabama, its address out of state; 549

4 "(3) The name or title of a person authorized to transfer an estate or interest in real property held in the name of the nonprofit association; and "(4) The action, procedure, or vote of the nonprofit association which authorizes the person to transfer the real property of the nonprofit association and which authorizes the person to execute the statement of authority. "(d) A statement of authority shall be executed and recorded in the same manner as a deed by a person who is not the person authorized to transfer the estate or interest. "(e) The probate judge of probate may collect a fee for recording a statement of authority in the amount authorized to be collected by and for the probate judge of probate pursuant to subdivision (1) of subsection (a) of Section 10-3A-200 for filing of articles of incorporation and issuance of a certificate of incorporation of a nonprofit corporation Section 10A for filing a certificate of formation. "(f) An amendment, including a cancellation, of a statement of authority shall meet the requirements for execution and recording, and be accompanied by payment of the same recording fee payable to and for the judge of probate, of an original statement. Unless cancelled earlier, a recorded statement of authority as amended is cancelled by operation of law five years after the date of the most recent amended statement of authority. "(g) If the record title to real property is in the name of a nonprofit association and the statement of authority is recorded in the office of the probate judge of probate of the county in which the real property is located, the authority of the person named in a statement of authority is conclusive in favor of a person who gives value without notice that the person lacks authority. This section is derived from section 10-3B-6. Subsections (e)-(f) have been re-written to correlate with the general fee provisions of section 10A Notice that though there is a fee payable to and for the probate judge for filing a certificate of authority, correlated with the fee payable for filing a certificate of formation, there is not a fee payable 550

5 to and on behalf of the State of Alabama since, unlike a certificate of formation, nothing is forwarded to the Secretary of State for filing. " 10-3B-710A Liability in tort and contract. "(a) A nonprofit association is a legal entity separate from its members for the purposes of determining and enforcing rights, duties, and liabilities in contract and tort. "(b) A person is not liable for a breach of a nonprofit association's contract merely because the person is a member, is authorized to participate in the management of the affairs of the nonprofit association, or is a person considered to be a member by the nonprofit association. "(c) A person is not liable for a tortious act or omission for which a nonprofit association is liable merely because the person is a member, is authorized to participate in the management of the affairs of the nonprofit association, or is a person considered to be a member by the nonprofit association. "(d) A tortious act or omission of a member or other person for which a nonprofit association is liable is not imputed to a person merely because the person is a member of the nonprofit association, is authorized to participate in the management of the affairs of the nonprofit association, or is a person considered to be a member by the nonprofit association. "(e) A member of, or a person considered to be a member by, a nonprofit association may assert a claim against the nonprofit association. A nonprofit association may assert a claim against a member or a person considered to be a member by the nonprofit association. This section is derived from section 10-3B-7, without change. " 10-3B-810A Capacity to assert and defend; standing. "(a) A nonprofit association, in its name, may institute, defend, intervene, or participate in a judicial, administrative, or other governmental proceeding or in an arbitration, mediation, or any other form of alternative dispute resolution. 551

6 "(b) A nonprofit association may assert a claim in its name on behalf of its members if one or more members of the nonprofit association have standing to assert a claim in their own right, the interests the nonprofit association seeks to protect are germane to its purposes, and neither the claim asserted nor the relief requested requires the participation of a member. This section is derived from section 10-3B-8, without change. " 10-3B-910A Effect of judgment or order. "A judgment or order against a nonprofit association is not by itself a judgment or order against a member. This section is derived from section 10-3B-9, without change. " 10-3B-1010A Disposition of personal property of inactive or dissolved nonprofit association. "If a nonprofit association has been inactive for five years or longer, or has been dissolved, a person in possession or control of personal property of the nonprofit association may transfer the property: "(1) If a document of a nonprofit association specifies a person to whom transfer is to be made under these circumstances, to that person; or "(2) If no person is so specified, to a nonprofit association or nonprofit corporation pursuing broadly similar purposes, or to a government or governmental subdivision, agency, or instrumentality. This section is derived from section 10-3B-10, without change. " 10-3B-1110A Appointment of agent to receive service of process. 552

7 "(a) A nonprofit association may file in the office of the probate judge of probate of the county where the association has its principal office a statement appointing an agent authorized to receive service of process. "(b) A statement appointing an agent shall set forth: "(1) The name of the nonprofit association; "(2) The address in Alabama, including the street address, if any, of the nonprofit association, or, if the nonprofit association does not have an address in Alabama, its address out of state; and "(3) The name of the person in Alabama authorized to receive service of process and the person's address, including the street address, in Alabama. "(c) A statement appointing an agent shall be signed and acknowledged by a person authorized to manage the affairs of the nonprofit association. The statement shall also be signed and acknowledged by the person appointed agent, who thereby accepts appointment. The statement and one copy thereof shall be delivered to the probate judge of probate, who will transmit a certified copy to the Secretary of State. If the probate judge of probate finds that the statement conforms to provisions of this section, he or she shall file such the statement in his or her office, and upon such the filing, the statement becomes effective. "(d) The appointed agent may resign by filing a resignation and one copy thereof with the probate judge of probate, and by giving notice to the nonprofit association. The probate judge of probate shall transmit a certified copy to the Secretary of State. The appointment of such the agent shall terminate upon the expiration of 30 days after receipt of such the notice by the probate judge of probate. "(e) The probate judge of probate may collect a fee for filing a statement appointing an agent to receive service of process, an amendment, or a resignation in the amount charged for filing similar documents for nonprofit corporations. "(f) An amendment to a statement appointing an agent to receive service of process shall meet the requirements for execution of an original statement. 553

8 This section is derived from 10-3B-11 without substantive change. " 10-3B-1210A Claim not abated by change of members or offices. "A claim for relief against a nonprofit association does not abate merely because of a change in its members or persons authorized to manage the affairs of the nonprofit association. This section is derived from section 10-3B-12, without change. " 10-3B-1310A Venue. "Venue shall be as is provided in Section 6-3-6, as may be amended from time to time. This section is derived from section 10-3B-13, without change. " 10-3B-1410A Summons and complaint; service on whom. "In an action or proceeding against a nonprofit association, a summons and complaint shall be served on an agent authorized by appointment in Section 10-3B-11 10A herein to receive service of process, or on an officer, managing or general agent, or person authorized to participate in the management of its affairs, or in any manner otherwise provided in the Alabama Rules of Civil Procedure. If after reasonable efforts to accomplish service through these methods, service cannot be accomplished, then service may be made on a member of the association. 554

9 This section is derived from section 10-3B-14, without substantive change. " 10-3B-1510A Transition concerning real and personal property. "(a) If, before January 1, 1996, an estate or interest in real or personal property was purportedly transferred to a nonprofit association, on January 1, 1996 the estate or interest vests in the nonprofit association unless the parties have treated the transfer as ineffective. "(b) If, before January 1, 1996, the transfer vested the estate or interest in another person to hold the estate or interest as a fiduciary for the benefit of the nonprofit association, its members, or both, on or after January 1, 1996, unless otherwise prohibited by terms of a written trust, the fiduciary may transfer the estate or interest to the nonprofit association in its name, or the nonprofit association, by appropriate proceedings, may require that the estate or interest be transferred to it in its name. This section is derived from section 10-3B-15, without change. " 10-3B-1610A Other acts not repealed. "The following sections and parts of sections of the Code of Alabama 1975, as amended, are not repealed by this chapter: "(1) Sections through , regarding cooperatives and associations. "(2) Section 6-3-4, regarding venue of actions against unincorporated groups issuing insurance policies. "(3) Section 6-3-6, regarding venue of actions against unincorporated organizations or associations. "(4) Section , regarding immunity of volunteers of nonprofit organizations if actions are in good faith and in the scope of 555

10 official functions and duties, and do not represent willful or wanton misconduct. "(5) Section , defining "Person" as including any person, partnership, joint stock company, unincorporated association, or society, or municipal or other corporation. "(6) Section , regarding right to commence actions in name of unincorporated organization or association. "(7) Section , regarding commencement of actions against unincorporated organization or association; satisfaction of judgment against unincorporated organization or association. "(8) Sections A through A , regarding Bishops of Diocese, incorporation. "(9) Sections A through A , regarding churches, public societies, and graveyard owners, incorporation. "(10) Sections A through A , regarding Conference of Ministers, incorporation. "(11) Sections A through A , regarding state conventions or associations of churches, incorporation. "(12) Sections A through A , regarding educational institutions, incorporation. "(13) Sections A through A , regarding health care service plans. "(14) Sections A through A , regarding industrial development corporations. "(15) Sections A through A , regarding local fraternal orders. "(16) Sections A through A , regarding single tax and other mutual economic associations. 556

11 "(17) Section A , regarding private foundations. "(18) Section A , regarding retail merchants' associations, incorporation. "(19) Section A , regarding wholesale merchants' associations, incorporation. "(20) Sections A through A , regarding water power companies. "(21) Sections A through A , regarding officers of not-for-profit corporations, associations or organizations liable only for willful or wanton misconduct or fraud, or gross negligence. This section is derived from section 10-3B-16. The only changes are adjustments of cross references. " 10-3B-1710A Savings clause. "This chapter does not affect an action or proceeding commenced or right accrued before this chapter takes effect. This section is derived from section 10-3B-17, without change. " 10-3B-1810A Uniformity of application and construction. "This chapter shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states enacting it." This section is derived from section 10A-3B-18, without change. 557

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