Ala. Code §§ 24-1B-1 to 24-1B-12 § 24-1B-11
Loss of Nonprofit Status; Transfer of Interests.
Operative Text
(a) A nonprofit organization that loses its nonprofit corporation status may no longer operate as a community land trust. (b) After losing its nonprofit corporation status, the organization must transfer, within 120 days and without financial compensation other than incidental associated costs, its interest in any ground leases, in order of priority, to either: (1) The organizing municipality; or (2) A municipal entity or a nonprofit affordable housing organization designated by the organizing municipality which shares the purposes of the community land trust and has received a determination under 26 U.S.C. § 501(c)(3). (c) If the entity or organization that gives up or loses its nonprofit corporation status fails to begin the transfer of its interest in any ground leases or deeds of conveyance within 120 days as provided in subsection (b), all interests shall be transferred to the organizing municipality effective immediately by operation of law and shall be reflected by the organizing municipality by recording notices of transfer in the real property records where the leases are recorded.
Under Alabama Code § 24-1B-11, a community land trust that loses its nonprofit corporation status is immediately barred from continuing to operate as such. The former nonprofit then has 120 days to voluntarily transfer its ground lease interests—without receiving financial compensation beyond incidental costs—to the organizing municipality or to a qualifying 501(c)(3) affordable housing entity designated by that municipality. If the transfer is not initiated within that window, the law automatically vests all ground lease interests in the organizing municipality by operation of law, with the municipality recording the transfer in the relevant real property records.
Plain English — not legal advice.
Community land trust operators subject to Alabama Code § 24-1B-11 should maintain active nonprofit corporation status as a foundational compliance requirement, since losing that status triggers an immediate prohibition on continued operation. Compliant organizations keep governance and state filing obligations current so that the 120-day transfer clock never begins. Operators also generally maintain clear documentation of all ground lease interests so that, if a transfer ever becomes necessary, it can be executed promptly and in the priority order the statute specifies.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Tenants holding ground leases through a community land trust should be aware that Alabama Code § 24-1B-11 provides a structured succession process if the trust loses its nonprofit status—meaning the land trust's obligations do not simply disappear. Ground lease interests must be transferred to a municipality or a qualifying affordable housing organization, which helps preserve the affordable housing purpose underlying the arrangement. Tenants who have questions about how a change in their land trust's status may affect their lease can reach out to a local tenant-rights organization or a legal aid office familiar with Alabama housing law for general information.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated October 16, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
Effective Timeline
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