Alabama's Uniform Assignment Act Took Effect 1 October 2026: Preservation Is a Power, and the Lender Has to Agree

Until this autumn, Alabama's statutory law on assignments for the benefit of creditors consisted of one sentence written in 1896 telling debtors where to record the deed. On 1 October 2026 that changed. Alabama adopted the Uniform Assignment for Benefit of Creditors Act, and an Alabama ABC now has a defined estate, a fiduciary assignee with enumerated powers, a claims process with deadlines, and a distribution waterfall. For anyone who secures and maintains commercial buildings, the two provisions that matter are the one that makes preservation an express power and the one that decides who pays for it.

What Took Effect, and When

The act arrived as SB15 of the 2026 Regular Session, sponsored by Senator Givhan. The enrolled text records that it originated in and passed the Senate on 10 February 2026 and passed the House of Representatives on 7 April 2026. Its own closing sections fix the timing: Section 27, "This act shall become effective on October 1, 2026," and Section 26, the transitional provision, "This act applies to an assignment made on or after October 1, 2026."

That date matters more than usual. An assignment made on 30 September 2026 is governed by the old law; one made on 1 October is governed by the new act. Anyone working an Alabama estate this autumn should establish which side of that line the assignment falls on before relying on anything in this page.

The old law it displaces is thin. Ala. Code § 35-4-57, carried forward from the Code of 1896 through the Codes of 1907, 1923 and 1940, says only that "all deeds of assignment executed by debtors for the benefit of creditors shall, as soon as executed, be filed and recorded in the office of the judge of probate of the county in which the property is situated, and such deeds are operative in all respects as other deeds from the day of the delivery to the judge." Recording, and nothing else.

The Assignee Takes Title

Section 5(a) of the new act states the basic effect: "An assignee obtains the rights, title, and interests of the assignor in the assigned assets." Where the assignor is not an individual, § 5(b) extends this to assets acquired after the assignment, so a trading company's later acquisitions fall in too.

Three qualifications follow immediately. Section 5(c): the assignee takes each asset subject to an existing interest held by another person, except as provided in § 10(b)(12). Section 5(d): the assignee holds the assets subject to the duties in § 9. Section 5(e): the assignment remains subject to other law under which it may be fraudulent or otherwise voidable. And § 5(f) fixes the effective date of the assignment agreement as the date it is signed by the last party required to sign, unless a later date is stated.

That title point is a real difference from Texas, whose 1967 chapter provides that an assignment "passes all an assigning debtor's real and personal estate to each consenting creditor in proportion to each consenting creditor's claim." In Alabama after 1 October 2026 the assignee is the title holder, which makes them unambiguously the party who can let a contractor onto the site.

Recording Follows the Property

Section 6(g) states the real property duty: "An assignee of an estate that includes a legal or equitable interest in real property shall record the assignment of the interest or notice of the assignment under the real estate recording law of the jurisdiction where the property is located."

The word is "jurisdiction," not county, and the standard is "the real estate recording law" of wherever the property sits - so an Alabama assignment over out-of-state property carries a recording obligation into that other state's system. Either the assignment itself or a notice of it will do.

Personal property runs on familiar machinery. Section 6(b) lets the assignee file a UCC financing statement in Alabama's filing office and in any state where the assignor would be located or an asset may be located; § 6(c) requires it to indicate it is filed in connection with an assignment; § 6(d) requires a copy of the assignment agreement to be attached or a statement that one is available on request. Section 6(f) then makes the point that filing is protective rather than constitutive: "the rights of the assignee under the assignment are not affected if the assignee does not file a financing statement."

Preservation Is a Named Power

Section 10(a) gives the assignee "the powers necessary or appropriate to perform the assignee's duties." Section 10(b) then enumerates thirteen, and the first is the one that puts field work squarely inside the statute: power to "operate an existing business that uses an assigned asset, including preservation of the asset and collection on or the sale, lease, license, or other disposition of the asset."

Section 10(b)(2) supplies the funding mechanism alongside it: power to "incur secured or unsecured debt and pay expenses incidental to the exercise of the power under subdivision (1)." Section 10(b)(4) lets the assignee engage professionals, including ones previously engaged by the assignor, "and pay the professional a reasonable fee for services from the assignment estate." Section 10(b)(11) gives an express power to abandon an assigned asset. And § 10(f) requires all of it to be exercised consistently with the fiduciary duty in § 9(a).

The duties in § 9 set the frame. Section 9(a) imposes a fiduciary duty to the assignment estate for the benefit of creditors - loyalty including good-faith management, "reasonable care to maximize distributions," and winding up compatibly with the best interests of the estate and creditors. Section 9(b) adds specific duties, including to "collect on or dispose of each assigned asset, unless the assignee determines it is more economically efficient to abandon the asset," to "prepare and retain appropriate business records, including a record of each receipt, disbursement, and collection on or disposition of an assigned asset," and to "pay administrative expenses of the assignment estate, to the extent the assignment estate has sufficient unencumbered assets."

Read § 9(b)(2) and § 9(b)(4) together and the commercial reality appears. Preservation is discretionary against an economic test, and administrative expenses are payable only to the extent there are sufficient unencumbered assets. On a leveraged estate - which is most of them - that condition is doing a great deal of work.

Who Actually Pays: Section 15(c)

The distribution waterfall in § 15 answers the question properly, and it will look familiar to anyone who has argued a surcharge in a bankruptcy case.

A "protected secured creditor" is defined in § 15(a) as one whose lien is perfected, cannot be avoided by the assignee under § 10(b)(12), and is not subordinate to the assignee's lien. Section 15(c) then provides that, unless otherwise agreed, before any other distribution that creditor receives the asset or its proceeds to the extent of the value of its interest - "less the assignee's reasonable and necessary expenses of preserving or disposing of the asset to the extent the expenses benefit the protected secured creditor and are incurred with the protected secured creditor's consent or acquiescence."

Three conditions, all of them evidentiary. The expenses must be reasonable and necessary. They must benefit that particular secured creditor. And they must have been incurred with that creditor's consent or acquiescence. A board-up ordered by the assignee without telling the mortgagee can satisfy the first two tests and still fail the third.

Where § 15(c) does not reach, the fallback is § 15(d): after distributions to protected secured creditors, the assignee pays "the necessary costs of the administration of the assignment estate," including fees and reimbursements of the expenses of the assignee and any professionals employed, post-assignment taxes, post-assignment rent incurred in occupying premises where estate assets are located or the business was conducted, post-assignment lease payments on personal property, and amounts required under the assignment agreement for winding up. Only after that do federal priority claims under § 15(e), wage claims under § 15(f) and general unsecured claims under § 15(g) get paid.

So preservation spending on encumbered collateral has one good route and one poor one. The good route is agreed in advance with the lender whose collateral it is. The poor route is administrative expense, payable out of whatever is left once secured creditors have been satisfied - which on a distressed commercial estate is often nothing.

The Other Deadlines Worth Diarising

Section 9(b)(6) requires the assignee to set a single claims bar date "not less than 90 and not more than 210 days after the effective date of the assignment agreement." Section 9(b)(8) requires a summary of assets, liabilities and expenses plus a status report to every creditor at least every six months. Section 9(b)(10) requires notification to each creditor of the assignee's compensation and of any change in how it is determined. Section 9(b)(11) requires a final accounting under § 19(a).

For a vendor those are useful markers rather than obligations: they tell you when the assignee will need numbers, and the six-month reporting rhythm is the cadence against which a per-site cost record is most easily presented.

What This Means If You Do the Work

• Establish the assignment date first - the act governs assignments made on or after 1 October 2026 and nothing before it
• Your counterparty holds title under § 5(a), so the assignee can give access and instructions directly
• Preservation is a named power under § 10(b)(1), and § 10(b)(2) lets the assignee incur debt and pay expenses incidental to it
• Before working on encumbered property, get the secured creditor's consent in writing - § 15(c) conditions the surcharge on "consent or acquiescence" as well as benefit
• Without that, your cost is an administrative expense under § 15(d), paid only after protected secured creditors are satisfied, and § 9(b)(4) pays administrative expenses only "to the extent the assignment estate has sufficient unencumbered assets"
• Expect abandonment to be on the table from day one under § 9(b)(2) and § 10(b)(11), judged on economic efficiency
• The assignee must retain a record of each disbursement under § 9(b)(3) and report to creditors every six months under § 9(b)(8) - supply costs per site in that shape

For the states still running older statutes of their own, see Texas, where the assignee must reside in the debtor's county and cannot take possession until the bond is filed, Ohio, where the probate court runs it and expenses need a bill of items, Oklahoma, where an unrecorded assignment is void against creditors after twenty days, and Arkansas, where preservation is the assignee's first statutory duty. Alabama's other regimes over a building someone else owns are covered separately: there is no blighted-property receivership and the municipality does the work itself, a chapter 7 trustee in Alabama's Bankruptcy Administrator districts, and what a tax-sale purchaser can recover as preservation improvements. For commercial scope see commercial property maintenance and our Alabama page.