An unincorporated association can also be termed a voluntary organization. A voluntary organization has no legal personality. Generally, an unincorporated organization has no right to acquire or hold property.
Statutes can provide the power to acquire and hold property, estates, and interests in property to unincorporated organizations.[i] Pursuant to the Uniform Unincorporated Nonprofit Association Act (Act), a nonprofit association can acquire, hold, or encumber an estate or interest in real and personal property.
In the absence of a statutory provision, unincorporated organizations cannot acquire or hold property in the name of the organization.[ii] An unincorporated organization cannot acquire property by purchase or gift. This is because an unincorporated organization has no legal existence.
When a property is acquired in the name of an unincorporated organization, the property belongs to its members.[iii] When an unincorporated organization is given a gift, the legal effect is supposed to be to the individual members of the organization. However, if the gift is expressed to be in trust and charitable use, the gift can be to the organization.
When an unincorporated organization has the capacity to be a beneficiary of a trust and lacks separate legal status, legal title to the property acquired by the unincorporated organization must be held by a trustee.[iv] In such conditions, an unincorporated organization can not acquire title in its organization’s name. However, it can acquire, hold, and dispose property through elected trustees.
If an unincorporated organization adversely occupies and possesses land as required by law for a proper length of time, the organization can acquire title to the property by limitation through its trustees. Constructively, possession of the members for associational purposes is the possession of the trustees who represent the organization.
Property cannot be bequeathed to an unincorporated organization. A bequest to an unincorporated organization cannot be made valid by the incorporation of the organization subsequent to the death of the testator.[v] However, according to the Act, a nonprofit association can become a legatee or devisee.
Even if a law authorizes an unincorporated organization to conduct a case in court to defend or enforce a substantive right, it cannot allow an unincorporated organization to hold property.[vi]
[i] Highlands Township Taxpayers Asso. v. Highlands Township Taxpayers Asso., 62 N.C. App. 537 (N.C. Ct. App. 1983)
[ii] United States v. One Square Acre of Land, 1996 U.S. App. LEXIS 13798 (8th Cir. Ark. June 11, 1996)
[iii] Guild v. Allen, 28 R.I. 430 (R.I. 1907)
[iv] Barnhart v. Bowers, 143 Kan. 866 (Kan. 1936)
[v] In re ROCHESTER TRUST & SAFE DEPOSIT CO., 273 A.D. 79 (N.Y. App. Div. 1947)
[vi] Calagaz v. Calhoon, 309 F.2d 248 (5th Cir. Ala. 1962)