Can an HOA Board Raise Dues Without a Vote? 3 Limits

The treasurer finishes the arithmetic: dues go from $70 to $80 a month. Then a board member asks the question that can undo a whole budget season: "Don't we need the owners to vote on that?"

Often, no. In many associations, the board can raise dues without a vote of the homeowners, because the documents give it the power to adopt the budget and set regular dues. But three things can take that power away: a cap in your own governing documents, a cap in your state's law, and a rule that lets owners reject the budget. Know which of the three you live under before you build the number, not after an owner objects.

The short answer

1. Many boards can raise dues without a vote, inside the limits their documents and state law set.
2. Some states draw a line. In Arizona and California, a rise of more than 20% over last year needs the members' approval (A.R.S. § 33-1803(A); Cal. Civ. Code § 5605(b)).
3. Check three things before you build the number: your documents' cap, your state's cap, and whether owners can reject the budget.

The first check: Your own documents

Start with the declaration and the bylaws, not the internet. Search them for "assessment", "increase", "percent" and "budget". You are looking for four things:

• a cap on how much regular dues can rise in one year;
• a vote the owners must hold above that cap;
• how much notice owners get, and what they must receive with it;
• what happens if the owners reject the budget.

Some state laws defer to a stricter document. Arizona's cap applies "unless limitations in the community documents would result in a lower limit for the assessment" (A.R.S. § 33-1803(A)). California's runs the other way: its 20% line applies "notwithstanding more restrictive limitations placed on the board by the governing documents" (Civil Code § 5605(b)), so ask your attorney how a stricter cap in your own documents reads there. In Arizona, the binder you already own may hold the rule that binds you.

The state line: Arizona and California stop at 20%

Of the four states read here, two set a percentage in statute, and in both it is 20%.

20% is the line Arizona and California law draw on a yearly rise in regular dues; above it, the members must approve. — A.R.S. § 33-1803(A); California Civil Code § 5605(b)

Arizona. Under its planned-community law, an association may not impose a regular assessment "more than twenty percent greater than the immediately preceding fiscal year's assessment without the approval of the majority of the members of the association" (A.R.S. § 33-1803(A)).

California. The board may not raise the regular assessment more than 20% over the prior fiscal year without the approval of a majority of a quorum of members at a member meeting or election (Civil Code § 5605(b)). California adds a condition for any annual increase at all: the board must have distributed the required parts of the annual budget report (Civil Code § 5300(b)) for that year, or have the members' approval (Civil Code § 5605(a)).

Run it on a 100-home example. $70 to $80 is a 14.3% rise: under the line, so the board can adopt it, provided it has met its notice duties. $70 to $90 is 28.6%: over the line, and it needs the members.

The 20% is also a planning fact. If your honest per-home cost is 30% above today's dues, a board in these states cannot close the gap alone in one year (California exempts true emergencies, Civil Code § 5610). It either asks the owners, or it climbs in steps of no more than 20% and says so in writing.

The veto: Where owners can reject the budget

Some states let the board adopt the budget and then hand the owners a veto.

North Carolina's ratification rule, N.C. Gen. Stat. § 47F-3-103(c).

1. Within 30 days: The board sends owners a budget summary and a meeting notice saying the budget may be ratified without a quorum.
2. 10–60 days later: The owners meet. No quorum is required.
3. The vote: The budget stands unless a majority of all lot owners, or any larger vote the declaration sets, rejects it.
4. If rejected: The last ratified budget continues.

Read step three twice. A majority of all lot owners, not of those in the room, must vote no, unless the declaration sets a larger vote (§ 47F-3-103(c)). In a 100-home community, that is 51 lot owners voting no at the meeting. Silence ratifies the budget.

One catch: this rule reaches the communities North Carolina's Planned Community Act covers under § 47F-1-102: generally those created on or after January 1, 1999 (not those of 20 lots or fewer, unless the declaration opts in), plus older communities that amended their declaration to adopt the Act. Section 47F-3-103(c) is not among the sections that reach pre-1999 communities on their own, so an older community's documents may say something different.

The notice rule: Florida puts its weight on the agenda

Florida's homeowners' association law, Chapter 720, works through notice. "An assessment may not be levied at a board meeting unless the notice of the meeting includes a statement that assessments will be considered and the nature of the assessments" (Fla. Stat. § 720.303(2)(c)2). A meeting where a special assessment will be considered needs written notice to members, and a notice posted on the property, at least 14 days before it (Fla. Stat. § 720.303(2)(c)2).

Florida also ties reserves to your documents. Where the budget does not set up statutory reserve accounts, reserve funding "is limited to the extent that the governing documents limit increases in assessments, including reserves" (Fla. Stat. § 720.303(6)(b)). A cap in the declaration can hold back the reserve line, not just the total.

Not legal advice These are four states, read at their statutes. Your state may say something else, and your documents can add rules. Your governing documents and your attorney decide.

Special assessments: The line that changes the vote

A regular dues increase and a special assessment are different decisions, with different lines.

In California, special assessments that together exceed 5% of the association's budgeted gross expenses for the year need the same majority-of-a-quorum approval (Civil Code § 5605(b)). In the 100-home example at $80 a month, budgeted gross expenses of $96,000 put that line at $4,800 for the year: $48 a home. A $2,400-per-home road assessment is fifty times that line.

That is why the per-home cost matters before the vote. A repair priced into dues a little each year can stay inside the board's power. The same repair, unpriced until it fails, often becomes a special assessment owners must approve (in California, unless it meets one of the emergency exceptions in Civil Code § 5610).

If the owners vote it down

What happens next depends on the rule you live under:

• Under a ratification veto like North Carolina's, the last ratified budget continues until the owners ratify a new one (N.C. Gen. Stat. § 47F-3-103(c)). The bills do not shrink, so the board brings a revised budget back.
• Under a cap like Arizona's or California's, a failed vote means the rise stays at 20% or less (A.R.S. § 33-1803(A); Civil Code § 5605(b)). The rest of the gap waits for next year or a later vote.
• Under your documents, read the clause. Some name a default; some say nothing. If yours says nothing, ask your attorney before the meeting, not after.

A rejected budget is not a cancelled bill. Insurance, the reserve and the landscaper still get paid. Show owners the line-by-line cost: a number owners understand is the one they ratify.

What to check before you announce

• We found every clause in the declaration and bylaws on assessments, increases and the budget.
• We know whether our documents cap the yearly rise, and at what.
• We know our state's rule, with the statute number written beside it.
• We worked out the percentage rise, and whether it crosses any cap.
• We know whether owners can reject the budget, and what happens if they do.
• Our meeting notice says assessments will be considered, and goes out on time.

How to Present an HOA Dues Increase: One Page, Line by Line

Frequently asked questions

Can an HOA board raise dues without a vote of the homeowners? Often, yes, within limits. The board usually adopts the budget, but a cap in the documents, a state cap of 20% (A.R.S. § 33-1803(A); Cal. Civ. Code § 5605(b)), or an owner veto (N.C. Gen. Stat. § 47F-3-103(c)) can require or allow an owner vote.

What is the most an HOA can raise dues in one year? It depends on the state and the documents. Arizona (A.R.S. § 33-1803(A)) and California (Civil Code § 5605(b)) require members' approval for a rise of more than 20% over the prior year. Where your state sets no percentage, your documents may.

Is a dues increase the same as a special assessment? No. A special assessment is usually a one-time charge on top of regular dues, and it can carry its own vote. In California, special assessments over 5% of budgeted gross expenses in a year need members' approval (Civil Code § 5605(b)). Check your documents for their own limit.

What happens if owners reject the HOA budget? Under North Carolina's rule (N.C. Gen. Stat. § 47F-3-103(c)), the last ratified budget continues until owners ratify a new one, so the board brings back a revised budget. Elsewhere, your governing documents and your attorney decide what happens next.