Introduction
Recently, our HOA board faced a tough decision: we had to increase our regular assessment by 10%. Rising costs for insurance and necessary repairs made it unavoidable if we wanted to keep up with maintenance and ensure our reserves remained stable. Naturally, we wanted to make sure we followed the rules correctly, so we turned to the Davis-Stirling Act to confirm how we should carry out the increase.
In researching the rules, we found that different states have different limits on how much dues can be increased without approval. Understanding these laws is crucial for any HOA board making financial decisions.
A well-planned budget can help your HOA manage rising costs while minimizing the need for drastic assessment increases. If you're preparing for an increase, check out our step-by-step guide on creating an HOA budget for strategies to keep your community financially stable.
For board members, navigating the legal requirements for dues increases is a fundamental responsibility. State laws define the limits, notice requirements, and approval processes for increasing assessments, and failing to comply can lead to disputes or even legal trouble.
This article breaks down the rules for HOA dues increases in California, Florida, and Texas. Whether you're a board member making tough financial decisions or a homeowner wanting to understand your rights, knowing these regulations ensures compliance and helps maintain trust within your community.
- State laws dictate how and when HOAs can increase dues, including limits and approval requirements.
- Clear communication and transparency with members prevent disputes and foster trust.
- HOAs should review their governing documents and consult legal professionals when in doubt.
California
Overview of the Davis-Stirling Act
The Davis-Stirling Act establishes the legal framework for HOAs in California to impose and collect assessments and outlines the rules for increasing them.
Authority to Collect Dues
HOAs are authorized to collect dues (referred to as assessments) to maintain and manage the association and its common areas. These assessments must be reasonable and align with the HOA’s budget[1].
Regular Assessments
HOAs can increase regular assessments by up to 20% annually without member approval. The statute requires that increases exceeding 20% obtain approval by a majority of a quorum of members in good standing[1]. Additionally, boards must provide at least 30–60 days’ written notice before implementing the increase.[1].
Special Assessments
HOAs may impose special assessments up to 5% of the HOA's total budgeted expenses for the fiscal year without member approval. Special assessments exceeding 5% require written notice explaining the increase and approval by a majority of a quorum of members in good standing.[1]
Emergency Assessments
California law allows emergency assessments to be imposed without member approval under specific conditions, such as an immediate need to repair or maintain essential services, court order, or safety concerns[1].
The table below summarizes the key provisions of the Davis-Stirling Act regarding regular and special assessments in California. It outlines the limits on increases, required notices, and when membership approval is necessary to ensure compliance with the law. These guidelines help HOAs maintain financial stability while respecting member rights.
| Assessment | Increase Limit | Notice Period | Voting |
|---|---|---|---|
| Regular | Up to 20% increase unless stricter limits exist in the governing documents | Detailed budget must have already been provided, and at least 30 days written notice is required | No member approval required |
| > 20% | Written notice explaining the increase, reasons, and impact must be sent to all members | Requires majority approval of a quorum of members (not just the board) | |
| Special | Up to 5% | Written notice explaining the increase, reasons, and impact must be sent to all members | No member approval required |
| Exceeds 5% of the annual budget | Written notice to all members explaining the proposed increase, the reasons behind it, and how it will affect their dues | Requires majority approval of a quorum of members (not just the board) | |
| Emergency | No limit for emergency situations (e.g., court orders, threats to safety) | No member approval required | |
Florida
Overview of Florida Statutes Chapter 718 and Chapter 720
Florida law, governed by Chapters 718 (Condominiums) and 720 (Homeowners Associations), provides guidelines for HOA and condo assessments.
Authority to Collect Dues
HOAs and condominium associations in Florida have the authority to collect assessments to fund maintenance, management, and operations. These assessments must align with the approved annual budget[3,7].
Regular Assessments
Boards can increase regular assessments as part of the budget approval process. The budget must be approved at a board meeting with at least 14 days written notice to members specifying that the budget will be considered at the meeting[4,7].
For condominiums, if the budget increases assessments by more than 115% of the prior fiscal year's assessments (excluding certain costs like insurance premiums), owners can challenge it[2]:
- If challenged in a timely manner by at least 10% of unit owners, a revised budget must be approved by a majority vote of members.
- If no challenge is made, the board-approved budget remains in effect regardless of the increase.
Certain costs are excluded from the calculation determining if assessments exceed the 115% threshold, including[4]:
- Insurance premiums (recently added to address rising costs).
- Reserve accounts for capital expenditures or deferred maintenance.
- Nonrecurring or extraordinary expenses not expected annually.
- Betterments to condominium property.
These exclusions mean that increases driven by these factors cannot be contested under the 115% rule. It is important to note that this rule applies only to condominiums and not to HOAs governed by Chapter 720.
Special Assessments
Special assessments require written notice, including the meeting date, time, location, a statement that assessments will be considered, and the nature of the assessments, at least 14 days in advance. The notice must also be posted conspicuously in the community.[4,5] Member approval is not typically required unless stipulated by the governing documents[5].
| Assessment | Increase Limit | Notice Period | Voting |
|---|---|---|---|
| Regular (HOAs) | No specific limit for HOAs | Budget must be approved at a properly noticed board meeting, and members must receive written notice at least 14 days in advance | No member approval required |
| Regular (Condos) | Over 115% increase may be challenged | Budget must be approved at a properly noticed board meeting, and members must receive written notice at least 14 days in advance | Majority approval required if challenged |
| Special | No specific limit on increases, but must align with governing documents | Written notice, including the meeting date, time, location, statement that assessments will be considered and the nature of the assessments, must be sent and posted at least 14 days in advance | No member approval required unless governing documents specify |
Texas
Key Statutes in Texas Property Code, Chapter 209
The Texas Property Code, Chapter 209, governs HOA assessments, focusing on transparency and balancing community needs.
Authority to Collect Dues
HOAs are authorized to collect assessments to manage the association's obligations, maintain common areas, and provide necessary services[7,8]. The HOA's governing documents typically outline the amount and process for collecting dues.
Regular Assessments
HOAs in Texas may increase regular assessments annually, with no specific cap imposed by state law[7,8]. The limits and procedures for such increases are determined by the HOA's declaration (CC&Rs) or bylaws.
HOA boards have significant discretion in deciding fee increases or financial obligations they consider reasonable to cover the costs of maintaining the residential community. While boards are required to provide notice of a meeting, including an agenda of items to be discussed, they are not obligated to take public comment on proposed increases.
Notice of the open meeting must be provided at least 10 days in advance, with postings in a common area and emails sent to owners at least 144 hours prior. Once approved, notice of the increase must be sent to members within 30 days unless otherwise specified in the governing documents.
Special Assessments
Similarly, the board must provide written notice at least 10 days before the meeting to discuss special assessments, including the purpose and amount[8]. Member approval is generally not required unless specified in the governing documents.
| Assessment | Increase Limit | Notice Period | Voting |
|---|---|---|---|
| Regular | No specific limit on increases, but must comply with the HOA's governing documents | The board must notify members of increases within 30 days of approval unless otherwise stipulated in the governing documents | No member approval required unless governing documents specify |
| Special | No specific limit on increases, but must align with governing documents | The board must provide written notice at least 10 days before the meeting to discuss the special assessment | No member approval required unless governing documents specify |
Review Governing Documents: Governing documents often outline additional requirements or limitations. Regularly reviewing these documents helps boards align decisions with established rules.
Consult Legal Counsel: Complex situations like emergency assessments benefit from legal expertise. Consulting legal counsel ensures compliance and reduces the risks of disputes.
Maintain Transparency and Communication: Clear communication with members builds trust. Document decisions, provide detailed notices, and use accessible channels to keep members informed.
FAQs About HOA Dues Increases
Can an HOA Increase Dues Without Notice?
No, most states require advance notice. For example, Florida requires 14 days' notice, California requires 30 days' notice, and Texas requires notice after the increase.
What happens if an HOA violates state laws?
Noncompliance can lead to litigation, financial penalties, and loss of trust among homeowners.
Are There Caps on Emergency Increases?
Caps vary by state. California allows emergency assessments under specific conditions, while Florida and Texas rely on governing documents for guidance.
Final Thoughts
Adjusting HOA dues is a critical responsibility requiring careful attention to state laws and governing documents. By following legal requirements, providing transparency, and fostering community trust, HOA boards can ensure financial stability while minimizing disputes.
If you're unsure about your HOA’s policies, reviewing your governing documents or consulting legal counsel can provide clarity and help prevent conflicts.
Footnotes & References
- California Legislative Information. Article 1. Establishment and Imposition of Assessments [5600 - 5625].
- Florida Condo & HOA Law Blog Powered By Becker & Poliakoff. Does a Condominium Have a 115% Cap on Increasing Assessments?
- The Florida Statutes. Chapter 718.111 Condominiums. The association.
- The Florida Statutes. Chapter 718.112 Condominiums. Bylaws.
- The Florida Statutes. Chapter 720.303 Homeowners' Associations. Association powers and duties; meetings of board; official records; budgets; financial reporting; association funds; recalls.
- The Florida Statutes. Chapter 720.316 Homeowners' Association. Association emergency powers.
- Texas Property Code. Title 11. Restrictive Covenants. Chapter 204. Powers of Property Owners' Association Relating to Restrictive Covenants in Certain Subdivisions.
- Texas Property Code. Title 11. Restrictive Covenants. Chapter 209. Texas Residential Property Owners Protection Act.
