hoa-financial-reporting-faq

Can an HOA increase dues because of financial problems?

Discover if an HOA can raise dues due to financial issues and understand your rights as a homeowner.

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Reviewed by:

D. Goren

Head of Content

Updated Jan, 12

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Can an HOA increase dues because of financial problems?

 

Can an HOA raise dues because of financial problems?

 

Yes, an HOA can raise dues when it faces financial trouble, but the increase must follow the rules in the governing documents and state law. HOA dues (also called assessments) are charges owners pay for community expenses such as maintenance, insurance, landscaping, and reserves. If money runs short, the board often must adjust dues to avoid bigger problems.

 

When an HOA is allowed to increase dues

 

  • The CC&Rs or bylaws allow it: These documents usually state how much the board can raise dues each year. Many allow a percentage increase without homeowner approval, often around 10–20%, but this varies by community.
  • The budget requires it: If expenses rise or reserves are too low, the board may be legally required to set dues high enough to cover costs. An HOA is not allowed to operate at a deficit.
  • State law supports it: For example, some states require boards to maintain adequate reserve funds. If reserves fall short, dues may need to increase.

 

When an HOA may need homeowner approval

 

Some governing documents say that dues can increase only up to a certain limit without a member vote. If the HOA must go over that limit because of financial problems, a vote or special approval process may be required. The exact rule depends on your community’s documents.

 

What the HOA cannot do

 

  • Raise dues in a way that violates its own governing documents: For example, if the CC&Rs require a vote for large increases, the board cannot skip that step.
  • Target certain owners: Dues must be applied uniformly unless the documents allow different rates for different types of units.
  • Hide financial reasons: Boards must give owners a budget and explain why dues are rising.

 

What homeowners can do

 

  • Request the budget: You have the right to see how the HOA calculated the increase.
  • Review the CC&Rs: Look for sections on “assessments” and “budget increases.”
  • Attend the meeting: Most states require the board to vote on budget changes in an open meeting.

In short, an HOA can raise dues for financial problems as long as it follows its governing documents and state law. The increase must be reasonable, properly approved, and clearly tied to the community’s expenses.

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