Can an HOA Raise Dues Without Notice? How Assessments Are Managed
Generally, homeowners’ associations (HOAs) are not allowed to increase dues—also known as assessments—without notifying association members in some fashion. How members are notified is determined by local laws and the association's governing documents, but typically, increases in dues must be presented as part of the association's budget at a board meeting.
While living in a community association has many benefits, it does come with a price tag. And as living expenses increase, so do HOA assessments. Read on to learn more about rising fees and what to do if you don’t get notified of them.
What Are HOA Dues?
Dues, also called assessments or fees, are payments all association members are legally required to submit. Depending on your association’s governing documents and procedures, dues can be collected annually, quarterly, or monthly.
FREE DOWNLOAD: “A Breakdown of HOA Governing Documents”
What Do HOA Dues Pay For?
These fees are the primary source of income for an association and are used to ensure the association can successfully perform the various duties and tasks for which it’s responsible. What your HOA fees cover depends on your association, but typically, this money is used to pay for repairs, maintenance, administration, and reserve funds for future repairs and improvements.
Can an HOA Raise Dues Without a Vote?
Likely, yes. If the raised amount is within a certain threshold, an association may be able to raise dues without a homeowner vote. It all depends on the procedures outlined in an association's governing document and state laws. While raising dues without a homeowner vote may be permitted, raising dues without notice is often forbidden.
Always check your community’s governing documents or seek legal advice from a reputable HOA attorney if you believe your board is acting beyond its scope of authority.
Why Do Boards Increase HOA Dues?
Some governing documents permit boards to increase assessments without the approval of owners. While reasons vary, as the cost of living increases, association boards may need to raise assessments to cover additional expenses, like rising insurance rates, increased utilities pricing, or a rise in management, maintenance, or other essential service costs. In addition, a board may increase dues to fund any shortfalls.
Case Study: How Increased Dues Helped One Community Get Back on Track
A 284-unit community located in Tucson, Arizona, was unable to continue to self-manage due to aging volunteers. In addition, there had been no assessment billing for at least three years. All account ledgers were kept by hand, and there was only one person keeping track of incoming and outgoing funds. Due to the low assessment rates, the association couldn’t afford legal representation or an accountant to review its records.
In fact, Associa Arizona arranged for pro bono counsel and agreed to conduct account-by-account verification in-house. The community manager worked closely with the accounting department and the board to ensure proper procedures were followed. Ultimately, under the advice of legal counsel, debts prior to 2015 were forgiven, new accounting books were opened, and dues for fiscal year 2015 to 2017 were billed and collected.
The management team developed a funding plan that recommended a multi-year special assessment, an increase in regular annual assessments, and a reduction of operating expenses, all of which were unanimously approved by the board.
Thanks to these financial efforts, the community was fully back on track within five years.
What to Do If You Don’t Receive Notice of a Dues Increase
Raising assessments is one of the most challenging decisions a board can make, but failing to properly notify residents of a dues increase can have serious consequences. As a homeowner, if you did not receive notice of a dues increase:
Check your governing documents and state laws.
Most HOAs notify homeowners of a dues increase immediately as part of their documented processes. Always verify that notification requirements are clearly outlined in either the governing documents or state laws. Many state laws and governing documents require HOAs to inform residents at least 30 days before the effective date.
Follow up with your board and community manager.
Confirm that a notice was given by addressing the issue with the board and community manager directly. If you find that legal processes were ignored, follow the proper protocols to file a formal complaint.
Attend board meetings.
Understand that notification of increased dues may have been provided at a missed meeting. Make sure to attend future meetings to ask questions and get more information on why dues were raised. Ask to see relevant budgets and reserve study results to justify the increase. Inquire what steps were taken to cut costs and minimize association expenses before raising assessments.
Seek advice from an attorney who specializes in HOAs.
Increased assessments can be a sudden source of financial strain for many residents. If you believe the board failed in its responsibilities by taking unlawful steps to increase fees, talk to an HOA attorney. They’ll be able to advise on the appropriate next steps.
Everything Residents Need to Know About HOA Assessments
While HOAs are not allowed to increase dues without notice, it’s these dues that keep the community functioning at its best. Download “Everything HOA Residents Need to Know About Assessments” to get answers to other pressing questions about dues, like: Are HOA dues tax deductible? Are you required to pay dues if you don’t use the common areas? And much more!