Should We Raise HOA Dues?
No board decision generates more owner pushback than a dues increase — which is why so many boards avoid making it until the financial situation forces their hand. This guide gives boards a structured framework for determining whether an increase is needed, how much is appropriate, and what the board can authorize without a member vote.
- The adequacy test — how to determine if current dues are actually sufficient
- State statutory increase caps and board authority limits
- How to calculate the right percentage range for your situation
- When a member vote is required vs. board-only authority
- Dues Adjustment Gate — interactive tool that returns a recommended action
- Common board mistakes when handling dues decisions
- Pre-decision checklist for HOA boards
The adequacy test
Dues adequacy is not about whether owners are comfortable with the current level — it is about whether the current level funds all required operations and contributions at the amount the association actually needs. The adequacy test has two components:
- Operating adequacy: Does current dues income cover all operating expenses — management fees, landscaping, utilities, insurance, administrative costs — at their current or anticipated rates?
- Reserve adequacy: Does current dues income fund the reserve contribution required by the current reserve study to maintain the recommended percent-funded ratio?
Both components must be true for dues to be adequate. An association that covers operating expenses but chronically undercontributes to reserves is not adequately funded — it is just structured so that the shortfall becomes visible later, usually in the form of a special assessment.
The comfort test (and why boards fail it)
The comfort test is the de facto test many boards use: will owners complain? Boards that govern by the comfort test hold dues flat until the situation becomes untenable, then implement large catch-up increases or special assessments that generate exactly the conflict they were trying to avoid.
The evidence strongly favors small, annual, adequacy-driven increases over periodic large catch-ups. An association that raises dues 4% each year for five years collects the same revenue as one that raises them 22% once — but the annual approach generates far less owner friction and maintains the association's financial trajectory rather than creating a funding crisis.
State caps and board authority
Many states limit how much the board can raise dues without a member vote. These caps define the boundary of board-only authority — they are not a ceiling on what the association can charge, only on what the board can do unilaterally. Amounts above the cap require a member meeting and a vote.
California's 20% cap (Civil Code §5605) and Florida's 115%-of-prior-budget rule are the most widely known, but many states have no statutory cap at all — leaving it entirely to the governing documents. Boards must check both state law and their CC&Rs before implementing any increase.
Dues Adjustment Gate
Answer three questions about your dues situation. The gate returns a recommended action with the appropriate percentage range.
State law reference
| State | Key statute | Dues increase rule |
|---|---|---|
| California | Civil Code §5605 | Board may increase annual budget up to 20% over prior year without member vote. Assessments exceeding 5% of the annual budget require member approval by majority vote of quorum. |
| Florida | F.S. §720.303, §720.3085 | Board may adopt budget up to 115% of prior year budget without member vote. Members may petition to hold a special meeting to veto the budget within 21 days of mailing. |
| Texas | Prop. Code §209.0062 | No statewide cap. Governing documents control board authority for dues increases. Many CC&Rs require member vote for increases exceeding a set percentage or dollar amount. |
| Colorado | C.R.S. §38-33.3-303.5 | No statewide cap for planned communities. CCIOA allows boards to impose special assessments up to 5% of prior year budget without member vote; regular dues increases governed by documents. |
| Nevada | NRS 116.3115 | No explicit statutory cap on regular dues increases for HOAs. Governing documents control. Associations must provide 30-day notice of any increase to members. |
| Arizona | A.R.S. §33-1803, §33-1256 | No statewide cap. Governing documents control. Board must adopt budget at open meeting with at least 10-day advance notice. CC&Rs often cap board-only increases at 10–20%. |
Common board mistakes
Pre-decision checklist
Sources
- California Civil Code §5605 — Assessment and budget increase limitations
- Florida Statutes §720.303, §720.3085 — HOA budget adoption and assessment authority
- Colorado Revised Statutes §38-33.3-303.5 — CCIOA special assessment authority
- Arizona Revised Statutes §33-1803, §33-1256 — Planned community and condominium assessment rules
- Community Associations Institute (CAI) — Dues Adequacy and Reserve Funding Best Practices