Can an HOA raise dues without a vote in Texas? This is a question both board members and homeowners often ask. When faced with higher dues, the first instinct is to challenge the decision and whether proper protocol was followed. But while unpopular, a dues increase doesn’t automatically equate to mismanagement.
Can HOA Raise Dues Without a Vote in Texas?
In an HOA or condominium, membership approval is required for several actions, but raising dues is typically not one of them. In general, association boards have the authority to raise dues without a homeowners’ vote, requiring only a board vote.
Raising HOA dues in Texas is typically at the board’s discretion, but there are certain requirements to follow. According to Section 209.0051 of the Texas Property Code, boards must consider or vote on an increase in regular fees at an open board meeting. This means homeowners have a right to observe the discussion and vote, but they don’t have voting power.
While this may seem unfair to some owners, the setup is based on sound reasoning. For one thing, board members are privy to what goes on behind the scenes. They are the ones who know what’s best for the community since they are more hands-on.
Homeowners aren’t aware of the financial condition of the association. They don’t negotiate with vendors or have a deep understanding of the association’s needs. If they have a say in every dues increase, it would significantly delay operations and stall cash flow.
That said, boards and owners must still check their governing documents. The CC&Rs and bylaws, in particular, may have stricter requirements and thresholds for raising dues. For example, an HOA may need to secure membership approval for any increases beyond a certain dollar amount or percentage of the previous year’s dues.
Can HOA Raise Dues Without Notice?
According to Section 209.0051 of the Texas Property Code, association boards must consider and vote on any dues increases at an open board meeting. These meetings must come with notice, allowing all homeowners to attend. The notice must include the date, time, location, and purpose of the meeting, which can include raising dues.
Board members must refer to their governing documents for any additional requirements. More often than not, the bylaws require written notice of the dues amount to be delivered to the owners. This way, owners who did not attend the board meeting are still informed.
Increases are often met with displeasure or complaints from owners. To avoid disputes, boards must educate homeowners on the reasoning behind the increase. Spell it out and itemize the expenses, complete with projected amounts. When owners understand why they must pay more, they are less likely to make a fuss.
When do Boards Raise HOA Dues?
Dues tend to increase every year to keep up with economic changes. That said, boards must not arbitrarily raise regular fees; instead, they should rely on historical data, accurate projections, and actual prices.
Here are the situations that can cause a dues increase:
1. Rising Costs
Inflation is the most common cause of rising fees. Most of the time, higher costs for utilities, insurance, and vendor services trigger an increase in regular dues.
2. Capital Improvements
Many neighborhoods invest in capital improvements to raise property values, attract new buyers, and keep residents happy. But these improvements cost money. If the association plans to pursue upgrades, renovations, or other projects, the board would need to raise dues to meet the budgetary needs.
3. Unexpected Repairs
Emergencies can strike at any time. A storm could wipe out the clubhouse roof. An earthquake could crack pavements. While insurance plays an essential role in addressing damages, coverage may be limited. To make emergency repairs and begin recovery efforts, a fee hike may be necessary.
4. Mismanagement
It is the HOA or condo board’s job to plan the budget and use it wisely. Unfortunately, volunteer boards aren’t always well-versed in these areas. They may inaccurately estimate costs or poorly manage the operating budget. These things can lead to an increase in dues.
5. Reserve Fund Needs
An association’s reserves contain monies set aside for future major repairs and replacements, as projected by the reserve study. If an association is still trying to meet its optimal funding level, it will likely need to raise dues to catch up.
6. High Delinquency Rate
Living in an association is a collaborative effort, and one owner’s actions can affect others. Nothing exemplifies this better than delinquency. When owners default on their dues, the association suffers cash flow issues. Sometimes, the board would have no other choice but to recoup the deficit by raising fees, which paying owners may deem unfair.
Is There a Limit on HOA Dues Increases in Texas?
In Texas, there is currently no law that limits how much or how frequently the board may raise dues. The governing documents of an association will typically outline these caps or restrictions.
For many communities, the bylaws or CC&Rs set a dollar or percentage limit. Going beyond this limit will require approval from homeowners through a membership vote. But if the increase doesn’t exceed this cap, then the board is free to proceed without an owner vote.
Special Considerations for Certain Counties in Texas
There are additional provisions that apply to associations located in the counties of Harris, Montgomery, and Galveston. According to Section 204.010, if the CC&Rs and bylaws permit an annual dues increase without a vote from homeowners, the board may:
- Assess the increase every year, or
- Amass the increase and assess it after a number of years.
This consideration applies only if the association’s governing documents don’t contain contrary provisions.
Can HOA Raise Dues Without a Vote in Texas? Answered!
Board members have the challenging responsibility of meeting the association’s financial needs while balancing homeowner response. Raising dues is often an unpopular decision among residents, but with clear explanations and justifications, the board can avoid conflict and disputes.
Graham Management offers exceptional HOA financial management services to Houston communities. Call us today at (713) 334-8000, request a proposal, or contact us online to learn more!
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