Arizona HOA Budget Approval

Key Findings

• Start with the big picture. Arizona is a comprehensive, non-UCIOA state, and it runs two separate chapters that do not borrow from each other. The section numbers differ, the text differs, and a rule in one chapter reaches the other only when both chapters carry a matching provision.
• For condominiums, the board holds the power to adopt and amend the budget under Ariz. Rev. Stat. § 33-1242(A)(2),¹ and assessments have to rest on a budget the board adopts at least once a year under § 33-1255(A).² Section 33-1243(D) then adds a negative-option ratification step — but it kicks in only when the declaration does not already let the board adopt and amend budgets on its own.³
• Planned communities work differently. That chapter lays out no budget-adoption or ratification procedure at all. The board adopts the budget under the declaration and ordinary corporate law, and the real statutory brake on growth is § 33-1803(A), which bars a regular assessment more than 20% above the prior year’s without majority member approval.⁴
• That 20% limit lives only in the planned-communities chapter. The Condominium Act sets no percentage cap on regular-assessment increases.⁴
• Neither chapter forces a reserve study or any reserve funding. On resale, the disclosure rules under § 33-1260 for condominiums and § 33-1806 for planned communities call for the current operating budget and the most recent reserve study — but only if one happens to exist.^{5, 6}
• And no Arizona appellate court, between June 2023 and June 2026, has interpreted the budget, assessment, or financial-records provisions of either chapter.

Section 1: Overview — How HOA budgets are approved in Arizona

Arizona runs association budgets through two parallel statutes inside Title 33, and the first job is to figure out which one you are in. The Condominium Act sits at Chapter 9 (Ariz. Rev. Stat. § 33-1201 et seq.); the Planned Communities Act sits at Chapter 16 (§ 33-1801 et seq.). Each carries its own provisions.⁷

For a condominium, the board adopts the budget. Unless the declaration expressly lets the board adopt and amend budgets on its own, that budget then stands as ratified — the owners do not have to approve it, but a majority of all unit owners can reject it at a meeting. Section 33-1243(D) calls the play, and it is a negative-option model.³

For a planned community, the chapter writes no budget-adoption or ratification procedure. The board adopts the budget under the declaration, and the main statutory control is the assessment limitation in § 33-1803(A).⁴ That limit does the member-protection work here: it demands a majority member vote before a regular assessment can climb past 120% of the prior year’s.⁴

In both chapters, the board normally adopts the budget at a noticed, open board meeting — § 33-1248 for condominiums, § 33-1804 for planned communities.^{8, 9} And keep the lineage in mind: Arizona is a comprehensive, non-UCIOA state. Chapter 9 draws in part on the 1980 Uniform Condominium Act, Chapter 16 on a homegrown Arizona framework — neither on the Uniform Common Interest Ownership Act. The table and the chapter-by-chapter walkthrough below lay out the mechanics.

Section 2: The budget approval mechanism

2A. Quick-Reference Budget Mechanics Table

This table tracks Ariz. Rev. Stat. Title 33 — Chapter 9 for condominiums, Chapter 16 for planned communities. The provisions are not interchangeable.

2B. The budget approval process under each chapter

Start with Chapter 9. A condominium board holds the statutory power to adopt and amend budgets for revenues, expenditures and reserves under Ariz. Rev. Stat. § 33-1242(A)(2), and the assessments have to rest on a budget the board adopts at least once a year under § 33-1255(A).^{1, 2} The step-by-step mechanics live in § 33-1243(D).³ Here is how they run. Within 30 days after the board adopts a proposed budget — except as the declaration says otherwise — the board has to hand every unit owner a summary. Unless the declaration already lets the board adopt and amend budgets from time to time, the owners must ratify the budget or the amendment. When ratification applies, the board sets a meeting no fewer than 14 and no more than 30 days after it mails the summary. Unless a majority of all unit owners — or any larger vote the declaration names — rejects the budget at that meeting, the budget stands, quorum or no quorum. If the owners do reject it, the last ratified budget simply carries on until they ratify a new one. That is the negative-option model, and a declaration can switch it off by handing the board standalone budget authority outright.

Chapter 16 takes another road. The Planned Communities Act writes no matching summary-and-ratification procedure. Adopting the budget is a board function under the recorded declaration and the association’s corporate authority, and the chapter’s one real control on growth is the assessment limitation in § 33-1803(A): “Unless limitations in the community documents would result in a lower limit for the assessment, the association shall not impose a regular assessment that is more than twenty percent greater than the immediately preceding fiscal year’s assessment without the approval of the majority of the members of the association.”⁴ Both chapters do insist on one thing: the board adopts the budget at a noticed, open meeting. Sections 33-1248 (condominiums) and 33-1804 (planned communities) require board meetings to be open to members, demand notice and an agenda at least 48 hours ahead once declarant control ends, and let members speak before the board votes.^{8, 9} So the two chapters agree that the board builds the budget and the levy follows it — but they split sharply on member control, condominiums leaning on ratification and planned communities on the percentage cap. And keep one line clear: adopting or ratifying a budget is not the same as levying the assessment. The budget projects the common expenses; the assessment is the periodic charge against each unit or lot that flows from it.

2C. The assessment limitation, variation by declaration, and the corporate-law overlay

Look closely at that 20% limit, because its reach is narrow. Section 33-1803(A) applies only to planned communities, and it caps the regular, annual assessment — not late fees, not penalties, not the lien amount.⁴ It blocks a regular assessment more than 20% above last year’s unless a majority of members signs off, and if the community documents set a lower cap, that lower cap wins. For planned communities, this is the primary statutory check on budget-driven assessment growth. The Condominium Act offers no equivalent percentage cap; there, increases answer instead to the § 33-1243(D) ratification process and to whatever limit the declaration imposes.³ Variability cuts along the same line. A condominium declaration can waive the ratification default and can raise the rejection threshold, while the open-meeting and financial-records duties stay mandatory in both chapters. In a planned community, the 20% limit bends only to a lower figure in the community documents. When statute and governing documents collide, the mandatory statute controls, and the recorded declaration generally sits at the top of the document stack, above the bylaws and board rules. One more layer matters: because most Arizona associations are nonprofit corporations, the Arizona Nonprofit Corporation Act (§ 10-3101 et seq.) supplies the corporate formalities, including the director standard of conduct, that run alongside the chapter rules.¹³ That act is not a budget statute, though, and it sets no budget-approval threshold.

Section 3: Budget-adjacent obligations

A. Reserves in the budget

Neither chapter makes the budget carry reserves or a reserve study. The Condominium Act treats money set aside for reserves as a fair piece of common expenses — § 33-1242(A)(2) authorizes budgets for “revenues, expenditures and reserves” — but it orders no funding, and the Planned Communities Act orders none either.^{1, 5} So reserve practice comes down to the declaration and the board’s judgment.

B. Special assessments

Neither chapter sets a statutory approval threshold for special assessments. The procedure, and any owner vote, come straight from the recorded declaration. In a planned community, the § 33-1803(A) 20% limit reaches the regular assessment and, by its own terms, leaves special assessments alone — so a special assessment answers to the declaration, not to the statutory cap.⁴

C. Assessment increase limits

Only Chapter 16 carries a statutory ceiling on increases. Section 33-1803(A) caps the regular assessment at 120% of last year’s without a majority member vote, subject to any lower limit in the community documents.⁴ Chapter 9 has no such cap; condominium increases run on the declaration and the § 33-1243(D) ratification process.³

D. Financial records, audit, and resale budget disclosure

Both chapters keep the books open. Each makes the association put financial records within members’ reach inside 10 business days and caps copy charges at 15 cents a page — § 33-1258 for condominiums, § 33-1805 for planned communities.¹⁴ Each also makes the board arrange an annual financial audit, review or compilation, finished within 180 days of the fiscal year’s end, unless the documents demand a full CPA audit — § 33-1243(J) for condominiums, § 33-1810 for planned communities.^{11, 12} And on resale, an association of 50 or more units has to hand over the current operating budget, the most recent annual financial report, and the most recent reserve study if one exists — § 33-1260 for condominiums, § 33-1806 for planned communities.⁶

Section 4: Recent legislative and judicial activity

A. Recent bills

Arizona’s recent budget-adjacent activity is modest and targeted — two signed bills, each reshaping a narrow piece of the assessment picture.

B. Recent appellate rulings

Here the record is empty, and that itself is the finding. Between June 2023 and June 2026, no Arizona court — not the Court of Appeals in either division, not the Supreme Court — interpreted the budget, assessment, or financial-records provisions of Chapter 9 or Chapter 16. The closest condominium case in the window, Cao v. PFP Dorsey Investments, LLC (Ariz. Sup. Ct., No. CV-22-0228-PR, Mar. 22, 2024), read the condominium termination statute, § 33-1228. It held that the Condominium Act “did not violate the eminent domain provision of the Arizona Constitution” but “required the sale of all property, rather than individual units.” It said nothing about a budget, assessment, or financial-records section, so it sits outside this page.¹⁷ There is a practical reason the appellate shelf stays bare: most § 33-1803 and § 33-1805 disputes get settled at the administrative level, before the Arizona Department of Real Estate and the Office of Administrative Hearings, which issue non-precedential decisions rather than published opinions.

C. Active legislative debates

Watch the Legislature, because the most telling action did not become law. HB 2442 (2025) — titled “homeowners’ associations; budget ratification; requirements” — would have forced both condominium and planned-community boards to win a majority member vote whenever a budget pushed assessments up faster than the Consumer Price Index. It cleared the House and then stalled in the Senate, where it died after a second reading on March 20, 2025 (status: “Engrossed – Dead”). Similar budget-ratification bills, amending §§ 33-1243 and 33-1803, are expected to return.¹⁸

Section 5: National positioning and related coverage

Set Arizona beside its peers and it fits the comprehensive, non-UCIOA group — California with its Davis-Stirling Act, Florida with Chapters 718 and 720, Texas with its Property Code. What sets Arizona apart is the split: it runs two parallel statutes, the Condominium Act (Chapter 9) and the Planned Communities Act (Chapter 16), instead of one common-interest framework. The budget rules track that divide. Condominiums use board adoption plus a declaration-waivable, negative-option ratification step under § 33-1243(D); planned communities use board adoption hemmed in by the 20% regular-assessment limit of § 33-1803(A); and both demand that the board adopt the budget at a noticed, open meeting under §§ 33-1248 and 33-1804. For an operator moving into Arizona from another state, the takeaway is blunt: condominiums and planned communities ride separate statutory tracks, and conflating them is a mistake — a procedure that is clean under one chapter can be noncompliant under the other.

HOA Weekly refreshes its Arizona budget-approval coverage each quarter, as the Legislature and the courts act. Federal frameworks — the Fair Housing Act, the Americans with Disabilities Act, the Fair Debt Collection Practices Act, the Servicemembers Civil Relief Act, and the OTARD rule — apply to Arizona associations no matter what the state budget framework says.

Recommendations

• Settle the chapter first. Before you apply any budget rule, confirm whether the community is a condominium (Chapter 9) or a planned community (Chapter 16) — the approval mechanics, the increase control, and the section numbers all change with the answer.
• For a condominium, read the declaration to learn whether it hands the board standalone budget authority. If it does, the § 33-1243(D) ratification step drops away. If it does not, calendar the 30-day summary and the 14-to-30-day ratification meeting now.
• For a planned community, run every proposed regular-assessment increase against both the § 33-1803(A) 20% limit and the community documents, and lock down a majority member vote before you cross it.
• Adopt budgets only at a noticed, open board meeting with a 48-hour agenda (§§ 33-1248 / 33-1804), and close out the annual audit, review or compilation within 180 days of the fiscal year’s end (§§ 33-1243(J) / 33-1810).
• Know what would change this guidance: a budget-ratification or CPI-cap bill like HB 2442 becoming law, or a published appellate decision construing § 33-1243(D), § 33-1255, or § 33-1803. Watch each Arizona regular session, January into spring, and keep an eye on azcourts.gov.

Caveats

• We verified the statutory text and section numbers against azleg.gov. Arizona amends and renumbers Title 33 often, so check the current version before you rely on any citation.
• The § 33-1803 assessment limitation is a planned-communities rule only, and it reaches the regular assessment alone. It is not a Davis-Stirling-style cap, and it does not touch condominiums, late fees, penalties, or special assessments.
• The Arizona Department of Real Estate handles new-subdivision public reports but does not regulate ongoing HOA budgets, and Arizona does not license community association managers.
• No qualifying appellate ruling exists in the stated window. With the case law silent, the statutory text and the governing documents control.

Footnotes

1. Ariz. Rev. Stat. § 33-1242(A)(2) (Powers of unit owners’ association; adoption and amendment of budgets for revenues, expenditures and reserves) ↩
2. Ariz. Rev. Stat. § 33-1255(A) (Assessments for common expenses; assessments based on a budget adopted at least annually) ↩
3. Ariz. Rev. Stat. § 33-1243(D), (J) (Board of directors and officers; powers; limitations; annual audit; applicability) ↩
4. Ariz. Rev. Stat. § 33-1803(A) (Assessment limitation; penalties; notice to member of violation) ↩
5. Ariz. Rev. Stat. § 33-1255 (Assessments for common expenses; no reserve study or funding mandate); see also Ariz. Rev. Stat. §§ 33-1260, 33-1806 (resale disclosure of reserve study “if any”) ↩
6. Ariz. Rev. Stat. § 33-1806(A)(4)–(6) (Resale of units; required information — current operating budget, annual financial report, most recent reserve study “if any”); parallel condominium provision at Ariz. Rev. Stat. § 33-1260 ↩
7. Ariz. Rev. Stat. tit. 33, chs. 9 (Condominiums) & 16 (Planned Communities) ↩
8. Ariz. Rev. Stat. § 33-1248 (Open meetings; exceptions; notice; agenda; policy statement) (condominiums) ↩
9. Ariz. Rev. Stat. § 33-1804 (Open meetings; exceptions; notice; agenda; policy statement) (planned communities) ↩
10. Ariz. Rev. Stat. § 33-1801 (Applicability; exemptions; voluntary election to be subject to chapter) (planned communities) ↩
11. Ariz. Rev. Stat. § 33-1243(J) (Annual financial audit, review or compilation within 180 days of fiscal year end) (condominiums) ↩
12. Ariz. Rev. Stat. § 33-1810 (Board of directors; annual audit) (planned communities) ↩
13. Ariz. Rev. Stat. § 10-3101 et seq. (Arizona Nonprofit Corporation Act; corporate formalities and director standard of conduct, e.g., § 10-3830) ↩
14. Ariz. Rev. Stat. § 33-1258 (Association financial and other records; 10 business days; 15 cents per page) (condominiums); parallel planned-community provision at Ariz. Rev. Stat. § 33-1805 ↩
15. S.B. 1494, 57th Leg., 1st Reg. Sess., ch. 71, 2025 Ariz. Sess. Laws (amending Ariz. Rev. Stat. § 33-1807) ↩
16. H.B. 2322, 57th Leg., 1st Reg. Sess., ch. 46, 2025 Ariz. Sess. Laws (amending Ariz. Rev. Stat. §§ 33-1202, 33-1217, 33-1255) ↩
17. Cao v. PFP Dorsey Invs., LLC, 256 Ariz. 444, 545 P.3d 459 (2024) (No. CV-22-0228-PR) ↩
18. H.B. 2442, 57th Leg., 1st Reg. Sess. (2025) (homeowners’ associations; budget ratification; requirements; status: Engrossed – Dead) ↩