Arkansas HOA Budget Approval

SECTION 1 — Overview: How HOA budgets are approved in Arkansas

Arkansas sets no statewide rule for approving an HOA budget. The state has no statutory budget-approval mechanism for any kind of community, so the annual budget process runs on each community's recorded declaration and bylaws rather than on state law.¹ Condominiums fall under the Arkansas Horizontal Property Act, Ark. Code § 18-13-101 et seq. — a traditional horizontal-property statute that Arkansas first enacted as Acts 1961 (1st Ex. Sess.), No. 60. That Act addresses how owners share common expenses, in proportion to each owner's percentage interest, and it gives unpaid assessments a priority. What it does not do is tell anyone how to prepare, adopt, or approve a budget.² Planned communities — the non-condominium HOAs — get no dedicated Arkansas statute at all. Their budget process comes from the recorded covenants, conditions, and restrictions (CC&Rs), backed only by the Arkansas Nonprofit Corporation Act of 1993 for corporate formalities and by common law.³ Arkansas has not adopted the Uniform Common Interest Ownership Act (UCIOA), so it offers no negative-option ratification — the mechanism under which a board-adopted budget takes effect unless owners vote it down.⁴ That puts Arkansas squarely among the CC&R-primary states, where the declaration alone sets the budget process, rather than with the comprehensive-statute or UCIOA-family states. The sections below lay out the few statutory hooks that do exist, the budget framework, the obligations that sit next to the budget, recent activity, and where Arkansas stands nationally.

SECTION 2 — The budget framework

Arkansas has no statutory budget-approval mechanism for any community type. The table below captures the few statutory hooks the Horizontal Property Act provides, plus the declaration-governed default that fills in when the statute stays silent.

2A. Quick-Reference Budget Mechanics Table

2B. What the Horizontal Property Act addresses, and what it leaves to the declaration

The Horizontal Property Act governs how a community shares and collects common expenses — not how it approves a budget. Section 18-13-116 requires co-owners to contribute pro rata toward administering, maintaining, and repairing the common elements "in the percentages computed according to § 18-13-112," and § 18-13-112 fixes each owner's percentage interest by the value of the apartment against the whole property.¹¹ Section 18-13-116 does one more thing: when a unit sells, it pays unpaid assessments out of the sale price ahead of most other charges — tax liens and duly recorded mortgages excepted — and it makes the buyer jointly and severally liable for what was owed before the sale. That is the Act's assessment-collection and lien mechanism.¹²

The Act does require every regime to run under recorded bylaws, and it lists what those bylaws must cover: the form of administration, the method for summoning co-owners (with at least a 51% majority to adopt decisions), the care and upkeep of common elements, and "the manner of collecting from the co-owners for the payment of the common expenses."⁶ Read that closely. It tells the bylaws to address how the community collects common expenses; it does not write a budget-approval procedure. There is no statutory negative-option ratification, no statutory budget-summary or notice deadline, and no statutory owner-rejection threshold. The declaration and bylaws control every one of those points.¹

The practical upshot: in Arkansas, a manager cannot fall back on a default statutory budget rule, because there isn't one. To learn who adopts the budget — and whether any owner-approval or ratification step applies — the manager has to read that specific community's recorded master deed (or declaration) and its bylaws. Two condominiums in the same county can follow completely different budget-approval procedures, and when the governing documents go quiet, nothing in the Act steps in beyond its general administration and common-expense provisions.

2C. Planned communities and the corporate-law overlay

Planned, non-condominium communities have no Arkansas statute that mirrors the Horizontal Property Act, so the recorded declaration is the entire budget rulebook.³ The percentage interests, the assessment formula, the authority to adopt a budget, and any owner-approval step all come from the CC&Rs and bylaws — nowhere else.

When the association is incorporated as a nonprofit — the usual setup — the Arkansas Nonprofit Corporation Act of 1993 adds corporate formalities that shape how a budget decision gets made, without ever setting a budget-approval threshold. The Act makes a membership corporation hold an annual meeting (Ark. Code § 4-33-701), spells out the notice owed for a members' meeting (Ark. Code § 4-33-705), and allows action by written ballot (Ark. Code § 4-33-708); the board-action and quorum rules likewise flow from the corporate code and the bylaws.¹³ Those provisions govern how you convene and document the meeting where a board adopts a budget or members take one up — but they fix no vote percentage for approving a budget and create no ratification mechanism. The Nonprofit Corporation Act of 1993 is a corporate-formality code, not an HOA budget statute. Anything the declaration leaves unaddressed gets resolved under common-law contract and property principles, because covenants run with the land and courts enforce them as contracts among the owners.³

SECTION 3 — Budget-adjacent obligations

Reserves in the budget

Arkansas imposes no reserve-study mandate and no reserve-funding mandate on any kind of community; a budget addresses reserves only as far as the recorded declaration directs.⁹ Boards still carry fiduciary duties under corporate-law principles, and lender expectations — secondary-market mortgage underwriting, for instance — can push a community toward funding reserves even though no Arkansas statute demands it.

Special assessments

No Arkansas statute sets an approval threshold for a special assessment. The declaration and bylaws decide whether and how the community levies one, and whether owners get a vote.⁸

Assessment increase limits

No Arkansas statute caps how much a regular assessment can rise, and none forces an owner vote on an increase. A cap or a vote requirement exists only where the declaration puts one there.⁸

Financial review, audit, and disclosure tied to the budget cycle

Arkansas ties no audit or financial-statement requirement to the budget cycle for any community type. The Horizontal Property Act asks only that the administrator or board keep a detailed book of receipts and expenditures, open for owners to examine (Ark. Code § 18-13-110); any audit or formal financial review comes from the declaration or from ordinary corporate recordkeeping, not from a budget statute.¹⁰

SECTION 4 — Recent legislative and judicial activity

A. Recent bills

The 2025 session produced one measure that touched this area, and it left budget approval untouched. Act 516 of 2025 (SB 323), "To Amend the Horizontal Property Act," sponsored by Senator J. Bryant and Representative McCollum, cleared the Senate 34-0 and the House 93-1 and became Act 516 on April 10, 2025.¹⁴ The act refreshed the Horizontal Property Act's definitions and imported concepts from modern condominium law — "declarant," "development rights," and the unequal allocation of common-expense and voting interests — and it amended the assessment provision at Ark. Code § 18-13-116 to add declarant assessment obligations during the declarant-control period and to allow interest on past-due assessments.¹⁴ What it did not do was create a budget-approval or negative-option ratification mechanism. Under Section 9 of the engrossed bill, it applies to regimes organized on or after September 1, 2025, and lets existing regimes opt in by amending the master deed.¹⁴

B. Recent appellate rulings

No Arkansas Court of Appeals or Arkansas Supreme Court decision in the past 36 months squarely takes up HOA, POA, or condominium budget or assessment approval, or the reading of a declaration's budget provisions.¹⁵ The closest assessment-lien decision, Holly Wood, John Wood, and Tara Capital, LLC v. Alkhaseh; Dawn Hill Townhouse and Condominium Property Owners Association, Inc., 2023 Ark. App. 179 (No. CV-20-322) — a condominium and townhouse POA foreclosure over unpaid maintenance assessments — landed just outside that window, on March 29, 2023.¹⁵ Trial-level assessment-collection fights keep moving through the Arkansas Circuit Courts, with appeals to the Arkansas Court of Appeals and discretionary review by the Arkansas Supreme Court.

C. Active legislative debates

No pending Arkansas bill would enact a comprehensive planned-community statute or adopt UCIOA-style negative-option budgeting. The 2025 session's work — Act 516 — modernized condominium definitions and declarant rights inside the existing Horizontal Property Act; it did not build a budget-approval framework.¹⁴

SECTION 5 — National positioning and related coverage

Across the states, budget approval follows one of three broad models. In negative-option ratification states — the UCIOA family and the condominium regimes built on the 1980 Uniform Condominium Act — a board adopts the budget and it takes effect unless a set percentage of owners rejects it. In affirmative-approval states, the budget waits: it takes effect only after owners vote yes. In CC&R-primary states, the declaration alone runs the budget process and the statute supplies no default. Arkansas sits firmly in that third group, for condominiums and planned communities alike, alongside CC&R-primary peers such as Alabama — whose Homeowners' Association Act, Ala. Code § 35-20-1 et seq., governs only HOAs created on or after January 1, 2016, and leaves older associations to their declarations — and Mississippi.⁴ For a multi-state operator moving into Arkansas, the takeaway is blunt: there is no statutory fallback to lean on. You run every community from its own declaration and bylaws. Momentum toward a comprehensive Arkansas statute stays limited; Act 516 of 2025 modernized condominium concepts without adding a budget-approval mechanism.¹⁴

HOA Weekly's Arkansas Budget Approval coverage updates quarterly 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 FCC's OTARD rule — apply to Arkansas associations no matter what the state framework says.

Footnotes

1. Arkansas Horizontal Property Act, Ark. Code § 18-13-101 et seq.; contains no budget-adoption or ratification provision (full text of governing chapter and 2025 amendments via Act 516). ↩
2. Ark. Code §§ 18-13-108, 18-13-112, 18-13-116 (Horizontal Property Act; bylaws, percentage interest, common-expense sharing); originally Acts 1961 (1st Ex. Sess.), No. 60. ↩
3. Arkansas Nonprofit Corporation Act of 1993, Ark. Code § 4-33-101 et seq. (Acts 1993, No. 1147). ↩
4. Uniform Law Commission, Uniform Common Interest Ownership Act enactment status; UCIOA enacted in only nine states (1982 version in Alaska, Colorado, Minnesota, Nevada, West Virginia; 2008 version in Connecticut, Delaware, Vermont, Washington), and Arkansas is not among them. ↩
5. Ark. Code § 18-13-103 (establishment of horizontal property regime by recorded master deed electing the Act). ↩
6. Ark. Code § 18-13-108 (bylaws; required content including form of administration, 51% majority to adopt decisions, and manner of collecting common expenses). ↩
7. Ark. Code § 4-33-705 (notice of members' meeting). ↩
8. Horizontal Property Act, Ark. Code § 18-13-101 et seq. (no assessment-increase cap or special-assessment threshold). ↩
9. Community Associations Institute, Arkansas state law summary (no statutory reserve-study or reserve-funding mandate). ↩
10. Ark. Code § 18-13-110 (book of receipts and expenditures; owner examination). ↩
11. Ark. Code §§ 18-13-116(a) and 18-13-112 (pro rata contribution; percentage interest). ↩
12. Ark. Code § 18-13-116(c)-(d) (assessment priority on sale; joint and several liability of purchaser). ↩
13. Ark. Code §§ 4-33-701, 4-33-705, 4-33-708 (annual meeting, meeting notice, action by written ballot). ↩
14. Act 516 of 2025 (SB 323), "To Amend the Horizontal Property Act" (official bill page, Arkansas General Assembly; Senate 34-0, House 93-1, Act date April 10, 2025). ↩
15. Holly Wood et al. v. Alkhaseh; Dawn Hill Townhouse and Condominium Property Owners Association, Inc., 2023 Ark. App. 179 (No. CV-20-322), decided March 29, 2023 (nearest assessment-lien decision; no in-window HOA/condo budget-approval decision identified on the Arkansas Judiciary opinions site). ↩