Delaware HOA Budget Approval

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

In Delaware, a community association's annual budget does not pass because owners vote for it. It passes because they do not vote against it. The Delaware Uniform Common Interest Ownership Act — DUCIOA, 25 Del. C. Chapter 81 — draws on the 2008 version of the Uniform Common Interest Ownership Act, and it governs condominiums, cooperatives, and planned communities created on or after September 30, 2009.¹ DUCIOA runs the budget on a negative option: the executive board adopts a proposed budget, and that budget is ratified unless a majority of all unit owners reject it at a ratification meeting.² That lineage matters. Because Delaware built on the 2008 act rather than the 1982 version that states such as Alaska and Colorado use, DUCIOA carries reserve content those states lack: a condominium or cooperative budget must include a line item that funds a repair and replacement reserve.² Condominiums created before DUCIOA took effect generally still answer to the Delaware Unit Property Act, 25 Del. C. Chapter 22, though a defined set of DUCIOA provisions reaches them.³ Delaware's court structure adds one more wrinkle: the state runs no intermediate appellate court, so an appeal in a budget or governance dispute travels straight from the trial court to the Delaware Supreme Court.⁴ The table and the sequence that follow lay out the mechanism, the budget-adjacent obligations, and the trial- and corporate-law overlays that sit on top of it.

Section 2 — The budget approval mechanism

2A. Quick-Reference Budget Mechanics Table

This table reflects the DUCIOA budget mechanism (based on the 2008 UCIOA) for communities created on or after September 30, 2009. Pre-DUCIOA condominiums fall under the Unit Property Act, subject to the enumerated DUCIOA provisions discussed in 2C.

2B. The budget approval sequence

DUCIOA builds the budget process as a negative option — deemed ratified unless rejected — not as an affirmative vote. At least once a year, the executive board must prepare a proposed budget for the common interest community, and in a condominium or cooperative that proposed budget must carry a line item for any required funding of a repair and replacement reserve.² Within 30 days after the board adopts the proposed budget — a step that kicks in after the period of declarant control — the board hands every unit owner a summary of that budget, including any reserves and a statement of how the association calculates and funds them.²

At the same time it sends the summary, the board sets a date for the owners to meet and consider ratifying the budget. That meeting has to fall not less than 14 nor more than 60 days after the summary goes out.² Then the meeting happens. Unless a majority of all unit owners — or any larger vote the declaration specifies, voting in person or by proxy — reject the budget, the budget is ratified, quorum or no quorum.² That missing quorum requirement defines the whole system: when owners do nothing, the budget passes. And if the owners do reject the proposed periodic budget, the last budget they ratified simply carries on until they ratify a new one the board proposes.²

Ratifying the budget is not the same as levying the assessment. Section 81-315 governs the levy: once an assessment has been made, the association must make assessments at least annually based on a budget it adopts at least annually, and in a condominium or cooperative that budget must include a line-item payment into the repair and replacement reserve large enough to reach or hold the funding level the reserve study sets.⁶ The ratified budget supplies the figure; § 81-315 then spreads the common-expense liability across the units and authorizes collection. Section 81-302(a)(2) confirms the point: the association must adopt and may amend budgets under § 81-324 and collect assessments, reserve funds included, on that basis.⁹ No statute caps how far the assessment can climb from one budget year to the next. The negative-option ratification vote is the owners' only statutory check on the number.

2C. Pre-DUCIOA communities, variation by declaration, and the court and corporate overlay

Condominiums created before September 30, 2009 generally still run on the Unit Property Act, 25 Del. C. Chapter 22. But § 81-119 lists enumerated DUCIOA provisions that reach pre-existing communities for events occurring after the effective date — and that list includes § 81-324 (budget adoption) and § 81-315 (assessments).³ Those provisions do not wipe out existing declaration terms. Where a pre-existing governing document conflicts with DUCIOA but not with the Unit Property Act, the governing document controls; where neither one addresses an issue, DUCIOA fills the gap.³ A declaration can move the ratification mechanism in only one direction — it can demand a rejection vote larger than a simple majority — but it cannot waive the negative-option structure itself, because § 81-104 bars parties from varying the effect of the chapter's provisions by agreement except where the chapter expressly allows it.⁸

When these disputes reach court, remember that Delaware runs no intermediate appellate court. Governance and equitable fights — including a request to enjoin a budget or assessment — usually land in the Court of Chancery, Delaware's court of equity, while smaller money claims can go to the Superior Court, the Court of Common Pleas, or the Justice of the Peace Court.⁴ From any of those trial courts, an appeal runs straight to the Delaware Supreme Court.⁴ One more layer: many associations organize as nonstock corporations, and § 81-326 provides that an association that is a Delaware corporation also answers to Title 8, the General Corporation Law, which governs to the extent it does not clash with Chapter 81.¹⁰ The corporate code supplies the meeting and notice formalities, but it sets no budget-approval threshold. That threshold lives entirely in § 81-324.

Section 3 — Budget-adjacent obligations

Reserves in the budget

DUCIOA does something the 1982-UCIOA states decline to do: it mandates both a reserve study and reserve funding for condominiums and cooperatives. A condominium or cooperative budget must carry a line item that funds a repair and replacement reserve to the level a reserve study sets — and the act defines that study as an analysis by qualified independent professionals performed or updated within the last 5 years (§ 81-103(40)).⁵ When no current reserve study exists, § 81-315 imposes a floor: 15% of the annual budget if the board maintains four or more enumerated systems, 10% for three, and 5% for two or fewer.⁶ Planned communities, by contrast, do not fall under these condominium and cooperative reserve provisions by statute.⁵

Special assessments

A special assessment covers an unexpected, nonrecurring, or other common expense the annual budget left out (§ 81-103(44)).⁵ Section 81-324(b) sends a special assessment down the same negative-option path as the periodic budget: the board proposes it, and it takes effect only if owners do not reject it under the § 81-324(a) procedure.² The one exception is an emergency. Under § 81-324(c), if the board decides by unanimous vote that a special assessment is necessary to meet an emergency, it takes effect immediately.²

Assessment increase limits

DUCIOA sets no statutory percentage cap on annual assessment increases for an owner-controlled association. The owners' only statutory control is the negative-option ratification vote under § 81-324.² Operators who know California's Davis-Stirling Act — which under California Civil Code § 5605(b) bars a board from imposing a regular assessment more than 20% above the prior fiscal year's, or special assessments adding up to more than 5% of budgeted gross expenses, without member approval — should not assume Delaware carries a comparable cap. It does not.¹¹

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

Section 81-306(a)(6) requires the bylaws of a condominium or cooperative with more than 50 unit owners to provide for an independent audit by a licensed CPA firm at least once every 3 years, plus a review by an independent accountant in each intervening year; an association of fewer than 100 unit owners may resolve to substitute a review for the full audit.⁷ The budget summary the board distributes under § 81-324(a) must itself state how reserves are calculated and funded, and the association must disclose reserve balances and the most recent reserve study in the resale certificate under § 81-409.²

Section 4 — Recent legislative and judicial activity

Recent bills

No bill enacted in the past 24 months amended DUCIOA's budget, assessment, or reserve provisions. The most recent substantive amendment to the budget section predates that window. House Bill 112 of the 151st General Assembly (83 Del. Laws c. 173), signed September 15, 2021 and effective October 15, 2021, amended § 81-324(a) to make clear that owners may vote at a budget ratification meeting by proxy as well as in person, and it added several DUCIOA sections to the list that applies to pre-existing communities under § 81-119.¹² Because it falls outside the 24-month window, we note it here for context only and provide no audience-implication table.

Recent rulings

No decision from the Delaware Court of Chancery, the Superior Court, or the Delaware Supreme Court in the past 36 months squarely interprets DUCIOA's budget provision (§ 81-324) or its assessment provisions (§ 81-315, § 81-316). The closest recent association case, Smernoff v. King's Grant Condominium Association, Inc. (Del. Ch., C.A. No. 2020-0798-BWD, decided July 12, 2024, Magistrate in Chancery Bonnie W. David), is a common-element maintenance-responsibility dispute that interprets the Unit Property Act and the condominium's governing documents; it does not reach DUCIOA's budget, assessment, or reserve provisions.¹³ Because Delaware has no intermediate appellate court, any appeal from the Court of Chancery in such a matter would run straight to the Delaware Supreme Court. We provide no audience-implication table here because no qualifying budget or assessment ruling exists in the window.

Active legislative debates

After the Champlain Towers South collapse, County Council empaneled a New Castle County common interest community task force, and in 2023 that task force recommended amending DUCIOA to require all common interest communities — not just condominiums and cooperatives — to maintain "adequate reserve funds" built on a 30-year cash flow projection, and to budget for structural and façade inspections. According to industry counsel, those proposed DUCIOA amendments were not to be introduced until the 2024 legislative session, and as of June 2026 no such statewide DUCIOA amendment appears to have been introduced or enacted.¹⁴ New Castle County did, on its own, adopt structural and façade inspection requirements through Ordinance No. 23-094, effective July 27, 2023, which amended the County Building Code and Property Maintenance Code to set routine inspections for certain common interest community buildings, condominiums included, with initial results due to the Department of Land Use by July 31, 2025.¹⁵

Section 5 — National positioning and related coverage

Delaware sits squarely inside the negative-option ratification family of UCIOA states, where the board adopts the budget and it takes effect unless owners affirmatively reject it. Its reliance on the 2008 version of the uniform act sets it apart from 1982-version states such as Alaska and Colorado: DUCIOA carries a reserve-study and reserve-funding mandate for condominiums and cooperatives that those states do not. And it stands in sharp contrast to affirmative-approval and increase-cap states such as California, where the Davis-Stirling Act (Cal. Civ. Code § 5605(b)) caps regular assessment increases at 20% and aggregate special assessments at 5% of budgeted gross expenses without a member vote, and to CC&R-only states that hand budget approval entirely to recorded covenants.¹¹ For a multi-state operator entering Delaware, the practical lesson is this: the ratification mechanism will feel familiar, but confirm the 2008-version reserve content and Delaware's distinctive court structure — no intermediate appellate court, governance disputes in the Court of Chancery — before you lean on assumptions you carried in from another UCIOA state.

HOA Weekly's Delaware Budget Approval coverage updates quarterly as the General Assembly and the Delaware courts act. Federal frameworks — FHA, ADA, FDCPA, SCRA, and OTARD — apply to Delaware associations no matter what the state budget framework says.

1. 25 Del. C. § 81-101 (short title) and § 81-103(21) (effective date September 30, 2009), Delaware Code Online, Title 25 Chapter 81 Subchapter I ↩
2. 25 Del. C. § 81-324 (Adoption of budget), Delaware Code Online, Title 25 Chapter 81 Subchapter III ↩
3. 25 Del. C. § 81-119 (Applicability to preexisting common interest communities and approved common interest communities) ↩
4. An Overview of the Delaware Court System, Delaware Courts (Court of Chancery jurisdiction over equity; Supreme Court receives direct appeals from the Court of Chancery, Superior Court, and Family Court; no intermediate appellate court) ↩
5. 25 Del. C. § 81-103(39) (repair and replacement reserve), § 81-103(40) (reserve study, 5-year currency), and § 81-103(44) (special assessment), Delaware Code Online ↩
6. 25 Del. C. § 81-315 (Assessments for common expenses; reserve funding minimums of 15%, 10%, or 5% absent a current reserve study), Delaware Code Online ↩
7. 25 Del. C. § 81-306(a)(6) (audit and review requirement for condominiums and cooperatives with more than 50 unit owners), Delaware Code Online ↩
8. 25 Del. C. § 81-104 (Variation by agreement; the effect of the chapter's provisions may not be varied by agreement except as expressly provided), Delaware Code Online ↩
9. 25 Del. C. § 81-302(a)(2) (Powers of unit owners' association; adopt and amend budgets pursuant to § 81-324 and collect assessments including reserve funds), Delaware Code Online ↩
10. 25 Del. C. § 81-326 (Delaware corporations; an association that is a Delaware corporation is also subject to Title 8, which governs to the extent not inconsistent with Chapter 81) ↩
11. Cal. Civ. Code § 5605(b) (California Davis-Stirling Act; 20% regular-assessment increase cap and 5%-of-budgeted-gross-expenses aggregate special-assessment cap absent member approval) — contrast jurisdiction only ↩
12. House Bill 112, 151st General Assembly (83 Del. Laws c. 173), signed September 15, 2021, effective October 15, 2021; Section 12 amends § 81-324(a) to clarify proxy voting at the budget meeting, and Section 3 adds DUCIOA sections applying to pre-existing communities via § 81-119, Delaware General Assembly ↩
13. Smernoff v. King's Grant Condominium Association, Inc., Del. Ch., C.A. No. 2020-0798-BWD (July 12, 2024) (Master's Final Report, Magistrate in Chancery Bonnie W. David), Delaware Courts ↩
14. New Castle County, Delaware Adopts Building Integrity and Reserve Study Standards, CAI Keystone (task force recommendation to expand reserve studies to all common interest communities based on a 30-year cash flow projection; proposed DUCIOA amendments not to be introduced until the 2024 session) ↩
15. New Castle County Ordinance No. 23-094 (Condo Safety Inspections; effective July 27, 2023; structural and façade inspections for certain common interest community buildings, initial results due July 31, 2025), New Castle County ↩