Kentucky HOA Budget Approval

Key Findings

Kentucky runs three statutory frameworks for community association budgets, plus an older predecessor law, and the framework that governs a given community turns on two facts: what type of community it is, and when its declaration was recorded or formed. For condominiums recorded on or after January 1, 2011, the Kentucky Condominium Act controls. Lawmakers modeled that Act on the Uniform Condominium Act, though it departs from the uniform text in several ways, and it sets no reserve-study mandate, no reserve-funding requirement, and no cap on assessment increases. The Act runs the budget on negative-option ratification: owners never cast a vote to approve a budget; instead, an adopted budget stands unless a majority of all owners reject it. Kentucky added one wrinkle of its own in 2012, by way of House Bill 433, the owner ratification meeting fires only when the adopted budget raises spending more than 15% over the previous year. Older condominiums answer to the Horizontal Property Law, except where the 2011 Act expressly reaches back. Planned communities, long a gap in Kentucky law, finally got their own statute in 2023, and that statute imports a budget-ratification process nearly identical to the condominium model.

Section 1: Overview, how HOA budgets are approved in Kentucky

Budget approval in Kentucky splits along two lines, community type and vintage. The Kentucky Condominium Act, Ky. Rev. Stat. §§ 381.9101 to 381.9207, governs condominiums created on or after January 1, 2011; it took effect that day, and lawmakers built it on the Uniform Condominium Act.¹ Under that Act, the executive board adopts a proposed budget, and the budget ratifies itself unless a majority of all unit owners, or any larger vote the declaration specifies, reject it, whether or not a quorum shows up; owners cast no affirmative approval vote.² Condominiums created before January 1, 2011 stay under the predecessor Horizontal Property Law, Ky. Rev. Stat. §§ 381.805 to 381.910, except that specified Condominium Act sections, the budget provision among them, reach back to those communities for events that occur after January 1, 2011.³ Planned-community HOAs once answered only to their recorded covenants and the Kentucky Nonprofit Corporation Acts, but the 2023 Planned Community Act, Ky. Rev. Stat. §§ 381.785 to 381.801, added a statutory budget-ratification mechanism that tracks the condominium model.⁴ Kentucky is a Uniform-Condominium-Act state, which sets it apart from the Uniform Common Interest Ownership Act states and from the 2008-UCIOA reserve states. The table and sequence below lay out the condominium mechanic first, then take up older condominiums and planned communities in turn.

Section 2: The budget approval mechanism

The Quick-Reference table below reflects the Kentucky Condominium Act (Ky. Rev. Stat. §§ 381.9101 to 381.9207) for condominiums created on or after January 1, 2011. Pre-2011 condominiums (Horizontal Property Law) and planned communities (2023 Planned Community Act) follow other frameworks, addressed in the prose that follows.

2A. Quick-Reference Budget Mechanics Table

2B. The budget approval sequence under the 2011 Act

The process starts with the executive board, which holds the power to adopt and amend budgets for revenues, expenditures, and reserves.¹⁹ Once the board adopts a proposed budget, Ky. Rev. Stat. § 381.9169(3) tells it to give a summary of that budget to all unit owners within 30 days of adoption.²⁰ Here Kentucky parts ways with the standard uniform-law text. As House Bill 433 amended the statute in 2012, the board must set a date for an owner ratification meeting only "[i]f the adopted budget contains an increase of greater than fifteen percent (15%) from the previous year's budget," and that meeting "shall not be less than fourteen (14) nor more than thirty (30) days after providing the summary."²¹ A budget that raises spending by 15% or less still requires the summary, but the statute mandates no owner ratification meeting.

When a meeting does take place, ratification is the default outcome. Unless a majority of all unit owners, or any larger vote the declaration specifies, reject the budget at that meeting, the budget ratifies, whether or not a quorum is present.²² That is the heart of negative-option ratification: owners cast no affirmative approval votes, and because the rejection threshold counts a majority of all owners rather than a majority of those who attend, a thinly attended meeting almost always ends in ratification. Should owners reject the budget, the periodic budget last ratified continues until they ratify a later one the board proposes.²³

Ratifying the budget is one thing; levying the assessment is another. Once an association makes a common-expense assessment, it must make assessments at least annually and base them on a budget adopted at least annually, allocating common expenses against the units as the declaration directs.²⁴ The budget sets the spending plan; the assessment is the per-unit charge that funds it. Past-due common-expense assessments carry interest at a rate the association sets, which may not exceed 18% per year.²⁵

2C. Pre-2011 condominiums, planned communities, and variation

A condominium's recording date decides its statute. The Horizontal Property Law, Ky. Rev. Stat. §§ 381.805 to 381.910, governs condominiums whose declarations were recorded before January 1, 2011.²⁶ The Condominium Act does not repeal that older law, but it reaches back to pre-2011 condominiums for specified sections, including the budget provision (Ky. Rev. Stat. § 381.9169), only for events or circumstances that occur after January 1, 2011.²⁷ Owners of a pre-2011 condominium may also opt fully into the Condominium Act by the vote Ky. Rev. Stat. § 381.9103(3) specifies.²⁸

Planned communities are now statutory. The 2023 Planned Community Act directs the board to adopt an annual budget, provide it to owners within 30 days, and, if the budget increases more than 15% over the prior year, hold a ratification meeting within 45 days after the summary; the board must then "[d]eem the budget ratified, whether or not a quorum is present, unless at that meeting a majority of all owners, or any larger vote specified in the declaration, reject the budget."²⁹ The Act applies broadly to planned communities, but it does not invalidate provisions already contained in documents recorded before its effective date, and its formation requirements apply only to planned communities formed after June 29, 2023.³⁰ The Kentucky Nonprofit Corporation Acts (Ky. Rev. Stat. ch. 273) supply the corporate formalities, meetings, director duties, and records, but they govern corporate conduct and set no HOA budget threshold.³¹ As for variation, the Condominium Act may not be varied by agreement except as expressly provided (Ky. Rev. Stat. § 381.9107); the budget provision allows only one narrow change, letting the declaration require a larger vote to reject.³²

Section 3: Budget-adjacent obligations

A. Reserves in the budget

The Kentucky Condominium Act sets no reserve-study or reserve-funding mandate. It permits reserves, because common expenses include allocations to reserves and the board may budget for them, but it does not require them.³³

B. Special assessments

The Condominium Act does not run ordinary special assessments through the budget-ratification mechanism. It does address emergency assessments, which the board may impose for defined reasons but which a simple majority of total unit owners may reduce or rescind at a special meeting, and it allows assessments to pay judgments and assessments tied to owner misconduct.³⁴ For planned communities, the 2023 Act sets a different process: a board majority approves a special assessment, and within 30 days a meeting lets owners rescind or reduce it by a majority of total lots cast.³⁵

C. Assessment increase limits

Neither the Condominium Act nor the Planned Community Act puts a statutory percentage cap on assessment increases. The recorded declaration sets the substantive limit; the statutes use a 15% increase only as the trigger for an owner ratification meeting, and the Planned Community Act expressly overrides contrary increase limits in older governing documents.³⁶

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

The Condominium Act requires associations to keep financial records and prepare an annual financial report, with the level of assurance scaling to annual revenue; this applies to every condominium association, whatever its creation date.³⁷ The Planned Community Act sets parallel revenue-based tiers, from a cash-receipts-and-disbursements statement for associations with revenues under $125,000 up to a CPA audit for associations with annual revenues of $1,000,000 or more.³⁸ Neither statute ties a mandatory independent audit to the budget-adoption cycle itself.

Section 4: Recent legislative and judicial activity

A. Recent bills

No bill enacted in the past 24 months amended the budget-ratification, assessment, or reserve provisions of the Kentucky Condominium Act or the 2023 Planned Community Act. The closest enactment, House Bill 472 (2024 Regular Session), authorized a court to appoint a receiver for a planned community that "fails to maintain the infrastructure, common area, storm water detention or retention area, or other facility that it is legally obligated to maintain," and let a city recover funds it spent to bring violations up to code. It did not change the budget or assessment regime, and it is codified at Ky. Rev. Stat. § 381.803.³⁹

B. Recent appellate rulings

No published or unpublished Kentucky Court of Appeals or Kentucky Supreme Court opinion from the past 36 months interprets the budget-ratification or assessment provisions of the Kentucky Condominium Act, the Horizontal Property Law, or the Planned Community Act. Trial-level disputes move through the Kentucky Circuit Courts, with appeals to the Kentucky Court of Appeals and discretionary review by the Kentucky Supreme Court. No qualifying budget ruling exists in the window.

C. Active legislative debates

The recurring proposal to relieve very small associations of financial-reporting duties (Senate Bill 233) is the most active budget-adjacent debate, and it may return in a future session. No comprehensive overhaul of the budget-ratification or reserve rules is pending.

Section 5: National positioning and related coverage

Kentucky sits with the states whose condominium statutes descend from the Uniform Condominium Act rather than the later Uniform Common Interest Ownership Act, a group that includes Alabama. That lineage explains what Kentucky lacks: no statutory reserve-study mandate, no minimum reserve-funding requirement, and no percentage cap on assessment increases of the kind California imposes. The negative-option ratification mechanism Kentucky uses for condominiums is the uniform act's signature feature, and the 2023 Planned Community Act extended a close variant to planned communities, while older planned communities remain largely declaration-governed. For a multi-state operator entering Kentucky, the practical upshot is straightforward: newer condominiums and newer planned communities both run on a board-adopts, owners-may-reject model with a 15% increase trigger, while pre-2011 condominiums follow the Horizontal Property Law and pre-2023 planned communities follow their recorded covenants.

Federal frameworks, including 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 Kentucky associations regardless of the state budget framework.

Recommendations

• Identify which statute governs each community first. For condominiums, use the declaration's recording date (before or on/after January 1, 2011); for planned communities, use the formation date (before or after June 29, 2023). This single determination drives the entire budget process.
• For condominiums and post-2023 planned communities, calendar the 30-day summary deadline at every budget adoption, and test each adopted budget against the prior year. If the increase exceeds 15%, schedule and notice the ratification meeting within the statutory window (14 to 30 days for condominiums; within 45 days for planned communities). If the increase is 15% or less, the statute requires the summary but not a meeting.
• Do not treat the ratification meeting as an approval vote. Brief boards that a budget passes by default, and that only a majority of all owners, not a majority of those attending, can stop it.
• Verify reserve and audit practices against the governing documents, not the statute, because Kentucky imposes no reserve mandate and ties no audit to the budget cycle. The benchmark that would change this analysis is a future amendment importing a reserve-study or minimum-funding requirement, or an appellate decision construing Ky. Rev. Stat. § 381.9169.

Caveats

• The Kentucky Condominium Act's 15% meeting trigger is a state-specific departure (added by House Bill 433 in 2012) from the standard uniform-law text. Practitioners coming from UCIOA states should not assume an annual ratification meeting is always required.
• The 2023 Planned Community Act applies only partly to communities formed before its effective date: it applies broadly, but it does not invalidate provisions already in pre-existing recorded documents, so older planned communities should confirm which provisions actually control.
• No recent appellate decision interprets these budget provisions, so several operational questions, including how the 15% trigger interacts with declarations that already mandate annual owner approval, remain untested in Kentucky's courts.

Footnotes

1. Ky. Rev. Stat. § 381.9103, Application and construction of §§ 381.9101 to 381.9207 (effective January 1, 2011); Stites & Harbison, New Law Brings Changes to Kentucky's Condominium Laws (Act "modeled after the Uniform Condominium Act . . . but it differed from the uniform law in various ways") ↩
2. Ky. Rev. Stat. § 381.9169(3), Executive board members and officers (budget ratified unless a majority of all unit owners reject, whether or not a quorum is present) ↩
3. Ky. Rev. Stat. § 381.9103(2), (5), Application and construction (specified sections, including § 381.9169, apply to pre-2011 condominiums for events after January 1, 2011) ↩
4. 2023 Ky. Acts ch. 23 (SB 120), Planned Community Act, codified at Ky. Rev. Stat. §§ 381.785 to 381.801 (signed by Governor March 20, 2023) ↩
5. Ky. Rev. Stat. ch. 381 (Kentucky Condominium Act, §§ 381.9101 to 381.9207); budget at § 381.9169(3); assessments at § 381.9191 ↩
6. Ky. Rev. Stat. § 381.9103(1), (2), Application and construction ↩
7. Ky. Rev. Stat. § 381.9169(3), Executive board members and officers ("If the executive board adopts a budget for the condominium . . .") ↩
8. Stites & Harbison, New Law Brings Changes to Kentucky's Condominium Laws (HB 433 limited the required meeting to budgets containing "an increase of greater than fifteen percent from the previous year's budget"); Ky. Rev. Stat. § 381.9169(3)(b) ↩
9. Ky. Rev. Stat. § 381.9169(3)(a) ("Provide a summary of the budget to all unit owners within thirty (30) days after the adoption") ↩
10. Ky. Rev. Stat. § 381.9169(3)(b) (meeting "not be less than fourteen (14) days nor more than thirty (30) days after providing the summary," required if increase greater than 15%) ↩
11. Ky. Rev. Stat. § 381.9169(3) (budget ratified unless "a majority of all the unit owners or any larger vote specified in the declaration reject the budget") ↩
12. Ky. Rev. Stat. § 381.9169(3) ("the budget is ratified, whether or not a quorum is present") ↩
13. Ky. Rev. Stat. § 381.9169(3) ("the periodic budget last ratified by the unit owners shall be continued until such time as the unit owners ratify a subsequent budget") ↩
14. Ky. Rev. Stat. § 381.9169(3)(b) (15% increase triggers the ratification meeting; no statutory cap on the increase itself) ↩
15. Ky. Rev. Stat. § 381.9167, Powers of unit owners' association (emergency assessment "may be reduced or rescinded by a vote of a simple majority of total unit owners at a special meeting") ↩
16. Ky. Rev. Stat. § 381.9105(6), Definitions ("common expenses" include "any allocations to reserves"); § 381.9167(1)(b) (board may adopt budgets "for revenues, expenditures, and reserves") ↩
17. Ky. Rev. Stat. § 381.9197, Association records — Financial report ↩
18. Ky. Rev. Stat. § 381.9107, Variation by agreement ("Except as expressly provided . . . provisions . . . may not be varied by agreement, and rights conferred . . . may not be waived"); § 381.9169(3) (declaration may specify "any larger vote" to reject) ↩
19. Ky. Rev. Stat. § 381.9167(1)(b), Powers of unit owners' association ("Adopt and amend budgets for revenues, expenditures, and reserves") ↩
20. Ky. Rev. Stat. § 381.9169(3)(a) ↩
21. Ky. Rev. Stat. § 381.9169(3)(b) ("If the adopted budget contains an increase of greater than fifteen percent (15%) from the previous year's budget, set a date for a meeting of the unit owners to consider ratification of the budget, which meeting shall not be less than fourteen (14) days nor more than thirty (30) days after providing the summary"); Stites & Harbison (HB 433 amendment, signed April 11, 2012) ↩
22. Ky. Rev. Stat. § 381.9169(3) ↩
23. Ky. Rev. Stat. § 381.9169(3) ↩
24. Ky. Rev. Stat. § 381.9191(1)-(2), Assessments for common expenses ("assessments shall be made at least annually and based on a budget adopted at least annually") ↩
25. Ky. Rev. Stat. § 381.9191(2) (past-due assessment interest "not exceeding eighteen percent (18%) per year") ↩
26. Ky. Rev. Stat. § 381.810, Definitions for §§ 381.805 to 381.910 (Horizontal Property Law) ↩
27. Ky. Rev. Stat. § 381.9103(2) ↩
28. Ky. Rev. Stat. § 381.9103(3) (100% of votes, or lesser percentage stated in declaration, may elect to apply the Act to a pre-2011 condominium) ↩
29. 2023 Ky. Acts ch. 23 (SB 120), § 13(7) (budget summary within 30 days; meeting within 45 days if increase greater than 15%; "Deem the budget ratified, whether or not a quorum is present, unless at that meeting a majority of all owners, or any larger vote specified in the declaration, reject the budget"), codified at Ky. Rev. Stat. §§ 381.790 and 381.797 ↩
30. 2023 Ky. Acts ch. 23 (SB 120), § 2 (applies to all planned communities but does not invalidate provisions recorded before the effective date; formation requirements apply to planned communities formed after the effective date, June 29, 2023) ↩
31. Kentucky Nonprofit Corporation Act, Ky. Rev. Stat. §§ 273.161 to 273.390 (corporate structure and procedure for associations organized as nonprofit corporations) ↩
32. Ky. Rev. Stat. § 381.9107, Variation by agreement; § 381.9169(3) (declaration may specify a larger rejection vote) ↩
33. Ky. Rev. Stat. §§ 381.9105(6) and 381.9167(1)(b) (reserves permitted, not mandated) ↩
34. Ky. Rev. Stat. § 381.9191(4)-(5), Assessments for common expenses (judgment and misconduct assessments); Ky. Rev. Stat. § 381.9167 (emergency assessments) ↩
35. 2023 Ky. Acts ch. 23 (SB 120), § 13(3)-(4) (board majority approves special assessment; meeting within 30 days; majority of total lots cast may rescind or reduce) ↩
36. 2023 Ky. Acts ch. 23 (SB 120), § 13(8) ("The provisions of this section shall override any limitation on the amount of assessments or the amount of annual increases that may be contained in existing declarations, bylaws, rules, or regulations") ↩
37. Ky. Rev. Stat. § 381.9197, Association records — Financial report (applies to all associations, revenue-scaled reporting per HB 433) ↩
38. 2023 Ky. Acts ch. 23 (SB 120), § 10(3) (financial-report standards: cash receipts and disbursements under $125,000; compilation $125,000 to under $300,000; review $300,000 to under $1,000,000; audit $1,000,000 or greater) ↩
39. 2024 Ky. HB 472 (AN ACT relating to residential planned communities), enacted, codified at Ky. Rev. Stat. § 381.803 (city-initiated receivership for failure to maintain infrastructure or common areas) ↩
40. 2026 Ky. SB 233 (AN ACT relating to property owner associations) (would exempt associations with 14 or fewer units from §§ 381.794 and 381.9197 reporting; passed Senate, died in House) ↩
41. 2025 Ky. Acts ch. 32 (HB 27) (amending Ky. Rev. Stat. § 381.800, political yard signs; signed March 18, 2025, effective June 27, 2025) ↩