New York HOA Budget Approval

Section 1: Overview, how HOA budgets are approved in New York

New York operates three separate legal frameworks for common-interest housing — and in all three, the board adopts the budget under the governing documents, with no statutory negative-consent ratification step in any of them. Condominiums operate under the New York Condominium Act, Real Property Law (RPL) Article 9-B (§ 339-d et seq.); the board of managers adopts the budget — called common charges — under the condominium bylaws. Cooperatives are corporations governed by the Business Corporation Law (BCL) together with the certificate of incorporation, bylaws, and proprietary lease; the board of directors adopts the budget, which cooperatives call maintenance. Homeowners associations have no comprehensive planned-community statute in New York. They operate under recorded declarations of covenants, conditions, and restrictions (CC&Rs) plus the Not-for-Profit Corporation Law (N-PCL) for corporate formalities, with the board adopting the budget under the declaration and bylaws.

The cooperative form changes the legal character of ownership. A cooperative owner holds shares in the corporation plus a proprietary lease — making the owner's interest personal property, not real property. That distinction means security interests in cooperative shares get perfected under Uniform Commercial Code (UCC) Article 9, through the share-loan and recognition-agreement practice, rather than through real-property mortgages.

Reserve requirements in New York arise mainly at the conversion and offering stage — not as an ongoing operational mandate. When a building converts to condominium or cooperative ownership, the offering plan must provide a reserve fund administered by the Attorney General under the Martin Act. New York's court naming inverts the usual pattern: the trial court is the Supreme Court, and the Court of Appeals is the highest court. The table and per-regime sequence below set out the mechanics.

Section 2: The budget approval mechanism

2A. Quick-Reference Budget Mechanics Table

This table reflects New York's three separate common-interest regimes. Cooperative ownership is personal property (shares plus a proprietary lease) governed by the proprietary lease and bylaws, which separates cooperatives from condominiums throughout.

2B. The budget process in each regime

Condominiums. The Condominium Act gives condominiums a skeletal framework and leaves budget mechanics to the bylaws. RPL § 339-m charges common expenses to unit owners according to their respective common interests, but it does not prescribe a budget-adoption procedure or a member ratification step.¹⁰ RPL § 339-v requires the bylaws to address the operation of the property, payment of common expenses, and determination and collection of common charges. It also permits — but does not require — bylaw provisions governing reserves.⁵ The board of managers adopts the budget and levies common charges under those bylaws. No negative-option ratification mechanism exists. Adopting the budget is distinct from collecting the charge. RPL § 339-w requires the board to keep detailed records of receipts and expenditures and make them available to unit owners. RPL § 339-aa governs the lien for unpaid common charges and requires 90 days' notice before a foreclosure action.^6,9

Cooperatives. A cooperative is a corporation. Its board of directors adopts the budget — called maintenance — under the proprietary lease and bylaws, with the Business Corporation Law supplying corporate formalities.² The personal-property character of cooperative ownership separates cooperatives from condominiums throughout. Because the owner holds shares plus a proprietary lease rather than real property, a lender perfects its security interest under UCC Article 9 by filing a UCC-1 financing statement (and a cooperative addendum). The cooperative's lien for unpaid maintenance and the lender's loan are coordinated through a recognition agreement.⁴ The Court of Appeals confirmed in Matter of Levandusky v. One Fifth Ave. Apt. Corp. (1990) that the business judgment rule governs review of cooperative (and condominium) board decisions — shielding a good-faith budget or assessment decision from judicial second-guessing.¹¹ No negative-option ratification mechanism exists.

Homeowners associations. An HOA board adopts the budget under the declaration and bylaws, with the Not-for-Profit Corporation Law supplying corporate formalities for most associations.³ New York has no planned-community statute that prescribes budget adoption, a ratification vote, or an assessment cap — the operative rules sit in the recorded CC&Rs. No negative-option ratification mechanism exists.

2C. Conversion-stage reserves and variation

New York's reserve requirement is a conversion-and-offering-stage rule — not the ongoing operational reserve-study mandate found in California, Florida, Nevada, or New Jersey. When a rental building converts to condominium or cooperative ownership, the sponsor must provide a reserve fund for capital repairs, replacements, and improvements. In New York City, Local Law 70 of 1982 (the Reserve Fund Law), codified at NYC Administrative Code § 26-703(b), provides that the fund "shall be established in an amount equal to either (i) three per cent of the total price."⁸ The Affordable Housing Retention Act, enacted in 2025, added RPL § 339-mm. For its narrow class of preservation-plan conversions, it requires a sponsor-funded reserve of three percent of total price — modeled on Local Law 70 — plus a separate dedicated capital fund equal to one-half of one percent of total price, overseen by the relevant housing finance agency.¹² These requirements apply at conversion and are administered through the offering-plan process.

The Attorney General, through the Real Estate Finance Bureau, regulates condominium and cooperative offering plans under the Martin Act (General Business Law Article 23-A). GBL § 352-e requires an offering plan to be filed before securities are sold. The conversion provisions — GBL § 352-eee for certain localities in Nassau, Westchester, and Rockland counties, and GBL § 352-eeee for New York City — govern conversion plans.^13,14,15 The Attorney General acts as an offering-plan regulator at the offering and conversion stage; it does not approve or set ongoing operating budgets. Outside the conversion context, budget mechanics in each regime are governed by the governing documents.

Section 3: Budget-adjacent obligations

A. Reserves in the budget

No ongoing statutory reserve-funding or reserve-study mandate applies to established condominiums, cooperatives, or HOAs in New York. The reserve-fund requirement is a conversion-stage obligation. In New York City, a sponsor converting a rental building must fund a reserve equal to three percent of the total price under Local Law 70. The 2025 Affordable Housing Retention Act applies a comparable three-percent reserve plus a one-half-percent dedicated capital fund to its preservation-plan conversions.^8,12 Established associations fund reserves only to the extent their governing documents require it.

B. Special assessments

Special assessments are governed by the governing documents in each regime. Neither the Condominium Act, the Business Corporation Law, nor the Not-for-Profit Corporation Law prescribes a special-assessment approval threshold. The condominium bylaws, the cooperative's proprietary lease and bylaws, or the HOA declaration and bylaws control whether a board may levy a special assessment and whether an owner vote is required.^5,7

C. Assessment increase limits

No statutory percentage cap applies to assessment or common-charge increases in any of the three regimes. The governing documents control the rate and procedure for increases, subject to the board's fiduciary duties and the business judgment rule.¹¹

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

For cooperatives, BCL § 624 requires the corporation to maintain books and records of account and, on a shareholder's written request, to provide an annual balance sheet and profit-and-loss statement for the preceding fiscal year.² For condominiums, RPL § 339-w requires the board of managers to keep detailed records of receipts and expenditures and make them available to unit owners.⁶ For HOAs organized under the N-PCL, § 621 grants members inspection rights, and § 621(e-1) specifically entitles homeowners association members to review invoices, ledgers, bank accounts, reconciliations, contracts, and documents related to the expenditure of association dues.³ No statute requires an independent annual audit for any of the three regimes. Offering-plan disclosure obligations apply only at the offering and conversion stage under the Martin Act.¹³

Section 4: Recent legislative and judicial activity

A. Recent bills

B. Recent appellate rulings

C. Active legislative debates

Companion reserve-study bills would, for the first time, require condominium and cooperative associations to complete periodic capital reserve studies. Assembly bill A8945 (introduced by Assemblymember Jackson, July 16, 2025) directs associations to complete a capital reserve study including a 30-year funding plan, reviewed by a licensed architect, engineer, or credentialed reserve specialist and filed with the State Comptroller, exempting associations with under $25,000 in common-area capital assets. Its Senate companion, S7600, has been reported out of committee but has not been adopted into law. A separate transparency bill, S7541 (Senator Bynoe, introduced April 22, 2025), would require sellers to provide buyers with records of the most recent inspection and engineering reports — motivated by the 2021 Champlain Towers South collapse. The bill was engrossed and referred to housing on June 11, 2025, but did not become law.^19,20

Section 5: National positioning and related coverage

New York is a three-regime state: boards adopt budgets under the governing documents in all three regimes, with no statutory mechanism in any of them. The state stands out for its large cooperative housing stock and for treating cooperative ownership as personal property — shares plus a proprietary lease — secured under UCC Article 9, a structure with no analogue in condominium or HOA practice. New York falls outside the negative-option ratification family of the Uniform Common Interest Ownership Act, which it has not adopted in any regime. It does not use California's assessment-increase-cap model, and it imposes no ongoing reserve-study mandate of the kind found in Florida, Nevada, or New Jersey. For a multi-state operator entering New York, the operative budget rules sit in the governing documents and differ by regime, and the cooperative form changes both the legal character of ownership and the way security interests are taken and enforced.

1. N.Y. Real Property Law Article 9-B (Condominium Act), § 339-d et seq. ↩
2. N.Y. Business Corporation Law § 624 (Books and records; right of inspection). ↩
3. N.Y. Not-for-Profit Corporation Law § 621 (Books and records; right of inspection), including § 621(e-1). ↩
4. N.Y. Uniform Commercial Code § 9-102 (cooperative interest, cooperative addendum definitions). ↩
5. N.Y. Real Property Law § 339-v (Contents of by-laws). ↩
6. N.Y. Real Property Law § 339-w (Books of receipts and expenditures). ↩
7. N.Y. Real Property Law § 339-v(2)(b) (optional bylaw provisions on payment, collection, and reserves). ↩
8. N.Y. Attorney General, Guidance on Compliance with the NYC Reserve Fund Law (Local Law 70 of 1982; reserve fund of three percent of total price; NYC Admin. Code § 26-703(b)). ↩
9. N.Y. Real Property Law § 339-aa (Lien for common charges; duration; foreclosure). ↩
10. N.Y. Real Property Law § 339-m (Common profits and expenses). ↩
11. Matter of Levandusky v. One Fifth Ave. Apt. Corp., 75 N.Y.2d 530 (Court of Appeals 1990). ↩
12. N.Y. Real Property Law § 339-mm (Reserve fund and dedicated capital fund for preservation-plan conversions). ↩
13. N.Y. General Business Law § 352-e (Real estate syndication offerings; Martin Act). ↩
14. N.Y. General Business Law § 352-eee (Conversions in certain Nassau, Westchester, and Rockland localities). ↩
15. N.Y. General Business Law § 352-eeee (Conversions in the City of New York). ↩
16. N.Y. Senate Bill S1354 (2025-2026); Affordable Housing Retention Act, Part GG of the FY 2026 Enacted Budget. ↩
17. Board of Mgrs. of the 443 Greenwich St. Condominium v. SGN 443 Greenwich St. Owner LLC, 228 A.D.3d 553 (1st Dept 2024) (2024 NY Slip Op 00450). ↩
18. Zollo v. Adirondack Lodges Homeowners Assn., Inc., 225 A.D.3d 973 (3d Dept 2024). ↩
19. N.Y. Assembly Bill A8945 (2025-2026); capital reserve study requirement. ↩
20. N.Y. Senate Bill S7541 (2025-2026); condominium and cooperative transparency guidelines. ↩