North Dakota HOA Budget Approval

Section 1: Overview — How HOA budgets are approved in North Dakota

In North Dakota, an association approves its budget the way its own recorded declaration and bylaws spell out — not the way a state statute commands — because North Dakota runs on a traditional condominium statute and has never enacted a comprehensive planned-community statute.¹ The North Dakota Condominium Ownership Act, N.D. Cent. Code ch. 47-04.1, is a horizontal-property framework. It says how a project comes together, how owners hold the common areas, and how assessment liens attach. It says nothing about adopting a budget or asking members to ratify one.² So the working model is simple: the board adopts the budget under the declaration and bylaws, and no statutory ratification step sits on top of it.³ Planned communities fall outside the condominium statute altogether. They run on their recorded covenants (CC&Rs) and on the North Dakota Nonprofit Corporation Act, N.D. Cent. Code ch. 10-33 — a corporate-governance code that sets no budget-approval threshold.⁴ North Dakota mandates no reserve study, requires no reserve funding, and caps no assessment increase.⁵ That places North Dakota among the declaration-primary states, where the recorded instrument, not a state code, controls association finance. The table and sequence below lay out what the statute supplies, what it does not, and where the declaration fills the gap.

Section 2: The budget approval mechanism

2A. Quick-Reference Budget Mechanics Table

North Dakota's Condominium Ownership Act is a traditional horizontal-property framework. With no statutory budget mechanics to lean on, the recorded declaration and bylaws control — so most rows below read "Not specified by statute."

2B. The budget process

For condominiums, the Condominium Ownership Act builds a framework for administration but hands the budget-adoption process to the bylaws and declaration. Section 47-04.1-07 directs the unit owners or their administrative body to "provide by bylaws for the maintenance of common elements, limited common elements where applicable, assessment of expenses, payment of losses, division of profits, disposition of hazard insurance proceeds, and similar matters."⁹ That phrase — "assessment of expenses" — is the statute's only nod to budgeting, and it delegates the job to the bylaws rather than prescribing a procedure. The statute never tells the board to prepare a proposed budget, circulate a budget summary, hold a ratification meeting, or collect a member vote.

Section 47-04.1-11 confirms the declaration-driven design. It states that "a reasonable assessment for common expenses made by the administrative body upon any condominium and made in accordance with the recorded declaration and bylaws shall be a debt of the owner thereof at the time the assessment is made."¹⁰ The statute, in other words, assumes the recorded declaration and bylaws already define how the association sets assessments and makes them enforceable. It supplies the lien remedy once an assessment is properly made and recorded; it does not supply the budget mechanics that produce that assessment in the first place.

Planned communities sit outside ch. 47-04.1 entirely. North Dakota has enacted no planned-community or common-interest-ownership statute, so a planned community runs on its recorded CC&Rs and, if it incorporated, on the Nonprofit Corporation Act.⁴ No statutory budget mechanism reaches these communities. The board draws its authority to adopt a budget and levy assessments from the declaration, and the corporate formalities — meetings, director action — come from ch. 10-33. Where the statute stays silent, which is nearly everywhere on the budget question, the declaration controls; no default statutory rule steps in.

2C. Variation and the corporate-law overlay

The practical consequence is direct: the recorded declaration is the operative source for budget adoption and assessments in nearly every North Dakota association. Two communities a mile apart can run entirely different budget calendars, notice periods, owner-approval triggers, and reserve practices, because each answers to its own instrument. A property manager or treasurer working across several associations has to read each declaration and bylaw set, not lean on a uniform statutory procedure.

The Nonprofit Corporation Act runs alongside the declaration for incorporated associations, but it governs corporations, not budgets.⁴ It supplies director and member meeting procedures, voting and quorum defaults for corporate acts, record-keeping duties, and similar formalities. It imposes no budget-approval threshold, no reserve requirement, and no assessment cap. When both the declaration and the bylaws go quiet on a budget question, North Dakota common law and general principles of contract and corporate governance fill the gap, and the North Dakota District Courts would resolve a dispute by applying those principles to the recorded instrument — with appeal to the North Dakota Supreme Court.¹¹

Section 3: Budget-adjacent obligations

A. Reserves in the budget

North Dakota imposes no reserve-study or reserve-funding requirement on condominiums or planned communities. Chapter 47-04.1 says nothing about reserves, and ch. 10-33 requires none.⁵ Whether an association funds reserves, and how, comes down to the recorded declaration and bylaws.

B. Special assessments

The condominium statute sets no approval threshold for association special assessments. The "special assessments" that § 47-04.1-13 references are governmental real-property tax assessments levied on each unit — not association-imposed special assessments.⁷ For condominiums and planned communities alike, the authority to levy a special assessment, and any owner-vote requirement, comes from the declaration.

C. Assessment increase limits

North Dakota sets no percentage cap on regular-assessment increases and no member-vote trigger for increases above a threshold. Section 47-04.1-11 asks only that an assessment be "reasonable" and "made in accordance with the recorded declaration and bylaws."¹⁰ Any cap or vote requirement is a creature of the declaration.

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

The Condominium Ownership Act ties no audit or financial review to the budget cycle. For incorporated associations, N.D. Cent. Code § 10-33-80 requires the corporation to keep its articles, bylaws, accounting records, voting agreements, and minutes of members' meetings "for the last six years," open to inspection by a member or director "for any proper purpose at any reasonable time" — but it attaches no audit to budget adoption.⁸ Separately, since August 1, 2025, a seller of a unit in a condominium or homeowners' association must hand over pre-sale financial disclosures, including the current operating and reserve budgets, under § 47-10-02.3. That is a transfer-disclosure duty, not a budget-cycle audit.¹²

Section 4: Recent legislative and judicial activity

A. Recent bills

No bill enacted in the past 24 months amended the budget or assessment provisions of the Condominium Ownership Act. The condominium-adjacent measure of the 2025 session was SB 2229, prime-sponsored by Sen. Josh Boschee (District 44, Fargo). It passed the Senate 44-2 on February 3, 2025, and the House 87-4 on March 12, 2025. The bill created a new section of ch. 47-10 (real property transfers), codified at § 47-10-02.3, requiring a seller to disclose, within ten days of a request, items including "the current operating and reserve budgets and year-to-date financial statement" and "whether the homeowners' association or condominium project uses a reserve study." It does not touch budget adoption, assessment thresholds, reserve mandates, or caps.¹²

B. Recent rulings

The North Dakota Supreme Court took up association assessment liens in Industrial Commission of North Dakota v. Gould, 2024 ND 32. The developer Fendee Group, LLC (with Fendee Estates I and II, LLC and Gary Fendich) argued that its 2013-recorded declaration created a "super lien" — one "superior and senior to any lien hereafter placed upon any portion of the subject property, including the lien of any mortgage or deed of trust." The Court rejected that theory and held that the association did not perfect its lien until it recorded its notice of lien. As the opinion puts it at paragraph 13, "The NDHFA lien is superior because its date of perfection is on September 5, 2019, while Fendee perfected its liens in 2021 and 2023 respectively." The Court awarded the mortgagee, the North Dakota Housing Finance Agency, foreclosure and a judgment of $211,697.53. The case interprets assessment-lien priority, not budget adoption, but it stands as the operative recent authority on how association assessments interact with other recorded interests.¹³

C. Active legislative debates

No bill creating a comprehensive planned-community or common-interest-ownership statute — or imposing a budget-adoption, reserve, or assessment-cap mechanic — is pending in the North Dakota Legislative Assembly.¹

Section 5: National positioning and related coverage

North Dakota belongs to the declaration-primary group of states, alongside Arkansas, Mississippi, and Montana, where a traditional condominium or horizontal-property statute coexists with no comprehensive planned-community statute, leaving budget mechanics to the recorded instrument. That separates North Dakota from the negative-option UCIOA family, in which a board-adopted budget takes effect unless a set percentage of owners rejects it; from California's Davis-Stirling model, which bars a board from imposing a regular assessment more than 20 percent greater than the prior year's without a member vote; and from the mandatory-reserve states that require reserve studies and funding.¹⁴ For a multi-state operator entering North Dakota, the implication is blunt: the recorded declaration, not a state statute, controls the budget and the assessment process for most communities. Due diligence means reading each association's instrument rather than mapping a statutory checklist.

HOA Weekly's North Dakota Budget Approval coverage updates quarterly as the Legislative Assembly and the North Dakota Supreme Court 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 North Dakota associations regardless of the state framework.

Footnotes

1. N.D. Cent. Code Title 47 (Property) chapter listing, North Dakota Legislative Branch (ch. 47-04.1 is the only common-interest chapter; no planned-community chapter exists). ↩
2. N.D. Cent. Code ch. 47-04.1, Condominium Ownership of Real Property, §§ 47-04.1-01 through 47-04.1-16, North Dakota Legislative Branch. ↩
3. N.D. Cent. Code § 47-04.1-07 (delegating assessment of expenses to the bylaws); the chapter contains no budget-adoption or ratification provision. ↩
4. N.D. Cent. Code ch. 10-33, Nonprofit Corporations, North Dakota Legislative Branch (corporate-governance code; no budget-approval threshold). ↩
5. Community Associations Institute, Reserve Requirements and Funding for Community Associations: "NORTH DAKOTA There is no statutory requirement to conduct a reserve study and no statutory requirement to fund reserves." Confirmed by the absence of any reserve or assessment-cap provision in N.D. Cent. Code ch. 47-04.1. ↩
6. N.D. Cent. Code § 47-04.1-02 (recording of declaration to submit property to a project), North Dakota Legislative Branch. ↩
7. N.D. Cent. Code § 47-04.1-13 ("Real property tax and special assessments — Levy on each unit"), addressing governmental tax assessments, North Dakota Legislative Branch. ↩
8. N.D. Cent. Code § 10-33-80 (corporate books, records, and financial statement; six-year retention; member and director inspection for a proper purpose), North Dakota Legislative Branch. ↩
9. N.D. Cent. Code § 47-04.1-07(1) (Administration — Bylaws — Rules and regulations), North Dakota Legislative Branch. ↩
10. N.D. Cent. Code § 47-04.1-11 (Liens against units for common expenses), North Dakota Legislative Branch. ↩
11. North Dakota Court System, Court of Appeals: the court was established in 1987 to assist the Supreme Court and hears only cases the Supreme Court assigns to it; trial-level disputes proceed through the District Courts with appeal to the North Dakota Supreme Court. ↩
12. N.D. Cent. Code § 47-10-02.3 (required pre-sale disclosures, including current operating and reserve budgets and whether a reserve study is used), enacted by 2025 SB 2229. Bill history (Senate 44-2; House 87-4; sponsor Sen. Josh Boschee): North Dakota Legislative Branch, 69th Assembly, SB 2229. ↩
13. Industrial Commission of North Dakota v. Gould, 2024 ND 32 (decided Feb. 22, 2024; Docket No. 20230188), North Dakota Supreme Court (Crothers, J.), affirming that the association's lien was not perfected until recorded and was subordinate to the earlier-recorded mortgage. ↩
14. Cal. Civ. Code § 5605(b) (Davis-Stirling Act), barring a regular-assessment increase more than 20 percent greater than the prior fiscal year, and a special assessment exceeding 5 percent of budgeted gross expenses, without member approval — illustrative of the increase-cap model North Dakota does not follow. ↩