Ohio HOA Budget Approval

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

Ohio runs two separate legal tracks for HOA budgets. Condominium associations answer to the Ohio Condominium Property Act (R.C. ch. 5311). Planned communities answer to the Ohio Planned Community Law (R.C. ch. 5312). Under both chapters, the board of directors adopts the budget under the recorded declaration and bylaws.^{1, 2} Neither statute uses a negative-option ratification mechanism, so no statutory step sends a board-adopted budget to the membership for approval or rejection.

The model is board adoption under the governing documents. The board annually adopts and amends an estimated budget, and the statute does not require a separate owner vote to approve it.¹ What makes Ohio distinctive is the reserve requirement. The annual budget must include reserves adequate to repair and replace major capital items without the necessity of special assessments — unless the owners waive the reserve requirement in writing by the statutory vote.^{1, 2}

The two-statute structure matters because the chapters run parallel but are not identical. The Condominium Property Act received a substantial revision through House Bill 135 of the 125th General Assembly, effective July 20, 2004.¹ The Planned Community Law took effect September 10, 2010, reaching communities that existed before that date subject to transition rules.³ Ohio belongs to neither the Uniform Common Interest Ownership Act family nor the 1980 Uniform Condominium Act states — both chapters are home-grown Ohio statutes. The Quick-Reference table and operational sequence that follow set out the budget mechanics for each chapter, then summarize the reserve mechanic and the corporate-law overlay.

Section 2: The budget approval mechanism

2A. Quick-Reference Budget Mechanics Table

This table reflects the Ohio Condominium Property Act (R.C. ch. 5311) and the Ohio Planned Community Law (R.C. ch. 5312). Each value sources to the controlling section in the correct chapter.

2B. The budget process under each statute

For condominiums, R.C. 5311.081(A) directs that the unit owners association, through the board of directors, shall annually adopt and amend an estimated budget for revenues and expenditures, and shall collect assessments for common expenses from unit owners.¹ The adoption authority sits with the board. No statutory provision sends the board-adopted budget to the membership for ratification, and no negative-option step conditions the budget's effect on owner inaction. Distribution timing, owner-meeting notice, quorum, and any owner role in the budget cycle all come from the recorded declaration and bylaws, not the statute.

For planned communities, R.C. 5312.06(A) directs that the owners association, through its board of directors, shall annually adopt and amend an estimated budget for revenues and expenditures, and shall collect assessments for common expenses in accordance with R.C. 5312.10.² The structure mirrors the condominium chapter: the board adopts; the statute imposes no membership ratification step. R.C. 5312.10(A)(3) makes the budget-to-assessment connection explicit, providing that the board "shall assess the common expense liability for each lot at least annually, based on a budget the board adopts at least annually."⁵

The distinction between adopting the budget and levying the assessment matters in both chapters. Adoption is the board's estimate of revenues, expenditures, and reserves. The levy is the allocation of common-expense liability to each unit or lot, which follows the allocation in the declaration. Under R.C. 5312.10(A)(2), if the declaration does not establish an allocation, common-expense liability is allocated equally among all lots.⁵ Neither chapter sets a percentage cap on year-over-year assessment increases. For planned communities, R.C. 5312.10(C)(2) provides that where the declaration itself limits the amount of assessments, the board may not increase them unless the owners amend the declaration — which requires the consent of seventy-five per cent of the owners under R.C. 5312.05(A).⁸ That is a documents-based limit enforced by statute, not a statutory percentage cap.

2C. The reserve mechanic and variation

The reserve mechanic is the defining feature of Ohio budget law. Think of it as reserves-required-unless-waived. For condominiums, R.C. 5311.081(A)(1) requires that the annual budget "shall include reserves in an amount adequate to repair and replace major capital items in the normal course of operations without the necessity of special assessments," unless either the declaration or bylaws include language limiting the board's ability to increase assessments for common expenses without an owner vote, or the unit owners — exercising not less than a majority of the voting power of the association — waive the reserve requirement in writing annually.¹ The 2022 amendment removed the prior ten-per-cent floor, so the standard is now adequacy rather than a fixed percentage. For planned communities, R.C. 5312.06(A)(1) sets the same adequacy standard and the same annual written waiver by a majority of the voting power, without the separate documents-based exception that appears in the condominium chapter.²

Two points follow. First, the waiver is annual and must be in writing; a waiver in one year does not carry forward. Second, neither chapter mandates a reserve study. The statutory standard is "adequate" reserves, and a reserve study is a tool to demonstrate adequacy rather than a statutory requirement. This is a reserves-required-unless-waived model — distinct from a full reserve-study mandate and distinct from no reserve requirement at all.

On mandatory versus variable provisions: both chapters make the duty to adopt an annual budget and the reserve obligation mandatory, subject only to the waiver mechanism. The provisions left to the declaration and bylaws include the budget-distribution timeline, owner-meeting notice and quorum, special-assessment procedures, and any internal cap on assessment increases. Separately, many Ohio associations organize under the Ohio Nonprofit Corporation Law (R.C. ch. 1702), which supplies corporate formalities such as meetings, records, and officer duties.⁹ Chapter 1702 is a corporate code only; it sets no budget-approval threshold.

Section 3: Budget-adjacent obligations

A. Reserves in the budget

For condominiums, R.C. 5311.081(A)(1) requires the annual budget to include adequate reserves unless the owners waive in writing by a majority of the voting power or the documents limit assessment increases. For planned communities, R.C. 5312.06(A)(1) imposes the parallel adequate-reserve requirement subject to the annual written waiver.^{1, 2} The budget consequence is direct: absent a valid waiver, a board that omits adequate reserves has not adopted a compliant budget. Both provisions are mandatory subject to the statutory waiver.

B. Special assessments

Neither chapter sets a statutory member-approval threshold for special assessments. The reserve provisions frame reserves as the means of avoiding "the necessity of special assessments," but the procedure for levying a special assessment is left to the declaration and bylaws.¹ For condominiums, this falls under the general budget and assessment authority of R.C. 5311.081. For planned communities, common-expense assessment authority sits in R.C. 5312.10, with charges and individual assessments addressed elsewhere in the chapter.⁵ These mechanics are variable by the governing documents.

C. Assessment increase limits

There is no statutory percentage cap on assessment increases in either chapter. For condominiums, R.C. 5311.081 ties any documents-based limit to the reserve exception rather than imposing a cap.¹ For planned communities, R.C. 5312.10(C)(2) provides that where the declaration limits assessments, the board may not exceed that limit without an owner amendment to the declaration under R.C. 5312.05(A), which requires seventy-five per cent owner consent.^{5, 8} Any cap is therefore a creature of the governing documents, not the statute.

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

Neither chapter imposes a statutory audit or independent financial-review mandate tied to the budget cycle. For condominiums, R.C. 5311.09 requires the association to keep correct and complete books and records of account specifying receipts and expenditures, along with minutes and owner records.⁷ R.C. 5311.091 governs owner examination of those records subject to reasonable standards and a five-year look-back limit.¹⁰ For planned communities, R.C. 5312.06(C) imposes the parallel duty to keep correct and complete books and records of account, records of common-expense collection, minutes, and owner records.² These recordkeeping duties are mandatory; the manner of owner access is partly variable by the governing documents.

Section 4: Recent legislative and judicial activity

A. Recent bills

No bill enacted in the past 24 months amends the budget, reserve, or assessment provisions of the Condominium Property Act or the Planned Community Law. The controlling substantive change remains Senate Bill 61 of the 134th General Assembly, effective September 13, 2022. That legislation removed the ten-per-cent reserve floor from R.C. 5311.081, added the written-waiver requirement to both chapters, and expanded the fidelity-insurance duty.¹¹ The expanded duty now requires "Blanket fidelity, crime, or dishonesty insurance coverage for any person who controls or disburses association funds," with coverage set at the maximum amount of funds in the association's custody at any one time plus three months of operating expenses.² Because SB 61 took effect more than 24 months before this page's verification date, it sits outside the recent-bill window and is noted here as the current statutory baseline.

B. Recent appellate rulings

No Ohio appellate decision in the past 36 months squarely construes the budget or reserve provisions of R.C. 5311.081 or R.C. 5312.06. The closest recent decision is Porter v. Hammond N. Condominium Assn., 2025-Ohio-2210, from the First Appellate District (Hamilton County), decided June 25, 2025, which arose from a contested annual budget and anticipated special assessments after a fire.^{12, 13} Writing for the court, Judge Crouse held that "The Ohio Constitution preserved Appellants' right to a jury trial on their claims seeking [damages]," reasoning that "R.C. 5311.19(A) seeks to remedy a breach of the CCRs governing a condominium property, and is therefore in the nature of a suit to enforce a real covenant." The court reversed and remanded a bench judgment, but it did not interpret the budget or reserve mandate itself.

C. Active legislative debates

Commentators report periodic legislative interest in mandatory reserve studies for condominiums and planned communities, reflecting national attention after the June 2021 Champlain Towers South collapse in Surfside, Florida. As of the verification date, no formal bill amending the budget or reserve provisions of either chapter is pending. Boards and managers should monitor the General Assembly for any reserve-study proposal that would move Ohio from its adequacy standard toward a study mandate.

Section 5: National positioning and related coverage

Ohio is a bespoke, non-UCIOA two-statute state. Condominium budgets run under the Condominium Property Act and planned-community budgets run under the Planned Community Law. Under both, the board adopts the budget under the recorded declaration and bylaws with no statutory ratification vote.^{1, 2} That places Ohio outside the negative-option UCIOA family — in which a board budget is ratified unless owners reject it — and outside California's percentage-cap model, since Ohio sets no statutory cap on assessment increases. Ohio also stops short of the full reserve-study-mandate states, a group that includes California, Florida, Hawaii, Maryland, Nevada, and Oregon. Its reserve rule is an adequacy standard that owners can waive in writing each year, not an engineering-study requirement. For a multi-state operator, the practical implication is clear: Ohio condominiums and planned communities sit under separate bespoke chapters with parallel but distinct text, and in both the budget must address reserves unless the owners waive the requirement.

1. Ohio Rev. Code § 5311.081, Powers and duties of board of directors (eff. Sept. 13, 2022; prior substantive revision H.B. 135, 125th G.A., eff. July 20, 2004) ↩
2. Ohio Rev. Code § 5312.06, Powers and duties of owner's association (eff. Sept. 13, 2022) ↩
3. Ohio Rev. Code § 5312.02, Applicability of chapter; establishment of planned community (eff. Sept. 10, 2010; transition provisions for pre-existing communities) ↩
4. Ohio Rev. Code § 5311.18, Lien for common expenses ↩
5. Ohio Rev. Code § 5312.10, Common expense liability ↩
6. Ohio Rev. Code § 5312.01, Definitions (eff. Sept. 10, 2010) ↩
7. Ohio Rev. Code § 5311.09, Unit owners association records ↩
8. Ohio Rev. Code § 5312.05, Amendments to declaration or bylaws (75% owner consent) ↩
9. Ohio Rev. Code ch. 1702, Nonprofit Corporation Law ↩
10. Ohio Rev. Code § 5311.091, Examination of books, records, minutes ↩
11. Ohio Gen. Assembly, Senate Bill 61, 134th Gen. Assembly (eff. Sept. 13, 2022) ↩
12. Porter v. Hammond N. Condominium Assn., 2025-Ohio-2210 (Ohio Ct. App., 1st Dist. June 25, 2025) ↩
13. Supreme Court of Ohio, Ohio Court of Appeals (twelve appellate districts) ↩