South Dakota HOA Budget Approval

Key Findings

• SDCL ch. 43-15A — South Dakota's condominium statute — sets no budget-adoption procedure, no assessment-approval step, no reserve requirement, and no cap on assessment increases. Its operative sections address master-deed contents, common areas, recording, developer registrations with the Real Estate Commission, and liens.
• South Dakota has no comprehensive statute for non-condominium planned communities. Those associations run on their recorded covenants and, when incorporated, the South Dakota Nonprofit Corporation Act (SDCL chs. 47-22 to 47-28).
• The state sends appeals directly from Circuit Court to the South Dakota Supreme Court — there is no intermediate appellate court.
• The 2025 and 2026 legislative sessions produced no bills amending the condominium statute's budget or assessment provisions, and no planned-community statute emerged.

Details

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

South Dakota runs a traditional condominium statute and no planned-community statute. For most communities, that means the recorded declaration — called the master deed — and the bylaws govern budget approval, not state law.¹ The model is straightforward: the board adopts the operating budget under the authority in the governing documents, and no statute imposes a ratification step or an owner-veto mechanism.² Non-condominium planned communities run on their recorded covenants, conditions, and restrictions. Where those associations are incorporated, the South Dakota Nonprofit Corporation Act adds corporate procedure — but no budget-approval threshold.³ South Dakota imposes no reserve-study requirement, no reserve-funding mandate, and no cap on annual assessment increases — those are left to the declaration.⁴ That puts South Dakota firmly among the declaration-primary states, where the contract among owners — not a state code — defines the financial process.¹ The quick-reference table and process discussion below show what the statute addresses and where the declaration takes over.

Section 2: The budget approval mechanism

South Dakota's condominium statute (SDCL ch. 43-15A) is a traditional framework — it prescribes no budget mechanism, and the state has no planned-community statute. With no statutory mechanics in place, the recorded declaration and bylaws control budget adoption and assessments.

2A. Quick-Reference Budget Mechanics Table

2B. The budget process

Chapter 43-15A establishes the form of condominium ownership but says nothing about the financial process. The statute requires the master deed to describe the land and buildings, identify each unit, describe the common areas, and obligate the council of co-owners to carry insurance.¹⁰ Owners share the common areas — that much the statute provides — and that shared ownership forms the textual basis for sharing common expenses. But the statute does not say how those expenses get budgeted, calculated, or approved.¹¹ The rest of the chapter covers developer registration with the South Dakota Real Estate Commission, public reports, escrow of deposits, a two-year cap on developer management contracts, and liens for improvements — none of it touches an annual budget.⁵ Because the statute is silent, the budget-adoption process comes entirely from the bylaws and declaration. The one budget-adjacent disclosure the statute does require comes at the point of sale: the developer's questionnaire to the Commission must state the maintenance charge and the conditions under which it can rise.¹²

Non-condominium planned communities have even less statutory scaffolding. South Dakota has enacted no planned-community or common-interest-ownership act, so their budget process rests on the recorded covenants, conditions, and restrictions and, for incorporated associations, the corporate-procedure rules in the Nonprofit Corporation Act.³ That Act governs meetings, voting, records, and directors — but sets no budget-approval threshold and no assessment mechanism.⁷ When the declaration is silent on a budget question, courts apply general contract and common-law principles — not a statutory default.

2C. Variation and the corporate-law overlay

The practical consequence: the recorded declaration is the operative source for budget adoption, assessment calculations, increases, and special assessments in South Dakota. Two communities a mile apart can run entirely different budget procedures depending on their documents — and the statute will fill no gaps.

For incorporated associations, the Nonprofit Corporation Act runs alongside the declaration. It sets quorum and voting defaults — the bylaws control, but absent a bylaw provision a majority of members present is required — along with record-keeping duties and annual-report filing with the Secretary of State.⁷ Those formalities matter for the validity of any vote the declaration requires, but they supply no budget-approval threshold of their own. When neither the declaration nor the corporate statute resolves a dispute, South Dakota courts apply common-law contract interpretation to the covenants — treating them as contracts among owners.¹³

Section 3: Budget-adjacent obligations

A. Reserves in the budget

South Dakota imposes no statutory reserve-study or reserve-funding mandate on condominiums or planned communities. Whether to fund reserves, and at what level, is the declaration's call — and the board's judgment.⁴

B. Special assessments

Chapter 43-15A does not address special assessments, and no planned-community statute fills the gap. The authority to levy a special assessment — and any owner-approval threshold — comes from the recorded declaration.⁸

C. Assessment increase limits

South Dakota sets no statutory percentage cap on annual assessment increases. Any limit, notice period, or owner-vote trigger is whatever the declaration provides.⁴

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

No statute ties an audit or financial review to a South Dakota association's budget cycle. Under SDCL 47-24-1, incorporated associations must keep correct and complete books, records of account, and minutes.⁹ Under SDCL 47-24-2, any member — or the member's agent or attorney — may inspect those records for any proper purpose at any reasonable time. Domestic nonprofit corporations must also file an annual report with the Secretary of State.¹⁴

Section 4: Recent legislative and judicial activity

A. Recent bills

The 2025 and 2026 Regular Sessions produced no bills amending the condominium statute's budget or assessment provisions, and no bill proposed a comprehensive planned-community statute.¹⁵ There is no qualifying bill to report in the past 24 months.

B. Recent rulings

The South Dakota Supreme Court has not touched chapter 43-15A's budget or assessment provisions in the past 36 months. The most relevant recent decision deals with covenant enforcement and owner obligations.

C. Active legislative debates

South Dakota has no active proposals addressing HOA or condominium budget or assessment rules, and no comprehensive planned-community statute is under consideration.¹⁵

Section 5: National positioning and related coverage

South Dakota stands among the declaration-primary states — alongside Arkansas, Mississippi, Montana, and North Dakota — where the recorded governing documents, not a state common-interest statute, set the budget process. It differs from the negative-option jurisdictions that adopted the Uniform Common Interest Ownership Act, where a board-proposed budget is ratified unless a majority of all owners rejects it — quorum or not. (Nevada, for instance, runs that model under NRS 116.31151.) South Dakota has not adopted UCIOA.¹⁶ It also differs from California, whose Davis-Stirling Act (Civil Code § 5605(b)) bars a board from imposing a regular assessment more than 20 percent greater than the prior year's — or special assessments aggregating more than 5 percent of budgeted gross expenses — without a member vote. California also requires the board to review a reserve study at least once every three years (Civil Code § 5550), a mandate South Dakota does not share.¹⁷ For a multi-state operator entering South Dakota, the implication is direct: the recorded declaration — not a state statute — controls the budget for most communities. Due diligence and compliance start with reading each association's documents, not a code chapter.

Recommendations

• Start with the recorded declaration and bylaws for every South Dakota community. Treat them as the controlling budget authority — the statute is not where the answers are.
• For incorporated associations, follow the Nonprofit Corporation Act formalities — notice, quorum, minutes, annual report — whenever the declaration requires a vote. Those formalities affect validity even if they set no budget threshold.
• Enforce assessment and budget-related covenants consistently. Hood v. Straatmeyer is a clear signal: abandoned enforcement can void a covenant entirely.
• Return to this page if the Legislature enacts a planned-community statute or amends chapter 43-15A. Those events would shift the analysis from declaration-driven to statute-driven.

Caveats

• This page states what the statutes do and do not require. It is not legal advice, and the controlling terms for any given association are in its recorded documents.
• Some third-party HOA-information sites misstate South Dakota law — a common error is treating SDCL ch. 43-15B (Time-Share Estates) as a planned-community act. It governs time-shares, not planned communities.
• The negative legislative finding covers the 2025 and 2026 Regular Sessions. Because the South Dakota Legislature site is JavaScript-gated, bills were verified through LegiScan and official agency publications.

1. South Dakota Legislature, S.D. Codified Laws ch. 43-15A, Condominiums ↩
2. South Dakota Legislature, S.D. Codified Laws ch. 43-15A, Condominiums (no budget-adoption or ratification provision) ↩
3. South Dakota Legislature, S.D. Codified Laws chs. 47-22 to 47-28, South Dakota Nonprofit Corporation Act ↩
4. South Dakota Legislature, S.D. Codified Laws ch. 43-15A, Condominiums (no reserve or assessment-cap provision) ↩
5. South Dakota Legislature, S.D. Codified Laws §§ 43-15A-10 to 43-15A-29, Developer registration, escrow, management contracts, and liens ↩
6. South Dakota Legislature, S.D. Codified Laws § 43-15A-3, Establishment by recorded master deed ↩
7. South Dakota Legislature, S.D. Codified Laws § 47-23-12, Bylaw provisions governing vote or quorum ↩
8. South Dakota Legislature, S.D. Codified Laws ch. 43-15A, Condominiums (no special-assessment provision) ↩
9. South Dakota Legislature, S.D. Codified Laws §§ 47-24-1, 47-24-2, Books, records, and inspection rights ↩
10. South Dakota Legislature, S.D. Codified Laws § 43-15A-4, Particulars required in master deed or lease ↩
11. South Dakota Legislature, S.D. Codified Laws § 43-15A-7, Exclusive and common rights of owners ↩
12. South Dakota Legislature, S.D. Codified Laws § 43-15A-11, Questionnaire; maintenance charge disclosure ↩
13. Hood v. Straatmeyer, 2025 S.D. 12, No. 30180 (S.D. Mar. 5, 2025) ↩
14. South Dakota Legislature, S.D. Codified Laws § 47-24-6, Report required of domestic corporation ↩
15. South Dakota Legislature 2025 and 2026 Regular Sessions, LegiScan ↩
16. Community Associations Institute, UCIOA Adopting States ↩
17. California Legislature, Cal. Civ. Code §§ 5605, 5550, Assessment-increase limits; reserve-study review ↩