Texas HOA Budget Approval

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

Texas draws a clear line between two types of communities, and that line determines how a budget gets approved. Condominium budgets fall under the Texas Uniform Condominium Act (Tex. Prop. Code ch. 82) for any condominium whose declaration was recorded on or after January 1, 1994.¹ Planned communities run on a different track: their budgets are governed by the recorded restrictions and bylaws, with the Texas Residential Property Owners Protection Act (Tex. Prop. Code ch. 209) operating as a procedural overlay rather than a comprehensive governance code.² In plain terms, a Texas condominium board adopts the budget — chapter 82 does not carry the Uniform Common Interest Ownership Act's negative-option ratification model, so no statutory step exists for owners to ratify or reject the board's budget.³ Planned communities operate the same way: the board adopts the budget under the restrictions and bylaws, while chapter 209 adds procedure rather than a ratification vote.⁴ Condominiums with declarations recorded before January 1, 1994 fall under the older Texas Condominium Act (Tex. Prop. Code ch. 81), though specified chapter 82 sections still reach back into those pre-1994 arrangements.⁵

The practical framing: Texas is a UCIOA-based-but-modified condominium state paired with a separate bespoke planned-community overlay. The table and discussion below set out the mechanics for each community type and the budget-adjacent obligations that travel with the budget cycle.

Section 2: The budget approval mechanism

2A. Quick-Reference Budget Mechanics Table

This table reflects Tex. Prop. Code ch. 82 for condominiums and Tex. Prop. Code ch. 209 (read with the recorded restrictions and bylaws) for planned communities. Condominiums whose declaration was recorded before January 1, 1994 follow Tex. Prop. Code ch. 81.

2B. The budget approval sequence under each chapter

Condominiums (chapter 82). Chapter 82 plants budget authority squarely with the board — owners have no statutory ratification vote. Section 82.102(a) is direct: "unless otherwise provided by the declaration, the association, acting through its board," may "adopt and amend budgets for revenues, expenditures, and reserves, and collect assessments for common expenses from unit owners."³ Section 82.112 then ties that budget to the assessment cycle: once an association makes its initial assessment, "assessments must be made at least annually and must be based on a budget adopted at least annually by the association."⁶ The sequence works like this: the board prepares the budget, the board adopts it (best practice is to record the action in meeting minutes, though chapter 82 does not require open-session adoption), and the board then levies the common-expense assessment that flows from it. The UCIOA negative-option ratification step — where the budget is ratified unless a set percentage of owners reject it at a no-quorum meeting — does not appear anywhere in chapter 82. The result is no statutory budget-summary distribution deadline, no ratification meeting notice window, no owner-rejection threshold, and no ratification quorum. The 20% figure in section 82.109 is the default quorum for general association meetings, not a budget-ratification quorum.⁸ One distinction deserves emphasis: adopting the budget and levying the assessment are separate actions. The budget is the financial plan; the assessment is the charge imposed under section 82.112 and secured by the association's lien under section 82.113. The lien-foreclosure machinery is a separate topic and is not addressed here.

Planned communities (chapter 209). Chapter 209 is a protective overlay on the recorded restrictions — it does not create a UCIOA-style budget-ratification regime. The association's authority to budget and assess flows from the declaration, bylaws, and (in certain counties) Tex. Prop. Code § 204.010, not from any general grant in chapter 209.¹² What chapter 209 supplies is procedure: under section 209.0051(h), the board may not approve an annual budget or any amendment to it except in an open meeting with prior notice to owners.⁴ The budget is board-adopted under the recorded restrictions. Owners do not ratify it by statute. As with condominiums, adopting the budget is distinct from levying the assessment, and the assessment-lien and foreclosure machinery — including chapter 209's pre-foreclosure notice and payment-plan requirements — is a separate topic and is not addressed here.

2C. Pre-1994 condominiums and variation

Condominiums with declarations recorded before January 1, 1994 fall under the older Texas Condominium Act, Tex. Prop. Code ch. 81.⁵ Section 81.0011 draws the boundary plainly: chapter 81 "applies only to a condominium regime created before January 1, 1994," while one created on or after that date "is governed by Chapter 82," and a pre-1994 regime "is also governed by Chapter 82 as provided by Section 82.002."⁵ To determine which act governs a given condominium, check the recording date of the declaration in the county real property records. A pre-1994 condominium may opt fully into chapter 82 through the amendment process in section 82.002(a).¹ Section 82.002(c) lists the chapter 82 provisions that apply to pre-1994 condominiums regardless of opt-in — including partial §82.102(a) board powers, §82.108 meeting rules, and §82.114 records requirements — so even a chapter 81 condominium carries some chapter 82 financial-records obligations.¹ Under chapter 81, the budget is board-adopted under the declaration and bylaws; like chapter 82, chapter 81 contains no owner-ratification mechanism. Within chapter 82, the budget power in section 82.102(a) is subject to the declaration ("unless otherwise provided by the declaration"), so a declaration may add an owner-approval step the statute does not require.³ For planned communities, the corporate-formality overlay is the Texas Business Organizations Code chapter 22 (nonprofit corporations), which governs bylaws, members, and the annual meeting but supplies no budget threshold.¹³

Section 3: Budget-adjacent obligations

A. Reserves in the budget

Neither chapter mandates reserves. For condominiums, section 82.112(f) permits — but does not require — a declaration to allow the accumulation of reserve funds. Section 82.157 requires that a resale certificate disclose the reserve amount, but no statute sets a minimum funding level or reserve-study frequency.^6,10 Chapter 209 is silent on reserves; reserve depth is controlled by the governing documents. This is a variable item, not a statutory mandate.

B. Special assessments

Chapter 82 treats the common-expense assessment as the vehicle for funding the budget and leaves special assessments to the declaration; no statute sets an owner-approval threshold for special assessments.⁶ Chapter 209 defines "special assessment" in section 209.002(12) and requires that special assessments be levied in an open board meeting under section 209.0051(h), but the approval threshold is whatever the recorded restrictions require.^9,4 Variable under both chapters.

C. Assessment increase limits

No statutory percentage cap on assessment increases exists under either chapter; the governing documents control. The Supreme Court of Texas confirmed this in Brooks v. Northglen Ass'n, 141 S.W.3d 158, 166–68 (Tex. 2004) (Jefferson, J.), holding that where recorded restrictions limit increases, those limits prevail over a board's unilateral attempt to raise assessments. The Court held Northglen could not increase annual assessments above the amount the deed restrictions provided without a vote of the lot owners.⁹ Variable, not capped by statute.

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

Chapter 82 imposes the only budget-cycle audit duty. Section 82.114(c) requires a condominium association to "annually obtain an independent audit of the records" as a common expense, with copies made available to unit owners. By the statute's terms, "[a]n audit required by this subsection shall be performed by a certified public accountant if required by the bylaws or a vote of the board of directors or a majority vote of the members of the association voting at a meeting of the association."¹¹ Section 82.114(a) requires detailed financial records kept in compliance with generally accepted accounting principles.¹¹

Chapter 209 imposes no audit mandate. Section 209.005 requires the association's books and records — including financial records — to be open to owner inspection, with a 10-business-day response window, and mandates a records-retention policy for associations of more than 14 lots.⁷ The bottom line: condominiums carry a mandatory annual audit; planned communities carry inspection-and-retention obligations only.

Section 4: Recent legislative and judicial activity

A. Recent bills

B. Recent appellate rulings

C. Active legislative debates

Texas legislates on a biennial cycle, so the next regular session convenes in 2027. Assessment-cap proposals and association-finance reporting requirements — including the failed S.B. 1935 and similar reporting bills that did not advance in 2025 — are the categories most likely to resurface.¹⁶

Section 5: National positioning and related coverage

Texas belongs to a category of its own: a UCIOA-based-but-modified condominium state paired with a bespoke planned-community overlay. The critical difference from full-UCIOA states is that chapter 82 removed the negative-option budget-ratification step — the mechanism where owners may reject the board's budget at a no-quorum meeting. In Texas, the board adopts and no owner vote follows. Texas also diverges from California, which caps assessment increases, since neither chapter 82 nor chapter 209 imposes any cap. And Texas diverges from reserve-mandate states like Florida, since Texas mandates neither reserves nor reserve studies. For any multi-state operator entering Texas, the structural implication is clear: condominiums and planned communities run under separate chapters with different financial-record duties, and the condominium budget process depends entirely on how chapter 82 handles ratification — which is to say, it does not require it.

Recommendations

• Identify the governing chapter first. For every Texas community in a portfolio, determine whether it is a condominium or a planned community, then apply the correct chapter. For condominiums, check the declaration recording date: chapter 82 governs declarations recorded on or after January 1, 1994; chapter 81 governs earlier ones, though specified chapter 82 sections still apply. For planned communities, chapter 209 overlays the recorded restrictions. Never cross-apply mechanics from one chapter to the other.
• Treat the budget as board-adopted, then look to the governing documents. Neither chapter imposes an owner-ratification step, so board adoption is the default. Read the declaration or restrictions and bylaws next — they may add an owner-approval requirement the statute does not. If those documents are silent, the board adopts.
• Separate budget adoption and assessment levy in both minutes and policy. The board first adopts the budget, then levies the assessment on that basis — section 82.112 for condominiums, the recorded restrictions and section 204.010 (where applicable) for planned communities. Keeping the ratification-vs-adoption distinction clear matters because it drives different notice and recordkeeping requirements.
• Meet the chapter 82 audit duty on schedule. Condominium associations must budget for the annual independent audit required by section 82.114(c) and make copies available to owners. Engage a CPA where the bylaws or a board or member vote require it. Planned communities carry no audit mandate but must keep financial records open under section 209.005 and maintain the retention policy in section 209.005(m) for associations of more than 14 lots.
• Close out the 2025 compliance items now. Verify that management-certificate filings with the Texas Real Estate Commission meet S.B. 711's seven-day deadline from county recording, and confirm that legacy certificates on file before September 1, 2025 were e-filed by March 1, 2026. Confirm the member website is live for condominiums with 60 or more units or those using a management company. Cap resale-certificate fees at $375. Adopt an electronic meeting and voting policy under S.B. 2629.
• Track the benchmarks that would change this guidance. A statutory assessment-increase cap — watch for S.B. 1935-type legislation in the 2027 session — would reshape the analysis, as would any bill adding an owner budget-ratification step or a reserve-funding mandate. A Supreme Court of Texas ruling construing section 82.112 or section 209.0051's budget provisions would also require updating the table and the per-chapter sequence.

Caveats

• This coverage addresses budget approval mechanics only. The assessment-lien and foreclosure machinery — including expedited judicial foreclosure under Texas Rule of Civil Procedure 736, chapter 209's pre-foreclosure notice and payment-plan requirements, and the 180-day post-sale redemption period — is a collections-and-liens topic and is not addressed here.
• Statutory mechanics are drawn from the official Texas Property Code at statutes.capitol.texas.gov. Because the budget process delegates so much to the declaration, restrictions, and bylaws, the controlling rule for any specific community is its own governing documents read alongside the correct chapter. This page does not substitute for a review of those documents or for legal advice.
• No Texas appellate decision in the 2023–2026 window squarely construes section 82.112's annual-budget clause or section 209.0051's budget-approval clause as such. Dun Huang Plaza is the closest recent case, and it interprets the related allocated-interest and common-expense provisions of chapter 82.
• Texas has no dedicated HOA regulator, and no state agency approves association budgets. Civil HOA disputes move through the Texas District Courts and County Courts at Law, then to one of the fourteen intermediate Texas Courts of Appeals, and on civil matters to the Supreme Court of Texas — not the Texas Court of Criminal Appeals, which handles criminal matters only.
• "Last verified" dates reflect June 16, 2026. Texas legislates biennially, so reconfirm all statuses on capitol.texas.gov after each regular session.

1. Texas Legislature, Tex. Prop. Code § 82.002, Applicability ↩
2. Texas Legislature, Tex. Prop. Code § 209.003, Applicability of Chapter ↩
3. Texas Legislature, Tex. Prop. Code § 82.102, Powers of Unit Owners' Association ↩
4. Texas Legislature, Tex. Prop. Code § 209.0051, Open Board Meetings ↩
5. Texas Legislature, Tex. Prop. Code § 81.0011, Applicability ↩
6. Texas Legislature, Tex. Prop. Code § 82.112, Assessments for Common Expenses ↩
7. Texas Legislature, Tex. Prop. Code § 209.005, Association Records ↩
8. Texas Legislature, Tex. Prop. Code § 82.109, Quorums ↩
9. Texas Legislature, Tex. Prop. Code § 209.002, Definitions; Brooks v. Northglen Ass'n, 141 S.W.3d 158 (Tex. 2004) ↩
10. Texas Legislature, Tex. Prop. Code § 82.157, Resale of Unit ↩
11. Texas Legislature, Tex. Prop. Code § 82.114, Association Records ↩
12. Texas Legislature, Tex. Prop. Code § 204.010, Powers of Property Owners' Association ↩
13. Texas Legislature, Tex. Bus. Orgs. Code ch. 22, Nonprofit Corporations ↩
14. S.B. 711, 89th Leg., R.S. (2025), Texas Legislature ↩
15. S.B. 2629, 89th Leg., R.S. (2025), Texas Legislature ↩
16. S.B. 1935, 89th Leg., R.S. (2025), Texas Legislature ↩
17. Dun Huang Plaza Ass'n, Inc. v. SUN9028, Inc., No. 14-22-00395-CV (Tex. App.—Houston [14th Dist.] Feb. 29, 2024) ↩
18. Texas Legislature, Tex. Prop. Code § 82.067, Amendment of Declaration ↩