Virginia HOA Budget Approval

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

Virginia runs two separate HOA budget statutes, and understanding each one distinctly matters. The Virginia Condominium Act (Va. Code § 55.1-1900 et seq.) governs condominium budgets. The Virginia Property Owners' Association Act (Va. Code § 55.1-1800 et seq.) governs planned-community budgets.^{1, 2} Under both statutes, the model is straightforward: the governing board — the executive board for a condominium, the board of directors for a property owners' association — adopts the budget under the association's governing documents and makes the budget or a summary available to owners before the fiscal year begins. No statutory owner-ratification vote is required.^{1, 2} Neither statute contains a negative-option, ratified-unless-rejected mechanism. Both statutes require the association to commission a reserve study at least once every five years, review it at least annually, and include reserve disclosures in the budget when the study shows a need.^{1, 2} The Common Interest Community Board within the Department of Professional and Occupational Regulation (DPOR) licenses managers and registers associations. The Common Interest Community Ombudsman handles owner inquiries and complaints. Neither approves budgets.^{3, 4} Virginia is a bespoke two-statute state, distinct from the Uniform Common Interest Ownership Act (UCIOA) family. The state recodified Title 55 into Title 55.1 effective October 1, 2019, so only current Title 55.1 citations apply.¹ The table and sequence below set out the mechanics statute by statute.

Section 2: The budget approval mechanism

The table below reflects the Virginia Condominium Act and the Virginia Property Owners' Association Act as codified in current Title 55.1 of the Code of Virginia.

2A. Quick-Reference Budget Mechanics Table

2B. The budget process under each statute

For condominiums, § 55.1-1965(A) requires the executive board — except to the extent the condominium instruments provide otherwise — to make available to unit owners either the annual budget or a summary of it prior to the commencement of the fiscal year.¹ The statute frames budget adoption as a board function. It imposes no unit-owner ratification vote, no rejection threshold, no negative-option mechanism, and it sets no fixed number of days for distribution. For property owners' associations, § 55.1-1826(A) requires the board of directors to make available to lot owners either the annual budget or a summary of it prior to the commencement of the fiscal year — again, a board function with no owner-ratification vote.² Under both statutes, the model is board adoption under the governing documents, not negative-option ratification. Adopting the budget is separate from levying the assessment: the budget is the spending plan the board adopts; the assessment is the charge the board levies to fund it. Condominium assessments are allocated among units under § 55.1-1964, and the executive board may levy an additional assessment when it determines that regular assessments are insufficient, with written notice and a lump-sum due date no earlier than 90 days after notice.⁵ In a property owners' association, the board of directors may levy an additional assessment under § 55.1-1825 when the purpose is found to be in the best interests of the association and the proceeds are used primarily for the common area and capital components.⁷ One contrast worth noting for multi-state readers: the Virginia Real Estate Cooperative Act, § 55.1-2134(C), uses a ratified-unless-rejected budget mechanism for cooperatives — which makes the absence of any such mechanism in the Condominium Act and the Property Owners' Association Act a deliberate distinction, not an oversight.¹⁰

2C. The reserve regime and variation

The reserve regime sits at the center of Virginia's budget law, and its structure is materially identical across the two statutes — with one drafting difference that matters. Under § 55.1-1965(B), the condominium executive board shall, except to the extent otherwise provided in the condominium instruments, conduct a reserve study at least once every five years, review the results at least annually, and make adjustments to the annual budget and annual assessment it deems necessary to maintain reserves.¹ Under § 55.1-1826(B), the property owners' association board of directors shall do the same — but the property owners' association provision contains no "except to the extent otherwise provided" opt-out, so the reserve-study duty reads as mandatory regardless of the declaration.² Both statutes, in subsection C, provide that when the study indicates a need to budget for reserves, the budget shall include the current estimated replacement cost and remaining and useful life of capital components, the current accumulated cash reserves and expected contribution, the estimation procedures, and the amount of reserves recommended in the study against current cash.^{1, 2} Subsection D of each gives the board discretion to meet repair and replacement requirements through replacement reserves, additional assessments, or borrowed funds.^{1, 2} On variation: the condominium budget and reserve duties are subject to the condominium instruments where the statute says so, while the property owners' association reserve duty is not. Overlaying both statutes is a regulator that does not approve budgets — the Common Interest Community Board licenses common interest community managers and registers associations, and the Common Interest Community Ombudsman, a member of the Virginia State Bar, assists owners and reviews notices of final adverse decision.^{3, 4} Most Virginia associations are also organized under the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.), which supplies corporate formalities but no budget-approval threshold.¹¹

Section 3: Budget-adjacent obligations

A. Reserves in the budget

The reserve-study and reserve-funding requirements sit inside the budget statute for each chapter: § 55.1-1965 for condominiums and § 55.1-1826 for property owners' associations.^{1, 2} When the most recent study shows a need, the budget must carry the statutory reserve disclosures, and the board adjusts the budget and assessment to maintain reserves as appropriate. The condominium duty is mandatory except as the condominium instruments provide otherwise; the property owners' association duty carries no statutory opt-out.

B. Special assessments

Each statute treats a special or additional assessment as a board power, not an owner-approved event. The condominium executive board may levy an additional assessment under § 55.1-1964(E) when regular assessments are insufficient, with written notice and a lump-sum due date no earlier than 90 days after notice.⁵ The property owners' association board may levy an additional assessment under § 55.1-1825 for common-area and capital-component needs.⁷ The 2024 amendment by House Bill 1209 removed the prior owner right to call a meeting to rescind or reduce such assessments for capital components, making these board powers controlling for capital-component funding.¹²

C. Assessment increase limits

Neither statute imposes a statutory percentage cap on assessment increases. The budget sections set no ceiling, and the governing documents control any limit on how much the board may raise regular assessments from year to year.^{1, 2} This is mandatory in the sense that the statute supplies no cap; any cap is variable and exists only if the declaration or bylaws create one.

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

Both statutes require the association to keep detailed records of receipts and expenditures and to maintain all financial books and records in accordance with generally accepted accounting practices: § 55.1-1945 for condominiums and § 55.1-1815 for property owners' associations.^{13, 14} Neither statute mandates an independent annual audit of the association tied to the budget cycle, so any audit or review requirement is variable and set by the governing documents. Separately, the property owners' association must file an annual report with the Common Interest Community Board, and condominium and cooperative associations are likewise subject to registration and annual reporting.¹⁵

Section 4: Recent legislative and judicial activity

A. Recent bills

Virginia's 2024 General Assembly session delivered two meaningful changes to how community associations handle reserves and assessments. Both bills were signed into law, both took effect July 1, 2024, and both directly affect how boards budget and how owners can respond.

B. Recent appellate rulings

Virginia's courts addressed two distinct questions about association budgets and charges in 2023 and 2024 — one testing the limits of relabeling a failed budget as a special assessment, and one drawing a line around what fees a declaration must expressly authorize.

C. Active legislative debates

The 2025 session focused on resale-certificate insurance-deductible disclosure and management-contract termination rather than budget, reserve, or assessment thresholds. No qualifying budget-mechanism amendment advanced in that window.¹⁶

Section 5: National positioning and related coverage

Virginia is a bespoke two-statute state. Condominiums sit under the Virginia Condominium Act and planned communities under the Virginia Property Owners' Association Act — both in Title 55.1, and both pair board-adopted budgets with a statutory reserve regime rather than borrowing the negative-option ratification mechanism of the UCIOA family or the assessment-increase cap of California's Davis-Stirling model.^{1, 2} Virginia layers on an active regulator, the Common Interest Community Board, that licenses managers and registers associations — a feature most UCIOA states do not have.³ For a multi-state operator, the practical implication is concrete: Virginia condominiums and property owners' associations fall under separate bespoke statutes in Title 55.1, both require a reserve study at least every five years with annual review, and any manager providing services must hold a Virginia license.^{1, 2, 3} Federal frameworks — including 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 Virginia associations regardless of the state budget framework.

1. Va. Code § 55.1-1965, Annual budget; reserve study; reserves for capital components (Virginia Condominium Act) ↩
2. Va. Code § 55.1-1826, Annual budget; reserve study; reserves for capital components (Property Owners' Association Act) ↩
3. Va. Code § 54.1-2346, License required; certification of employees; renewal; provisional license (Common Interest Community Board) ↩
4. Va. Code § 54.1-2354.3, Common Interest Community Ombudsman; appointment; powers and duties ↩
5. Va. Code § 55.1-1964, Liability for common expenses; late fees; additional assessment; authority to borrow (Virginia Condominium Act) ↩
6. Va. Code § 55.1-1904, Association charges (Virginia Condominium Act) ↩
7. Va. Code § 55.1-1825, Authority to levy additional assessments; authority to borrow (Property Owners' Association Act) ↩
8. Va. Code § 55.1-1805, Association charges (Property Owners' Association Act) ↩
9. Va. Code § 55.1-1801, Applicability (Property Owners' Association Act) ↩
10. Va. Code § 55.1-2134, Executive board members and officers (Virginia Real Estate Cooperative Act, budget ratification) ↩
11. Va. Code § 13.1-801, Short title (Virginia Nonstock Corporation Act) ↩
12. 2024 Va. Acts ch. 324 (House Bill 1209), Common interest communities; reserve studies; special assessment rescission or reduction ↩
13. Va. Code § 55.1-1945, Books, minutes, and records; inspection (Virginia Condominium Act) ↩
14. Va. Code § 55.1-1815, Access to association records; association meetings; notice (Property Owners' Association Act) ↩
15. Va. Code § 55.1-1835, Annual report by association (Property Owners' Association Act) ↩
16. 2024 Va. Acts ch. 685 (Senate Bill 672), as reflected in Va. Code § 55.1-1904, Association charges (updated section) ↩
17. Leggett v. The Sanctuary at False Cape Condo. Ass'n, Record No. 240270, 303 Va. 128 (Va. May 2, 2024) ↩
18. Burkholder v. Palisades Park Owners Ass'n, Inc., 76 Va. App. 577, Record No. 0187-22-4 (Va. Ct. App. Feb. 7, 2023) ↩
19. Va. Code § 17.1-405, Appeal of right to the Court of Appeals of Virginia ↩