How much can an HOA raise fees? What the state caps actually say.

Don't sort states into "cap" and "no cap" — classify the rule

There is no federal law limiting HOA assessment increases, but the state frameworks are not all the same kind of rule, so a two-bucket "California/Arizona cap, everyone else doesn't" split is misleading. For the association's state, classify the framework as one or more of: a numeric percentage cap on the increase; a budget ratification or rejection system where owners can veto or replace the budget; an owner-vote trigger above a threshold; a document-driven authority where the declaration sets the limit; a condominium-only rule; a planned-community-only rule; an emergency exception; or no dedicated percentage rule located after primary-source review. Record the exact statute section and the date verified for whichever classifications apply.

Examples of the different classifications

California Civil Code §5605 is a numeric-percentage-cap example: a board generally cannot raise the regular assessment more than 20% over the prior fiscal year without member approval. Arizona has a comparable percentage limit for planned communities, which is why the two are often paired — but confirm the current section, the association type it applies to, and its exact triggers rather than assuming they operate identically. Many other states use a budget-ratification model or leave the ceiling to the declaration. Where the increase would be levied by board resolution alone above whatever threshold applies, a membership vote is usually the alternative path.

Florida's 115% figure — and why it's commonly misunderstood

Florida's often-cited 115% figure is widely misread as a hard percentage cap on fee increases; it isn't one for most established associations. It only functions as a genuine hard cap while the developer still controls the board. Once the association is owner-controlled, exceeding a 115% increase over the prior year's budget doesn't block the board — it gives owners the right to call a meeting and adopt a substitute budget instead. Reserve contributions, insurance premiums, and other non-recurring items are also excluded from the 115% calculation, which further limits how often the threshold actually gets triggered in practice.

Where the limit lives when there's no statutory percentage

Where primary-source review finds no dedicated statutory percentage rule for the association type, the declaration is the next place a limit can exist. Many declarations cap annual increases somewhere in the 5% to 20% range without a membership vote, while older declarations — drafted before increase caps became standard practice — often contain no cap at all, leaving the board's authority limited by its fiduciary duty to set assessments that are reasonable and necessary rather than by any specific number. Even then, a budget-ratification statute or an owner-vote trigger may still apply, so the "no cap" conclusion should come from checking each classification, not from the absence of a headline percentage.

Why "no legal cap" doesn't mean "no practical limit"

Even where no statute or CC&R caps the percentage, a board proposing a large increase in one year still faces real practical constraints: the business judgment rule protects reasoned decisions, not arbitrary ones, so a board that can't document the budget need behind a steep increase is exposed if challenged. A large, poorly explained increase also tends to provoke recall petitions or a rush of delinquencies, which can end up costing the association more in collections and legal fees than a smaller, better-communicated increase phased over two budget cycles.

Legislative movement worth tracking

• California has seen proposed legislation aimed at further tightening existing fee-increase rules — check current bill status for this budget cycle.
• Several other states have introduced (though not always passed) bills capping HOA fee increases in response to rising insurance and reserve costs.
• Insurance-driven cost spikes are the most commonly cited reason legislatures are revisiting these caps, so a board should expect this to remain an active area of state law for the next several years.

What a board should do before setting next year's increase

Confirm the state's statutory position first, then pull the CC&Rs' own cap language, then document the specific budget drivers — insurance premium changes, reserve funding gaps, contractor cost inflation — behind the proposed number. An increase a board can explain line by line survives a homeowner challenge far better than one presented only as a total percentage.

Special assessments are a separate question from regular dues increases

Everything above addresses regular, recurring assessment increases — the annual dues figure. Special assessments, which fund a specific one-time need like a roof replacement or storm repair, are typically governed by an entirely different set of rules, often with their own vote thresholds and, in some states, their own dollar or percentage triggers that require a membership vote rather than board approval alone. A board should not assume that a state's silence on regular-dues caps also means silence on special-assessment limits — the two are frequently addressed by different statutory sections with materially different thresholds.

Phasing a large increase instead of taking it all at once

Where the underlying budget need is real but the resulting increase would be steep — a reserve funding catch-up, for example — boards in states without a hard percentage cap still have the option to phase the increase across two or three budget cycles rather than imposing the full amount in a single year. This approach can reduce delinquency spikes and homeowner pushback, though it also means the association carries the underlying budget shortfall slightly longer, which is itself a tradeoff the board should weigh and document rather than default into without discussion.

Whichever path a board chooses, the increase should be communicated to homeowners well before the effective date, with the specific budget line items driving it laid out plainly — an increase homeowners can trace to a real cause is far less likely to trigger a recall petition or a wave of delinquencies than one that arrives as an unexplained number on next month's statement.

Boards operating in a no-cap state should not read the absence of a statutory ceiling as license to increase freely. The business judgment rule still requires a documented, reasonable basis for the number chosen, and a board that treats "the state doesn't cap it" as the entire justification is building a weaker record than one that ties the increase directly to specific line items in the budget.