2026 HOA Law:
Proposed Changes Explained
FISCAL RESPONSIBILITY, BUdgets, HOA DUES, RESERVES
ARS 33.1243 (Condo Associations) & ARS 33.1803 (Planned Community Associations)
PROPOSED Arizona HOA Reform: Your Action Required to Protect Your Wallet
Critical Proposed Legislation Needs Your Support—Here’s What’s at Stake and How to Help
Note: Arizona has two separate sets of laws — one for Condominium Associations and another for Planned Community Associations. The differences between them are subtle but important. As you read and do your research, be sure the specific law applies to your scenario, via Condo or Planned Communities.
If you’re an Arizona homeowner living in a homeowners association (HOA) or common interest community, proposed legislation currently under consideration could fundamentally change how your association raises your monthly dues and special assessments.
However, these protections won’t become law without action from homeowners like you. Understanding what’s being proposed—and making your voice heard—could save you thousands of dollars and give you unprecedented control over your HOA fees.
The Proposed Change: Your Approval Required for Meaningful Fee Increases
Current Law
Under current Arizona law, your HOA board can increase your annual assessments by up to 20% without asking your permission. That means if you’re paying $200 per month, the board can suddenly bump it to $240 monthly—an extra $480 per year—without homeowners getting a vote.
Proposed Law
The proposed law would slash that threshold dramatically. For communities with fifty or more units, any regular assessment increase of 5% or greater would require your approval through a simple majority vote. Using the same example, the board could only increase your $200 monthly fee to $210 without member ratification.
Why This Proposed Reform Matters to Your Family Budget
This proposed change would be transformative for several reasons:
Proposed Special Assessment Protections Even Stronger
While the proposed 5% rule would apply to regular annual assessments, the legislation provides even more robust protection against special assessments—those one-time charges that boards impose for major repairs, improvements, or unexpected expenses.
This protection is crucial because special assessments can be financially devastating. Imagine your board deciding to finance a $2 million renovation project that would add $5,000 to your personal obligation. Under current rules, boards have much more latitude to approve such projects. The proposed law would give you and your neighbors the power to reject assessments that don’t have strong community support—but only if it passes.
Your Reserve Funds Would Be Protected
Another critical proposed protection involves reserve accounts—the funds set aside for long-term capital improvements and major maintenance. The proposed law would treat reserve allocations as “committed expenses” that cannot be reduced to cover unbudgeted operating expenses without member approval.
This would prevent boards from raiding reserves that homeowners have been funding for years to cover shortfalls in the operating budget. If reserves were intended for roof replacements or road resurfacing, they would have to be used for those purposes—not redirected to cover management mistakes or budget shortfalls, or worse pay legal fees to sue members of the association.
Proposed Requirement: Surplus Funds Must Be Returned to You
Perhaps one of the most homeowner-friendly proposed provisions would require that surplus operating funds be returned to unit owners or credited against future assessments—regardless of what your HOA’s governing documents say. The phrase “notwithstanding any provision in the community documents to the contrary” means this rule would override whatever your HOA’s original declaration might have stated.
However, the association could ask homeowners annually if they want to waive this provision and instead direct surplus funds to reserve accounts. This would give you choice and transparency: either get your money back or consciously vote to strengthen reserves for future needs.
Proposed Enhanced Financial Oversight to Protect Your Investment
What This Could Mean for Your Community’s Future—If It Passes
These proposed changes would create a new paradigm for HOA governance in Arizona. The legislation recognizes that excess operating funds belong to homeowners, not the association as an entity. It would establish that budget ratification requirements exist to give associations latitude to address reasonable year-over-year cost increases while providing checks and balances over unrestrained assessment growth.
Most importantly, the proposed law acknowledges that the ratification process should never become an obstacle to prudent and rational budgeting—but it absolutely should be an obstacle to excessive or poorly justified fee increases.
CRITICAL: Action Steps Required from Arizona Homeowners
These protections will not become law without your involvement.
The proposed reforms represent a potential victory for homeowner rights in Arizona. By reducing the assessment increase threshold from 20% to 5%, requiring supermajority approval for special assessments, and mandating the return of surplus funds, this proposed law would create a more balanced relationship between HOA boards and the homeowners they serve.
But none of this matters if the legislation doesn’t pass. Your financial interests hang in the balance. Whether you’re currently facing unreasonable assessment increases or simply want to protect yourself from future financial shocks, now is the time to act.
This proposed legislation is currently under consideration in the Arizona Legislature. The specific provisions described here reflect the language in the proposed bill but are subject to change through the legislative process. Stay informed and stay engaged to ensure these homeowner protections become reality.
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