How to build a Texas HOA or condo annual budget

For a Texas condominium, Tex. Prop. Code § 82.112(a) requires assessments to be made at least annually and to be based on a budget adopted at least annually. That is the anchor. It does not tell you when, it does not tell you what notice to give, and it does not tell you what has to be in the budget. It does tell you that an assessment that does not rest on an adopted annual budget is standing on nothing.

The board's authority to adopt that budget and to collect against it comes from § 82.102(a), which lists adopting bylaws and budgets and collecting assessments among the association's default powers. The same subsection lets the association suspend an owner's voting rights or common element use after thirty days of delinquency, which is a fact worth knowing when you model collections.

Everything else about the sequence lives in your dedicatory instruments. Pull the declaration and bylaws before the first workshop and write down what they actually require: notice period, quorum, whether the membership approves anything, and whether the documents cap the increase the board can adopt without a vote. Boards that skip this step routinely discover a document requirement in the week of the meeting.

The starting document is twelve months of actuals through the most recent closed month, annualized, sorted by vendor rather than by account. Vendor detail is where escalator clauses, mid-year renewals, and every-other-year charges become visible. Account roll-ups hide all three.

Mark each line fixed, contractual, variable, or one-time. Fixed and contractual lines can be priced with a phone call. Variable lines need a three-year trend. One-time lines should come out of the base and only be re-added deliberately, which is what stops a budget from ratcheting upward every year.

Do this before you look at last year's budget at all. A budget built from a budget compounds every prior estimating error, and it produces the classic Texas failure mode: an association that has increased assessments by three percent for six consecutive years while its actual costs increased by more.

For a Texas condominium, § 82.111(a) requires the association to maintain property insurance on the insurable common elements for at least eighty percent of replacement cost or actual cash value, plus commercial general liability including medical payments, both to the extent reasonably available. Where units have horizontal boundaries, § 82.111(b) extends the property coverage to the units themselves if reasonably available, though not to owner improvements and betterments.

That eighty percent floor is a budget input. If replacement cost has moved and the placement has not, the association may be carrying a coverage gap that is also a compliance gap. Ask for a current replacement cost valuation as part of the renewal, not as a separate project.

Deductibles deserve their own line of thinking. Under § 82.111(i) through (l), repairs below the deductible fall on the party who would be responsible absent insurance, repairs above it follow the documents, then a board resolution, then treatment as a common expense, and owner-caused damage may be assessed to that owner. A high deductible lowers the premium and raises the amount the association has to be able to absorb, which belongs in reserves or contingency rather than in a surprise.

Texas has no statutory reserve-study requirement comparable to Florida's structural integrity reserve study. What Chapter 82 does say is narrower: § 82.112(f) permits the declaration to allow reserves to accumulate without a cap, and § 82.112(a) provides that reserves and working capital collected from purchasers are not to be used for operations during declarant control.

So the reserve contribution is a governance decision constrained by the declaration, not a compliance number. That is more freedom and more responsibility. It also means the pressure arrives from outside the statute: lenders, insurers, and buyers ask about reserves, and § 82.157(a) requires the resale certificate to state the reserves along with the capital expenditures approved for the next twelve months.

The practical recommendation is to commission a reserve study on a regular cadence anyway, adopt a funding method in the minutes, and budget the contribution the study's funding plan produces. A board that does this has a defensible answer for every buyer, lender, and owner who asks; a board that sets the contribution by feel does not.

Total budgeted expenses, less non-assessment revenue, is the amount to be assessed. The allocation across units comes from the declaration's allocated liability for common expenses. Under § 82.112(e), when allocated liabilities are reallocated the assessments are recomputed, and so are installments that are not yet due.

Publish the periodic figure and the monthly equivalent, and publish the change in dollars as well as in percent. Owners think in monthly terms regardless of how the association bills.

Budget the collection rate you actually achieve rather than assuming full collection. Chapter 82 and Chapter 209 give real collection tools, but they take time, and a budget built on one hundred percent collection becomes a cash problem in the second half of the year.

Because Texas sets no statutory adoption calendar, the single highest-value thing a Texas board can do in budget season is adopt a written budget calendar as a board policy: workshop dates, the notice period the documents require, the adoption meeting, and the date owners are told the new rate. Put it in the minutes once and it becomes the association's calendar rather than this board's habit.

Fold in the clocks the code does impose, because they intersect budget season even though they are not budget deadlines. The management certificate has to be amended within thirty days of notice of a change and filed with the state within seven days of recording under § 209.004; records requests carry a ten business day production clock under § 209.005; and the resale certificate has to be furnished within ten days of a written request under § 82.157(b), including the current operating budget.