Budget Not Ratified At Annual Meeting

In SC, our BOD proposed budget for 2026 was not ratified at the annual meeting recently. Our bylaws allow for members to vote on the proposed budget and we can even amend the budget during the discussion period. Our bylaws don't provide for the situation if the budget doesn't pass, no guidance on what the next steps are.

There were several issues with the meeting relative to the vote. The ballots were set up to have the election of new board members and budget approval on the same paper. The potential board members presented their spiel, the board presented their take on the budget and then the vote was called for by the president for both the board member election and budget approval.

We follow Robert's rules of order. There was no motion on the floor for the budget vote, no second, no discussion (with potential amendments). Once the vote was called for the meeting descended into lost order, people collecting ballots, many conversations taking place.

Once the votes were counted, it was determined that one member had a vast majority of proxies, they did not present themselves following the vote count to indicate what their issue was with the budget.

The BOD is trying to determine the next steps, ideas include continuing with the 2025 budget (HOA dues remain the same), but do they have the power to enforce that without a ratified budget? Some people think if its not passed by January 1, they have only whats left in the reserves to work with.

The kicker is one of the existing board members (re-elected that night) nixed the budget with his collection of proxies.

Thanks for the quick reply. That section is still current, has not been amended. Our HOA is incorporated, we are over 300 SFH. I will look into the SC HOA act.

Using the 2026 budget as written was one of the ideas they thought about. There was no dues increase in the 2026 budget. Our bylaws do allow for special assessments as well, which is the avenue I was thinking they could use.

The SC HOA act is pretty light on information. Our bylaws require 2 weeks notice for some meetings, 30 days for others, like the annual budget/officer election meeting. We also have the budget available to home owners on our website.

Not knowing what the issue with the proposed budget was is making changes rather difficult. Our social media has blown up a bit since the meeting. Best we can glean is they want an increase in the dues and more money applied to the amenities we have. They want to compete with new neighborhoods with their resort pools etc. Goes along with their fiduciary requirements I guess, the board has been addressing the amenities, just not quick enough for one member.

The budget was reasonable, it was pretty much the same as 2025 with a few adjustments to line items based on 2025 actuals to date. It even has a surplus based the same dues. We all thought there would be no issue with its passing.

There were 3 people running for 2 positions, any 2 would be fine. There was no contention noticeable that would have caused a proxy fight, so no one campaigned except the one board member.

We are thinking differently about him now, considering if he had an issue with the budget, it should have been worked out/compromised prior to going to the association with it. At least the board should have been united by that point.

Where are you reading if the owners don’t approve or amend a budget, the Board may do ever you want? In a state that requires funded reserves, this may mean the Board closes the pool and the club house to meet both the declaration and state laws.

This is not what I said.This is also not what I said.

11/19/2025 8:23 PM Quote Reply
Try again:
Posted By DeanJ on 11/19/2025 8:05 PM

I said, “My interpretation is the budget is the amount of the assessment and the total to be expended. The board may not increase the assessment for 2026 and is bound by the 2025 assessment until such time an action of the members amend it, which may prohibit the board from passing a special assessment.”

I went further to say the board’s only recourse was to balance the expenditures with income.

You said, “Because of the phrase "for the fiscal year" in the bylaws, I disagree”. I reasonably concluded you believe s not a restriction on the board and they can increase the assessments.

It seems you have an issue with what went on at the meeting and the rejection of the proposed budget. I'll start with the second one, because you said your bylaws don't say what happens if the vote is voted down.

As a practical matter, I would think you continue with the current budget. It's true the homeowners nixed the proposed one, but your bill continue regardless. How do they think the association will pay its bills otherwise? The answer IS NOT "use what's left of the reserves." Reserves exist for the association to save money to pay for major improvements and replacements to the common areas, such as a new roof for the clubhouse. It's NOT for plugging in shortfalls to the operating budget! If you're on the board, that's one option you absolutely should oppose. You might be outvoted, but at least people will know the risks, so speak up.

I smell a back story to this budget - what, specifically, did people object to? If there was to be an increase in assessments, did the board explain why this was necessary and show the numbers? If not, why not? It's ok for people to disagree, especially if they come up with suggestions on how to control costs. People don't like assessment increases, but special assessments are worse because it often means not enough reality was faced regarding increased costs (e.g. no one thought about shopping around for different landscaping companies).

You could consult your attorney to see what would be the best way to approach this and then call a special meeting to discuss the options, and people can vote on this again. If people want to avoid paying anything without a ratified budget, they shoukd know they may risk not having any services the association may be responsible for because there's no money.

As far as the meeting is concerned, who was running it? How did this ratification rejection get through without anyone calling for a formal vote (guess Robert's rules of order weren't effective). You could give a side eye to the person who collected enough proxies to nix the budget, but this is what people who are motivated for the right or wrong reasons will do to swing a vote in a certain direction. Did anyone bother asking this board member what his concerns were? You had a discussion on the budget before the vote, so if people rejected it, that's their right.

It would appear better education is appropriate all around and I don't know if you can get a special meeting called after Thanksgiving (you're now on the clock for the rest of 2025, so this needs to be done in a hurry). Get the budget issue resolved first and deal with the proxy stuff at a later date. You'll need to check your documents to see how they're supposed to be used, and if that's not addressed either, you may need your bylaws amended (requiring a homeowner vote).

While you're at it, I might suggest thought be given to amending the stuff about homeowner ratification of the budget. It's ok if the board proposed an assessment increase beyond a certain percentage of the current year or special assessments. Otherwise the board should be expected to apply careful thought to managing the association's finances,explain where the money's going and why. People still have the option of voting someone in or out, and if they can do a better job, have at it.

I disagree that the board must be unanimous on the budget.