ST. LOUIS, MO – September 12, 2026 (STL.News) Consumer Alert – Homeowners shopping for a house or condominium governed by a homeowners association should look far beyond the monthly HOA fee before signing a purchase contract.
A low HOA assessment may look attractive on a real estate listing. It may also be a warning.
Across the United States, homeowners can face substantial special assessments when associations discover they don’t have enough money saved to replace roofs, repair streets, address structural problems, or pay other major expenses.
Sometimes an emergency truly is unpredictable. But roofs wear out. Asphalt deteriorates. Concrete cracks. Retaining walls age. Swimming pools require renovation. Exterior building components eventually need replacement.
Those expenses are not surprises simply because an HOA failed to save for them.
When an association has predictable long-term obligations but repeatedly fails to build sufficient reserves to meet them, homeowners can ultimately pay the price for years of poor financial planning.
That deserves a name: financial mismanagement.
And it raises a larger consumer-protection question.
Should states allow homeowners associations responsible for millions of dollars in privately owned community infrastructure to operate without stronger requirements governing reserve studies, long-term financial planning, disclosures, and reserve funding?
For prospective homebuyers, the answer matters because buying a property governed by an HOA can mean accepting financial obligations that extend far beyond the mortgage, taxes, insurance, and monthly association assessment.
Low HOA fees can hide a much larger liability
One of the most dangerous assumptions a prospective buyer can make is that a community with a lower HOA assessment is financially healthier or less expensive than a community with a higher assessment.
The opposite can be true.
Consider two hypothetical condominium developments offering otherwise comparable properties.
One charges $650 a month and regularly contributes substantial money to professionally calculated reserves.
Another charges $350 a month but has accumulated relatively little for future capital expenses.
The second community appears to save the homeowner $300 every month.
But suppose the first association has already accumulated sufficient reserves to replace its roofs when they reach the end of their useful lives, while the second eventually imposes a $30,000 special assessment on every owner.
Which association was actually less expensive?
The $650 association may have been collecting the true cost of maintaining the property all along.
The $350 association may have been postponing it.
That distinction is critical.
An artificially low HOA fee is not necessarily evidence of good management. It can show that tomorrow’s bills aren’t being funded today.
HOA boards face a built-in financial incentive
The governance structure of many homeowners associations can contribute to the problem.
Board members are commonly homeowners themselves.
That can be beneficial because directors have a direct interest in maintaining the community. But it also creates an inherent economic incentive when the board sets annual assessments.
Board members who approve higher assessments generally have to pay them themselves.
Their neighbors must pay them too.
A board that increases monthly assessments from $350 to $500 may face angry homeowners demanding to know why their expenses increased.
A board that keeps assessments at $350 may be praised for “holding the line.”
But holding assessments down is not responsible financial management if the association actually needs $500 per household to pay current expenses and accumulate adequate reserves.
It merely postpones collection of the difference.
Consider a hypothetical 400-home community that should be collecting an additional $150 per household every month to adequately fund its long-term obligations.
That represents:
$60,000 per month.
$720,000 per year.
Over five years, the difference amounts to $3.6 million, before accounting for investment earnings, inflation, expense changes, or capital projects completed during that period.
The association hasn’t necessarily saved homeowners $3.6 million.
It may simply have failed to collect $3.6 million that it will eventually need.
When the bill finally arrives, the current homeowners may receive it all at once.
A 400-home community is a substantial operation
View large HOAs for what they really are: organizations responsible for potentially significant assets, liabilities, and cash flows.
A community containing several hundred homes might be responsible for private streets, sidewalks, stormwater infrastructure, entrance monuments, landscaping, irrigation systems, common-area lighting, retaining walls, pools, clubhouses, roofs, siding, elevators, or other shared property.
Each component has a cost.
Many have reasonably predictable useful lives.
If a private street is expected to require major reconstruction, the association should plan for that expenditure long before the pavement fails.
If roofs have an estimated useful life, the association should incorporate their eventual replacement into long-range financial planning.
A $2 million project does not become an unforeseeable emergency merely because nobody accumulated the $2 million needed to pay for it.
That is precisely why professional reserve studies exist.
Reserve studies can expose tomorrow’s bills today
A reserve study generally evaluates major common assets, estimates their remaining useful lives, and projects the amount an association should accumulate to repair or replace them.
The concept is straightforward.
If an association knows a major component will eventually require replacement, it can gradually collect money from homeowners using that asset during its useful life, rather than leaving the entire expense for whoever happens to own property when replacement becomes unavoidable.
The St. Louis area provides an example of professional association management incorporating this kind of planning.
DNI Properties, headquartered in Creve Coeur, Missouri, says it manages more than 150 single-family, condominium, townhome and villa communities in the St. Louis metropolitan area and has more than 35 years of community-management experience.
DNI lists financial, investment, and reserve-study assistance among its management services.
Its community-planning service goes further.
The company asks associations whether they have financial reserves planned and forecast for aging community assets, and offers a planning process that includes a complete property analysis, forecast community improvements, a reserve study, financial analysis, and a property-protection and risk-management review. DNI describes the result as a three- to five-year long-range community plan.
DNI also maintains a reserve-study service relationship with Asset Guardians, according to its website.
That illustrates an important distinction: professional management can provide boards with financial planning tools and advice, but an association still has to confront the cost.
A reserve study showing that substantially larger contributions are necessary can mean increasing assessments.
And that is where resistance can begin.
Homeowners understandably do not want another monthly bill increase. Board members understandably do not want to impose one.
But refusing to adequately fund a predictable liability does not eliminate the liability.
Yesterday’s budget may not work tomorrow
Reserve funding is only one part of the problem.
Annual operating budgets can also become unrealistic when boards rely too heavily on historical expenditures.
Suppose an association’s insurance cost was $200,000 last year.
That doesn’t guarantee it will cost $200,000 next year.
Insurance premiums can increase. Contractor prices can rise. Labor costs can change. Utilities can increase. Property taxes applicable to association-owned property can change. Landscaping and snow-removal contracts can cost more.
A budget that assumes tomorrow will cost approximately what yesterday cost can quickly become obsolete.
An association operating too close to the financial edge has little ability to absorb those increases.
The result can be higher assessments, deferred maintenance, borrowing, special assessments, or some combination of those measures.
This is why sound HOA management should involve more than balancing next year’s anticipated income against next year’s anticipated bills.
Associations responsible for long-lived assets need long-range financial plans.
Missouri gives associations broad budgeting authority
Missouri law shows why consumers need to understand the difference between having authority to establish reserves and being required to maintain adequate reserves.
Under Missouri’s Uniform Condominium Act, a unit owners’ association has authority to adopt and amend budgets for revenues, expenditures, and reserves and to collect assessments for common expenses.
Missouri also provides meaningful disclosure requirements for condominium resales.
A resale certificate must disclose, among other information, the monthly common-expense assessment, current special assessments, anticipated capital expenditures for the current and next two fiscal years, reserves for capital expenditures, the association’s most recent regularly prepared balance sheet and income-and-expense statement if available, and its current operating budget.
Missouri’s original-sale provisions are also revealing. A projected association budget must state the amount included as a reserve for repairs and replacement — or state that there is no amount included. The statute also requires budget assumptions about occupancy and inflation factors.
Those disclosure provisions are important.
But disclosure is not the same thing as ensuring adequate funding.
A law can require an association to tell a buyer how much it has in reserves without necessarily ensuring that the amount is sufficient for its future obligations.
That distinction is major, and lawmakers should examine it.
Florida shows how regulation can go further
Florida has adopted much stronger reserve requirements for certain condominium buildings.
Under Florida law, qualifying residential condominium associations must complete structural integrity reserve studies at least every 10 years. Those studies must identify covered property components, estimate their remaining useful lives and replacement costs or deferred-maintenance expenses, and establish a recommended reserve-funding schedule.
Florida has also restricted covered associations’ ability to vote away required reserve funding for specified structural components.
For budgets adopted on or after Dec. 31, 2024, associations subject to the structural integrity reserve-study requirements generally cannot simply decide to provide no reserves or less than required for the covered components, subject to statutory exceptions.
Perhaps one of the clearest consumer warnings is contained directly in Florida law.
When applicable owners are asked about waiving or reducing reserves, Florida requires a conspicuous warning that doing so may make owners responsible for unexpected special assessments.
That warning captures the financial problem remarkably well.
Reserve funding is not money disappearing into an HOA bank account.
It is money being accumulated against future liabilities.
If you fail to collect it now, someone may have to collect substantially more later.
Mortgage financing recognizes reserve risk too
This isn’t merely a theoretical concern among HOA critics.
Mortgage underwriting recognizes the importance of reserves.
Under Fannie Mae’s current full-review requirements for applicable condominium projects, lenders must review an HOA’s projected budget for adequacy and verify that it provides replacement-reserve funding for capital expenditures and deferred maintenance equal to at least 10% of the association’s annual budgeted assessment income, subject to the applicable review framework.
Why would a major housing-finance institution care about reserves?
Because the association’s financial condition can affect the financial condition, marketability, and physical condition of the properties securing mortgages.
An underfunded HOA isn’t merely an administrative inconvenience.
It can become a property-value and lending issue.
Other states are debating stronger protections
The policy debate continues elsewhere.
Colorado lawmakers considered legislation in 2022 that would have required reserve studies for common-interest communities with major shared components. That legislation ultimately did not become law.
Colorado returned to the issue in 2026 with HB 26-1099, legislation addressing the financial condition of homeowners associations. Among its provisions, the measure requires developers of new planned communities or condominiums to obtain a reserve study before transferring control to the association. The study must project costs for maintaining, repairing, or replacing common property over a 30-year period and must be performed by an independent, qualified professional meeting statutory criteria.
The continuing legislative attention underscores a broader national question:
How much financial risk should an HOA board be permitted to transfer to homeowners through inadequate planning?
States should consider minimum HOA financial standards
The answer does not have to involve government officials deciding whether an HOA should replace a clubhouse carpet or plant new shrubs.
A substantial difference exists between micromanaging a private association and establishing minimum financial safeguards.
States could consider requiring associations above reasonable thresholds to:
- Obtain independent reserve studies on a recurring schedule.
- Update those studies when major financial or physical conditions change.
- Establish minimum annual reserve contributions based on professional projections.
- Segregate reserve money from ordinary operating funds.
- Provide homeowners with an annual reserve-funding report.
- Prominently disclose significant reserve deficiencies to prospective buyers.
- Obtain periodic independent financial reviews or audits for larger associations.
- Require basic financial and fiduciary training for board members.
- Disclose major deferred-maintenance projects.
- Explain significant deviations from professional reserve recommendations.
- Provide state-level enforcement mechanisms when associations fail to comply with financial-disclosure or reserve requirements.
Most importantly, lawmakers should consider whether an HOA should be allowed to knowingly remain substantially underfunded year after year simply because current homeowners prefer lower assessments.
That may be politically popular within the subdivision.
It isn’t necessarily responsible management.
Consumer Alert: Investigate the HOA before buying
Homebuyers should treat an HOA’s financial condition with the same seriousness they give the condition of the house itself.
Do not stop at asking, “How much are the HOA fees?”
Ask:
When was the last professional reserve study?
Can I see it?
How much does the association currently have in reserves?
How much does the reserve study say it should have?
Is the board following the recommended funding schedule?
What major capital projects are anticipated during the next five, 10, and 20 years?
Have reserve contributions been reduced or waived?
Has the association imposed special assessments during the past 10 years?
Are additional special assessments being discussed?
Has the association postponed major maintenance because money was unavailable?
How much did insurance cost three years ago compared with today?
Are assessments sufficient to cover both operations and long-term capital obligations?
Does the association own or maintain private streets, roofs, sidewalks, retaining walls, stormwater facilities, pools or other expensive infrastructure?
A buyer should also review meeting minutes, budgets, financial statements, insurance information, pending litigation, and any engineering or reserve reports available under applicable law and governing documents.
If a seller or association produces documents showing extremely low reserves relative to aging common infrastructure, buyers should not dismiss that information just because no special assessment is pending today.
Today’s reserve shortage can become tomorrow’s special assessment.
Special assessments can destroy household budgets
A homeowner who voluntarily purchases a $500,000 house can evaluate the mortgage before closing.
A sudden $30,000 HOA special assessment is different.
The homeowner may not have $30,000 sitting in a bank account.
Some owners may borrow the money. Others may drain savings. Retirees living on fixed incomes may face particularly difficult decisions. Owners already carrying mortgages, vehicle loans, medical expenses, or other debts can find their household finances destabilized.
And selling the property may not provide an easy escape if prospective buyers learn that a large assessment is pending.
That is why reserve management should be considered a consumer-finance issue, not merely an internal HOA accounting matter.
Homeowners deserve competent financial management
There are well-managed associations. There are responsible volunteer directors willing to make unpopular decisions. Professional management companies advise communities to perform reserve studies and properly plan for future expenditures.
Don’t confuse those associations with communities that repeatedly postpone necessary funding.
Increasing HOA assessments is unpleasant.
But responsible management sometimes requires telling homeowners something they do not want to hear:
Maintaining the property costs more money than it did before.
A board that refuses to acknowledge that reality doesn’t prevent the cost increase.
It only determines when homeowners discover it.
The central consumer lesson is therefore simple.
Do not judge an HOA by how low its monthly assessment is. Judge it by whether it has enough money and a credible financial plan to fulfill the obligations it has already assumed.
For state lawmakers, the question is equally straightforward.
When associations control substantial common infrastructure and can impose mandatory assessments on hundreds of homeowners, should adequate long-term financial planning remain largely discretionary?
The growing financial consequences of underfunded associations suggest that question deserves considerably more attention.
Homeowners should not have to discover after purchasing a property that years of inadequate reserve funding have left them responsible for tens of thousands of dollars in deferred bills.
Sometimes the special assessment really is caused by an unforeseen catastrophe.
But when an aging roof, deteriorating street or worn-out common asset finally requires replacement after years of inadequate reserve contributions, the financial crisis may not be unexpected at all.
It may simply be the final bill for years of mismanagement. This is happening across the country as real estate taxes and insurance rise.
Consumer Alert: Prospective buyers should consult qualified real estate, legal, financial, and inspection professionals when evaluating an HOA or condominium association. Requirements governing reserves, disclosures, assessments, and association finances vary substantially by state and by the governing documents of individual communities. That said, I would avoid realtors’ advice because their commission creates a conflict of interest. Therefore, their advice might be slightly biased and self-serving.
