Can an HOA charge dues before the community is finished being built?
Reviewed by the OurHOA team · Updated June 2026
Whether a developer-run HOA can collect dues while amenities and streets are still incomplete, how deficit-funding and subsidy clauses work, and what owners can expect before turnover.
Yes - dues usually start the day you close, not the day the community is done
It surprises a lot of first owners in a new community, but assessments almost always begin as soon as you take title, even if the clubhouse is a hole in the ground and half the streets are still gravel. The obligation to pay dues comes from the recorded declaration (the CC&Rs), which binds every lot from the moment it's created - it doesn't wait for the amenities to be finished. The reasoning is practical: the association has real expenses from day one (insurance, the common areas that do exist, basic management, early landscaping), and those costs have to be funded by someone. So the question is rarely whether you owe dues during build-out, but how much, and who covers the gap between what early owners pay and what the community actually costs to run.
The early years are run by the developer, not the homeowners
While a community is being built, it's in what's called the declarant-control or developer-control period. The developer (the 'declarant') typically appoints the first board, sets the initial budget, and controls the association until enough lots are sold or a deadline passes - the trigger for handing control to homeowners is called turnover or transition. This matters for dues because the developer is the one setting the assessment level and deciding how the early-years deficit gets covered. Understanding that the people setting your dues during build-out are the developer's representatives - not your neighbors - is the key to reading what's happening with your money. Our guide on developer control and turnover walks through how and when that control shifts to the homeowners.
Who pays for the gap: subsidy vs. deficit-funding
A new community usually can't collect enough in dues from a handful of early owners to cover its real operating costs, so the declaration almost always spells out how the developer handles the shortfall - and there are two common models. Under a subsidy or 'deficit-funding' arrangement, the developer keeps owner dues low and simply pays the difference between assessment income and actual operating expenses out of its own pocket until more lots sell. Under the other common model, the developer pays full assessments on the lots it still owns, just like any owner. The model you're under is set by the recorded documents, and it has real consequences: a deficit-funding developer that stops subsidizing at turnover can leave the new homeowner board facing a sudden, sharp dues increase to cover costs the developer used to absorb.
What the law says about developer assessments
Some states regulate this directly. Florida is a clear example: its planned-community statute lets a developer be excused from paying assessments on developer-owned lots during a defined period if the developer instead guarantees the assessment level and pays the operating deficit - the difference between expenses and the assessments owners actually pay (Fla. Stat. 720.308). Many state common-interest acts modeled on the Uniform Common Interest Ownership Act similarly require the declarant to either pay assessments on its lots or fund the deficit, and limit how long developer-favorable arrangements can run. The recurring theme across states is that the developer can shape early-years dues but generally can't simply leave the new association insolvent. Check your state's HOA or planned-community act and the assessment section of your declaration to see which rule applies to you.
What this means before you buy or at turnover
If you're buying in a community still under construction, two documents tell you what to expect: the budget (is it realistic, or artificially low because the developer is subsidizing it?) and the declaration's assessment and developer-obligation sections (does the developer pay full dues, or fund a deficit that ends at turnover?). An unrealistically low introductory dues figure is a yellow flag that a jump is coming once the developer steps back. At turnover, the new homeowner board should get a full accounting, confirm whether any promised subsidy was actually paid, and - critically - check that reserves were funded during the developer years rather than skipped to keep dues looking attractive. Underfunded early reserves are one of the most common post-turnover surprises, and they show up later as special assessments.
How OurHOA helps
When a community transitions from developer control to a homeowner board, the single hardest thing is getting a clear, honest picture of the money - what's been collected, what was subsidized, what's in reserves, and where dues really need to be. OurHOA gives a newly self-managed community one place to keep its budget, assessment records, and reserve balance, so a first homeowner board can see exactly what it inherited and set dues at a level that actually covers the now-finished community. That transparency makes the post-turnover dues conversation a lot less contentious. OurHOA is software for keeping a community's finances and records organized, not a law firm or a developer's accountant - for the developer-assessment rules that bind your community, read your recorded declaration and your state's planned-community statute.
OurHOA is the friendly, affordable way self-managed communities keep dues, records, and reminders in one place. See how it works.
These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.