The passing of SB24-021 effectively amended Section 116 of the Colorado Common Interest Ownership Act (CCIOA), updating the criteria for an association to qualify as a small or limited-expense community. The statute required a notice be sent to associations across the state from the Colorado Department of Regulatory Agencies (DORA) regarding this exemption. Additionally, DORA also issued a letter to those qualifying communities last September.
1. Why does this matter?
Associations that qualify as a small or limited-expense community are exempt from the provisions of CCIOA (§38-33-33.3-101 et seq), except for the requirements found in Sections 105 through 107, unless the declaration specifically states otherwise. In addition, exempt communities may now opt-in to CCIOA if the community would like to be bound by its terms.
It is important to note that this bill does not apply to condominiums regardless of meeting the requisite criteria, as there is no exemption for condominiums.
2. What are the criteria to qualify?
SB24-021 revised and consolidated the qualification criteria for small communities and limited-expense communities as follows:
- Small Communities
- Must be created on or after July 1, 1992;
- Must contain EITHER units restricted to nonresidential use OR no more than 20 units;
- Must not be subject to any development rights (as defined in CCIOA); and
- Must not have a declaration that states CCIOA is applicable.
OR
- Limited-Expense Communities
- Regardless of when the community was created, the declaration must provide that the annual average common expense liability of each unit is restricted to residential purposes, exclusive of optional user fees and insurance premiums, and must not exceed $400 dollars, as adjusted in accordance with the Consumer Price Index (CPI) increase clarified in subsection (3).
- Subsection (3) now provides that the dollar limitation must be increased annually in accordance with the CPI. Note that if the CPI for the prior year did not increase, then the amount cannot increase, but the amount does not decrease if the prior year’s CPI decreased.
3. Does my community qualify?
If your association qualifies as a small or limited-expense community, you should have received a letter from DORA confirming your eligibility. If you have not received a notification but believe your community may qualify, you may determine your status on your own.
4. What action should my community take?
Our firm is happy to help with determining your association’s status and whether it qualifies as a small or limited-expense community.
Depending on your association’s status, you may want to consider amending your declaration. If your community now qualifies as a small or limited-expense community and wishes to avail itself to all of CCIOA, you may amend your declaration in order to formally elect and adopt all of CCIOA. However, such an amendment may also require revisions throughout the declaration to remove any conflicting language or ambiguities.
If you have any questions or concerns about your options, please feel free to contact any of our Altitude attorneys at 303-432-9999 or [email protected].