Since July 1, 2018, when the CCIOA budget process was made applicable to pre-CCIOA communities, there continues to be confusion and unclarity with respect to the CCIOA budget process and especially if and how it applies to special assessments. The purpose of this article is to help clarify both the budget process and special assessment process.
Budget Creation
- Board approves budget
- Within 90 days of board approval, summary of budget (or budget itself) must be mailed or otherwise delivered AND a meeting date is set for owners to consider budget
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- Meeting must occur within a “reasonable time” after mailing or delivery of the budget
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- Notice of meeting must be mailed to all owners in accordance with requirements in the bylaws
*Exception: If the community was created prior to July 1, 1992 (pre-CCIOA), and the declaration contains a maximum assessment cap, and the new budget does not propose an increase over and above the cap, the meeting referenced above will be a meeting to discuss the budget but not to ratify it. Owner ratification/approval will not be necessary as long as the assessment cap is not exceeded.
If, on the other hand, the cap is exceeded, the association will need to obtain the owner approval required by the declaration.
Budget Ratification Meeting
- Quorum is not required—anyone (or no one) who shows up at the meeting is sufficient to hold the meeting. However, keep in mind if you are ratifying the budget at the regular annual meeting (as opposed to a separate budget ratification meeting), quorum will need to be obtained to ratify the budget. For this reason, it is safest to hold your budget ratification meeting separately from the annual meeting. This does not mean you can’t hold both meetings on the same night in a back-to-back fashion. Just make sure your meeting notice makes it clear that there are two separate meetings being held on the same night.
- Owner approval is not required (unless declaration requires approval) at the meeting.
- Budget is deemed approved absent a veto from a majority of all owners (or larger amount if specified in the declaration). This means if a majority of all owners are not present at the meeting, the budget will be automatically ratified.
Special Assessment Process
- If the declaration requires owner approval for a special assessment, such approval must still be obtained. This may be accomplished by voting on the special assessment during a membership meeting or via mail ballot instead of holding a membership meeting.
- If the declaration is silent concerning special assessments or allows the board to impose a special assessment without owner input, the budget ratification process set out above must be followed before the special assessment may be imposed:
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- An updated budget must be approved by the board and proposed to the membership—the updated budget will contain an extra income line representing the special assessment income, and an additional expenditure line representing the expense to be paid for with the special assessment funds
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- The updated budget must be mailed or delivered to owners, and a meeting must be set for owners to consider the budget
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- The budget ratification meeting, as set forth above, must be held, and the budget must be ratified for the special assessment to become effective
Should you have any additional questions about the CCIOA budget process, please do not hesitate to contact an Altitude attorney at (303) 432-9999 or at [email protected].