The Colorado Common Interest Ownership Act (“CCIOA”) provides a step-by-step process for budget ratification for communities created after July 1, 1992. Associations created before July 1, 1992, and those that are otherwise exempt from CCIOA, are not required to follow the CCIOA budget ratification process and must follow the budgeting and assessment processes set forth in their governing documents.
Associations created after July 1, 1992, are required to adopt a budget at least annually. Once the budget is finalized by the board, CCIOA requires:
1. Timely Notice of Proposed Budget: Within 90 days after the proposed budget is adopted by the board, the board must mail, by ordinary first-class mail, or otherwise deliver a summary of the budget to all owners. Note that the board is required only to send a summary of the budget, not the actual budget to the owners. However, if an association’s budge is proposing a significant increase to assessments or spending an unusually large amount of money, we recommend providing additional information to the owners in addition to the budget summary to explain why such increase or expenditure is necessary.
2. Set a Meeting for the Owners: The board must also set a date for a budget ratification meeting. CCIOA requires the meeting occur within a “reasonable time” after the notice. Or, if the association’s bylaws provide for a specific time frame for this process, such process must be followed. Many associations find that combining the budget ratification meeting with the annual meeting is very successful and can reduce the administrative costs of conducting two separate meetings.
3. Timely Notice of Meeting: The Board must provide notice of the budget meeting to the Owners. Pursuant to CCIOA, such notice must be 10 to 50 days prior to the meeting.
4. At the Meeting: Pursuant to CCIOA, unless a majority of ALL owners veto the proposed budget, the proposed budget is ratified and becomes effective. However, if the association’s declaration contains a higher ratification requirement, the higher requirement must be followed. If the meeting is solely a budget ratification meeting (and not also the annual meeting), then CCIOA does not require a quorum of owners be present at the meeting. However, if the budget meeting is combined with the annual meeting, then a quorum is required.
However, do not dismiss the requirements set forth in your governing documents if they require owner approval instead of ratification, because such requirements must be followed and are not in conflict with the CCIOA budget process requirements.
5. If the Budget is Vetoed: Occasionally a proposed budget is vetoed by the owners. If that occurs, the last approved/ratified budget (last year’s budget most often) remains in place until a new budget is ratified.
Navigating your Association through the CCIOA budget process can be complicated. If you have additional questions or would like assistance with your association’s budget process, please contact a Altitude Community Law attorney at 303.432.9999 for more information.