This article is intended to explain what it means when a common interest community is referred to as a “Limited Expense Community” under the Colorado Common Interest Ownership Act (“CCIOA”).
Colorado Revised Statute C.R.S. 38-33.3-116 grants an exception for Limited Expense Communities, specifically, a Limited Expense Community is exempt from all the statutory requirements in CCIOA, except for Colorado Revised Statutes 38-33.3-105 to 107, which, in part, address public policy concerns and unreasonable restrictions on energy efficiencies measures and electric vehicle charging systems. For the specific verbiage, click here.
As a result, Limited Expense Communities are not otherwise required to follow the provisions in CCIOA; however, this also means that these communities cannot rely on certain powers and rights that CCIOA offers, such as statutory lien rights for unpaid assessments.
That being said, what is a Limited Expense Community? In order to qualify as a Limited Expense Community the following conditions must be met:
- The community must be a planned community, and not a condominium community. Planned communities include single family, townhome, and patio home associations.
- The community’s declaration of covenants must limit assessments (exclusive of optional user fees and insurance premiums) to $400.00 per unit per year. This maximum cap on the annual assessment may be increased each year consistent with any increase in the United States department of labor bureau of labor statistics final consumer price index for the Denver- Boulder consolidated metropolitan statistical area for the preceding calendar year.
- Third, the Declaration must expressly state the assessments cannot exceed this maximum. If the Declaration is silent, then the community will not qualify as a Limited Expense Community.
- Finally, the units subject to the maximum assessment amount must be restricted to residential purposes.
If all the above conditions are met, a community qualifies as a Limited Expense Community. . . UNLESS the declaration expressly provides that all of CCIOA applies.
Please do not hesitate to contact an Altitude Community Law attorney at 303.432.9999 if you have any additional questions concerning Limited Expense Communities.