HOA Budget Ratification

[sulo28]

Colorado:

My HOA, which consists of 22 homes, just had a budget meeting but not formal vote ever took place to ratify the budget. I even have an email from the board stating that the vote never took place yet the budget was ratified regardless. Is this lawful?

 

[PayrollHRGuy]

That would depend on the bylaws of your HOA.

 

[Zigner]

Colorado:

My HOA, which consists of 22 homes, just had a budget meeting but not formal vote ever took place to ratify the budget. I even have an email from the board stating that the vote never took place yet the budget was ratified regardless. Is this lawful?

When was the association formed?

ETA: If before 7/1/1992, then it appears to be legal. If on or after 7/1/1992, then it does not appear to be legal.

 

[Zigner]

That would depend on the bylaws of your HOA.

Not necessarily - please don't guess, it'll bite you in the rump.

 

[Zigner]

From https://leg.colorado.gov/sites/default/files/ccioa-in-subdivisions-and-condos.pdf:

Both pre- and post-1992 communities are subject to some provisions in section 38-33.3-303,
C.R.S., of CCIOA, which pertain to executive board members, powers, duties, reserve funds,
and audits. Post-1992 communities are subject to all provisions of that section. But pre-1992
communities are not subject to this notable provision regarding community budgets: Within
90 days after adoption of a proposed budget for the community, the board must mail or
otherwise deliver a summary of the budget to all unit owners and set a date for a meeting of
the unit owners to consider the budget, and the budget can be vetoed by a majority vote of
the unit owners.

 

[PayrollHRGuy]

I really wasn't guessing. I couldn't find anything in CRS 38.

 

[Zigner]

I really wasn't guessing. I couldn't find anything in CRS 38.

Fair enough

 

[Taxing Matters]

When was the association formed?

ETA: If before 7/1/1992, then it appears to be legal. If on or after 7/1/1992, then it does not appear to be legal.

(Bolding added.) Actually, I disagree with the bolded part, and think that PayrollHRGuy got it right. Here is what the Colorado statute says:

(4)(a) Within ninety days after adoption of any proposed budget for the common interest community, the executive board shall mail, by ordinary first-class mail, or otherwise deliver a summary of the budget to all the unit owners and shall set a date for a meeting of the unit owners to consider the budget. Such meeting shall occur within a reasonable time after mailing or other delivery of the summary, or as allowed for in the bylaws. The executive board shall give notice to the unit owners of the meeting as allowed for in the bylaws. Unless the declaration requires otherwise, the budget proposed by the executive board does not require approval from the unit owners and it will be deemed approved by the unit owners in the absence of a veto at the noticed meeting by a majority of all unit owners, or if permitted in the declaration, a majority of a class of unit owners, or any larger percentage specified in the declaration, whether or not a quorum is present. In the event that the proposed budget is vetoed, the periodic budget last proposed by the executive board and not vetoed by the unit owners must be continued until a subsequent budget proposed by the executive board is not vetoed by the unit owners.​

Colo. Rev. Stat. Ann. § 38-33.3-303(4)(a). Note that the law does NOT require that the association vote on the budget. It only requires that the board mail out the proposed budget and hold a meeting on the budget. The statute expressly states that unless the declaration says otherwise the board does not require approval from the owners and it is deemed approved unless the owners veto the budget. Here, the board gave notice of the budget and held a meeting. That's all it had to do. The owners would have had to bring a vote at the meeting to veto it to prevent it being approved. They apparently did not do that, and as PayrollHRGuy noted, it matters what the declaration says. If it expressly requires the owners to approve the budget (and that’s not common in Colorado HOAs) then the board has a problem. Otherwise, I’m not seeing any violation by the board here given the facts we have.

 

[Zigner]

(Bolding added.) Actually, I disagree with the bolded part, and think that PayrollHRGuy got it right. Here is what the Colorado statute says:

(4)(a) Within ninety days after adoption of any proposed budget for the common interest community, the executive board shall mail, by ordinary first-class mail, or otherwise deliver a summary of the budget to all the unit owners and shall set a date for a meeting of the unit owners to consider the budget. Such meeting shall occur within a reasonable time after mailing or other delivery of the summary, or as allowed for in the bylaws. The executive board shall give notice to the unit owners of the meeting as allowed for in the bylaws. Unless the declaration requires otherwise, the budget proposed by the executive board does not require approval from the unit owners and it will be deemed approved by the unit owners in the absence of a veto at the noticed meeting by a majority of all unit owners, or if permitted in the declaration, a majority of a class of unit owners, or any larger percentage specified in the declaration, whether or not a quorum is present. In the event that the proposed budget is vetoed, the periodic budget last proposed by the executive board and not vetoed by the unit owners must be continued until a subsequent budget proposed by the executive board is not vetoed by the unit owners.​

Colo. Rev. Stat. Ann. § 38-33.3-303(4)(a). Note that the law does NOT require that the association vote on the budget. It only requires that the board mail out the proposed budget and hold a meeting on the budget. The statute expressly states that unless the declaration says otherwise the board does not require approval from the owners and it is deemed approved unless the owners veto the budget. Here, the board gave notice of the budget and held a meeting. That's all it had to do. The owners would have had to bring a vote at the meeting to veto it to prevent it being approved. They apparently did not do that, as PayrollHRGuy noted, it matters what the declaration says. If it expressly requires the owners to approve the budget (and that’s not common in Colorado HOAs) then the board has a problem. Otherwise, I’m not seeing any violation by the board here given the facts we have.

I see what you are saying, and it almost sounds like a purely semantic difference, but it is an important difference. I stand corrected.

 

[PayrollHRGuy]

I love being right by accident.

 

[Zigner]

i love being right by accident.

lol

 

[sulo28]

(Bolding added.) Actually, I disagree with the bolded part, and think that PayrollHRGuy got it right. Here is what the Colorado statute says:

(4)(a) Within ninety days after adoption of any proposed budget for the common interest community, the executive board shall mail, by ordinary first-class mail, or otherwise deliver a summary of the budget to all the unit owners and shall set a date for a meeting of the unit owners to consider the budget. Such meeting shall occur within a reasonable time after mailing or other delivery of the summary, or as allowed for in the bylaws. The executive board shall give notice to the unit owners of the meeting as allowed for in the bylaws. Unless the declaration requires otherwise, the budget proposed by the executive board does not require approval from the unit owners and it will be deemed approved by the unit owners in the absence of a veto at the noticed meeting by a majority of all unit owners, or if permitted in the declaration, a majority of a class of unit owners, or any larger percentage specified in the declaration, whether or not a quorum is present. In the event that the proposed budget is vetoed, the periodic budget last proposed by the executive board and not vetoed by the unit owners must be continued until a subsequent budget proposed by the executive board is not vetoed by the unit owners.​

Colo. Rev. Stat. Ann. § 38-33.3-303(4)(a). Note that the law does NOT require that the association vote on the budget. It only requires that the board mail out the proposed budget and hold a meeting on the budget. The statute expressly states that unless the declaration says otherwise the board does not require approval from the owners and it is deemed approved unless the owners veto the budget. Here, the board gave notice of the budget and held a meeting. That's all it had to do. The owners would have had to bring a vote at the meeting to veto it to prevent it being approved. They apparently did not do that, and as PayrollHRGuy noted, it matters what the declaration says. If it expressly requires the owners to approve the budget (and that’s not common in Colorado HOAs) then the board has a problem. Otherwise, I’m not seeing any violation by the board here given the facts we have.

Thank you for the help everyone. It sounds like it was lawful but boy, that is a shady way to do business in my humble opinion. I guess moving forward, I just have to be sure the entire community knows that any budget changes requires someone to veto the budget as the board has no obligation to hold a vote or ask if anyone wants to veto the budget.