Colorado HOA budgets and assessment increases

The default favors the board. It adopts a proposed budget, sends it to owners, and the budget passes on its own unless a majority of all owners votes to veto it at the meeting. Because no quorum is required and the veto is measured against the whole membership, a few objectors cannot stop an increase. It takes an organized majority of all owners.

If owners do veto the budget, the community is not left without one. The last budget that was not vetoed continues while the board goes back and proposes a revised version. So a rejected increase is a pause, not a permanent freeze.

Colorado does not cap annual assessment increases. Any limit lives in the declaration or bylaws, not the statute, so a board with thin reserves and aging shared systems can raise dues sharply or levy a special assessment without a state-law ceiling in the way.

That makes the budget history and the reserves the real story for a buyer. A community that is underfunded against its obligations is signaling a future increase or special assessment, and the veto vote rarely stops one.

Read these together before you make an offer:

• The last few years of budgets to see how fast dues have climbed.
• The reserve balance against upcoming big-ticket repairs.
• Any special assessment that has been approved, discussed, or is likely.
• Board minutes for talk of a shortfall, a loan, or a large planned project.

Your dues can rise without a statutory ceiling, so the protection that matters is reading the budget and the reserves before you buy. The veto vote rarely blocks an increase, which puts the homework on the buyer.

An HOA Notes brief reads the budgets, the reserves, and the minutes together, flags a community heading toward a steep increase or a special assessment, and cites the page behind each finding.

Colorado Revised Statutes section 38-33.3-303(4) (Budget ratification by owners). After the executive board adopts a proposed annual budget, the board must either submit it to owners for ratification or hold a meeting at which owners may vote to reject it; a majority of owners holding a majority of the votes in the association may reject the proposed budget, causing the prior year's budget to remain in effect; Colorado has NO statutory percentage cap on annual assessment increases -- any cap comes only from the governing documents. The association may adopt any budget amount the board determines necessary; the board does not need owner approval unless owners affirmatively vote to reject; if rejected, the board may propose a revised budget for a subsequent vote.

When you read the disclosure packet, watch for the board may set annual assessments without owner ratification or review, and no budget disclosure to owners required before the fiscal year begins. HOA Notes flags each of these against the statute and tells you which restrictions are actually enforceable.