Budget ratification
In some states, owners don't approve the budget, they get a narrow chance to veto it.
Budget ratification is a process, used in some states, where a board-adopted budget takes effect automatically unless owners vote it down at a noticed meeting. Under Colorado's model, defeating the budget takes a majority of every owner in the association, not just those who attend, and no quorum is required for the meeting itself.
Two different models, easy to confuse
There are two ways a state or an association's governing documents can hand owners a role in the budget. In an approval model, the budget only takes effect if owners affirmatively vote yes. In a ratification model, the budget takes effect the moment the board adopts it, and stays in effect unless owners affirmatively vote it down. These sound similar but produce opposite defaults: in one, owner silence kills the budget; in the other, owner silence passes it.
Boards and members mix these up constantly, and the mix-up matters. A board operating under a ratification model that waits for a "yes" vote it doesn't need can stall its own budget for no reason, and a member who assumes a majority of the room can block a budget may be surprised to learn the real threshold is a majority of every owner in the association.
How Colorado's veto model works
This is Colorado law specifically, under the Common Interest Ownership Act (CCIOA); check whether your state uses anything similar. The board adopts the budget on its own, no owner vote required to pass it. Within 90 days, the board mails or delivers a budget summary to every owner and sets a ratification meeting.
"The owners can reject the proposed budget only if a majority of all of the owners veto the proposed budget. There is no requirement that a quorum of owners be present for it to be a valid meeting."
Source: How the CCIOA Budget Process Works, Altitude Community Law
Notice what that removes: there is no quorum requirement to hold the meeting, and a handful of attendees voting no does nothing on its own. If owners do reach a majority of everyone in the association and vote to veto, the budget doesn't just disappear, the prior year's budget stays in effect until the board brings a version that survives ratification.
Check your own state and documents
This evidence base verified a veto-ratification structure in Colorado, a different assessment-increase cap structure in California, and no ratification mechanism at all in the states not researched here. Do not assume your association uses a ratification model just because you've heard the term. Some states give owners no statutory role in the operating budget at all, leaving it entirely to the board; others require affirmative approval; a few use the veto structure described above. The answer is in your state's common-interest-community statute and in your own bylaws, not in what a neighboring association does.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Under a Colorado-style ratification model, the board mails a budget summary and holds the meeting. Only 40 percent of owners attend, and all of them vote to reject it. What happens to the budget?
The board mails a budget summary and sets a ratification meeting, as CCIOA requires. What must actually happen for owners to defeat the budget?
Owners successfully veto the board's proposed budget under a Colorado-style ratification model. What governs spending until a new budget survives ratification?
Sources
- How the CCIOA Budget Process Works, Altitude Community Law
- California Civil Code Section 5605, Assessment Increases: Requirements and Limitations, State of California
Related elsewhere in the Academy
Budgeting
Not sure whether your budget needs a board vote, a member vote, or nothing at all? See how board budget approval works first.
Whether your state uses a veto-ratification model, an approval-required model, or leaves the budget entirely to the board, and what vote threshold or quorum rule applies, vary by state statute and by your governing documents.