With over 380,000 community associations in the US, including homeowner associations, condos and co-ops, most consisting of at least some inexperienced board members, it is no surprise that there are financial planning battles and infighting when trying to maintain aging buildings, keeping the project attractive to new buyers but also keeping monthly fees low.

Therein lies the struggle that occurred for years with the Champlain Towers South Condominium in Surfside, FL before it collapsed. This is an extreme example of what could happen when owners, shareholders and board members can not find a solution that satisfies all parties while planning for the future and ensuring the safety of the buildings (and the residents) involved.

When living in a condo, co-op or being a member of a HOA, and hearing the term ‘special assessment’ during an annual board meeting, one tends to become overly emotional and experience much anxiety over these types of battles. Special assessments represent levies that could cost residents tens of thousands of dollars in order to pay for major repairs such as new roofs, plumbing issues, new driveways, etc. These assessments become necessary when the HOA, (condo or co-op), fall short of covering the costs. In the case of the Champlain Tower South condo, the special assessments would have been due this month and ranged from $80,000 for a one-bedroom unit to $336,000 for a penthouse.

Robert Norlund, a registered professional engineer and founder and CEO of Association Reserves, stated that approximately 30% of associations fall short in their reserve funds when having to finance a large projects of this nature. According to Norlund, 40% rate fair and 30% have strong financial reserve funds, allowing them to cover major expenses and emergencies without special assessments.

There are currently eleven states that require HOAs (condos and co-ops), to fund reserves for major expenses and Colorado is not one of them. They are Connecticut, Delaware, Florida, Hawaii, Illinois, Massachusetts, Michigan, Minnesota, Nevada, Ohio and Oregon. Although, in Florida and Illinois, associations are allowed to waive the funding requirements based on the majority vote at an owners’ meeting.


As tragic as the events at Champlain Towers South were, there could be some good that comes from it all. Now, residents and board members of HOAs, condos and co-ops are becoming more proactive and making sure their homes are protected. 

The Community Associations Institute is recommending that homeowners check to see if their communities have conducted a reserve study in order to help plan for replacement and/or repair of major construction items. And of course, prospective buyers and homeowners should also verify that they have a healthy reserve fund for these types of big-ticket repairs.

All homeowners should get involved and become more educated by attending all board meetings and owner meetings. They should read all communications and understand the community’s finances.

Additionally, the Institute recommends that board members are completely transparent when it comes to estimated repair or replacement costs. It should also be the board’s duty to determine if an inspection is required and help determine if any repairs are needed on the structure of the building(s).

Colorado law provides for access to community association governing documents, inspection, and copying of records, including meeting minutes, budgets and finances. Colorado does not require reserve accounts, unless the association documents provide for such accounts. However, if a reserve account is established, associations shall adopt a policy concerning investment of reserve funds. When the association performs or contracts for a reserve study to determine future need for capital projects and deferred maintenance (i.e. for roofs, elevators, parking lots, swimming pools, windows, etc.), repair or replacement, to be performed by the association, the association must also determine a funding plan for the work, as well as whether the study is based on a review of the physical plant or financial analysis, or both.

All of these recommendations can help in reducing or eliminating bickering and infighting within the community. If you have any questions or concerns about Colorado HOA, Condo or Co-op, or the Colorado Common Interest Ownership Act (CCIOA), please contact us for assistance. We represent association boards as well as individual owners.