By Heidi Scanlan
Special assessments are among the most challenging decisions a homeowners association (HOA) board will face. In Colorado, these decisions are not only financial, but they are also governed by statutory obligations under the Colorado Common Interest Ownership Act (CCIOA), the Colorado Revised Nonprofit Corporation Act, and, in some cases, legacy governing documents from pre-CCIOA communities.
Handled thoughtfully, a special assessment can protect property values and ensure long-term sustainability. Handled poorly, it can create financial strain, erode trust, and expose the board to legal and ethical risk.
This article explores the ethical framework behind special assessments through the lens of the how, why, when, and if, providing boards with a practical approach to decision-making that aligns with both legal obligations and community expectations.
The “Why”: Necessity, Not Convenience
Under CCIOA, associations are responsible for maintaining, repairing, and replacing common elements. This authority allows boards to levy assessments to meet those obligations, but authority alone is not justification.
Ethically, the “why” must be grounded in necessity:
- Life safety issues or structural repairs
- Insurance gaps or high deductibles
- Capital projects not adequately funded in reserves
- Compliance with building or safety codes
- Was this expense foreseeable?
- Were owners given advance warnings?
- Are we imposing this burden suddenly or responsibly preparing the community?
- Is board approval sufficient?
- Is owner approval required?
- Are there limits on amount or frequency?
- Reserve funding (if available)
- Incremental assessment increases
- Whether certain owners disproportionately benefit
- Whether limited common elements are properly assigned
- Whether the allocation is defensible not just legal
- A clear explanation of the project
- Total cost and funding breakdown
- Payment options and deadlines
- Risks of delaying or not proceeding
- Is this truly unavoidable?
- Are we solving the right problem?
- Are we balancing current and future owner impacts?
- Should owners be involved in the decision, even if not required?
- The financial health of the association with
- The financial realities of homeowners
- Payment structures are unreasonable
- Hardship considerations are ignored
- Communication is insufficient
- The When (timing and communication)
- The How (process and fairness)
- The If (judgment and discretion)
Where boards face scrutiny is when special assessments result from avoidable circumstances, such as years of underfunding reserves or deferring known projects.
“A special assessment should never be a shortcut for past financial decisions it should be a response to present necessity.”
While the board may still have the legal authority to act, fiduciary duty under the Colorado Nonprofit Act requires decisions to be made in good faith, with reasonable care, and in the best interests of the association.
The “When”: Timing, Notice, and Owner Expectations
Timing is not just a logistical consideration it is an ethical one.
Colorado law requires budget ratification processes that give owners visibility into financial decisions. However, special assessments often arise outside the standard budget cycle, making proactive communication even more critical.
Boards should ask:
“Owners should never feel surprised by a special assessment only informed.”
For pre-CCIOA communities, governing documents may impose different requirements, including owner approval thresholds or caps. Even when not required, early communication strengthens transparency and reduces conflict.
The “How”: Process Defines Integrity
The process behind a special assessment is where boards demonstrate ethical leadership.
1. Confirm Authority
Before proceeding, boards must ensure compliance with governing documents:
Failure to follow these provisions can invalidate the assessment.
2. Use Objective Data
Ethical decisions rely on credible information:
This not only supports sound decision-making but also aligns fiduciary standards under Colorado law.
3. Evaluate Alternatives
A special assessment should not be the first option; it should be the most appropriate one after considering:
“The ethical question is not ‘Can we assess?’ but ‘Is this the most responsible path forward?’”
4. Ensure Fair Allocation
Assessments must be allocated according to governing documents, typically based on ownership percentages or allocated interests.
Boards should also consider:
5. Communicate Clearly and Completely
Transparency is both a legal requirement and an ethical obligation.
Owners should receive:
“Transparency is not just about sharing information; it’s about building understanding.”
The “If”: Authority vs. Judgment
One of the most important questions boards often overlook is whether a special assessment should happen at all.
Boards should pause and consider:
In some cases, delays may be reasonable. In others, particularly those involving safety or structural integrity, delay may create greater liability.
There is also a governance consideration:
“Just because a board has the authority to act does not mean it should act alone.”
Balancing Fiduciary Duty and Community Impact
Colorado law establishes a clear fiduciary standard, but ethical governance requires more than compliance.
Boards must balance:
A technically correct decision can still create ethical concerns if:
Strong boards recognize that financial decisions affect real people and lead accordingly.
All Things Considered
Special assessments are not inherently good or bad they are a necessary tool within HOA governance.
What defines them is not the assessment itself, but how the decision is made.
By grounding decisions in:
…boards can meet their legal obligations while upholding the ethical standards that build strong, resilient communities.
“The ultimate goal is not just to maintain the property it is to maintain trust.”
Final Thought for Boards
“If you can clearly explain the decision, support it with data, and defend it as fair, you are likely on solid ethical ground.”
