Vermont HOA Budget Approval

Section 1: Overview — How HOA budgets are approved in Vermont

Vermont governs common-interest-community budgets through the Vermont Common Interest Ownership Act (VCIOA), 27A V.S.A.—the statute Vermont Statutes Online identifies as the “Uniform Common Interest Ownership Act (1994).”¹ The executive board adopts a proposed budget, and that budget takes effect unless a majority of unit owners reject it at a ratification meeting.² That mechanism covers condominiums and planned communities, the two community types VCIOA recognizes as common interest communities. Under 27A V.S.A. § 1-103(10), a cooperative is a regime created under 11 V.S.A. chapter 14—it is not a common interest community under Title 27A.³ Condominiums created before January 1, 1999 fall under the older Condominium Ownership Act, 27 V.S.A. chapter 15, which charges common expenses annually by undivided interest and does not include a negative-option ratification step.⁴ Vermont does not mandate a reserve study or reserve funding—the act authorizes reserves but does not require them, and Vermont did not add any such mandate.⁵ Vermont belongs to the group of UCIOA states that use the negative-option budget model, not an affirmative-approval or increase-cap model. The table and sequence below set out the verified mechanics and identify which provisions a declaration may vary.

Section 2: The budget approval mechanism

This table covers the Vermont Common Interest Ownership Act (27A V.S.A.), which governs condominiums and planned communities created on or after January 1, 1999. Condominiums created before that date follow the predecessor Condominium Ownership Act (27 V.S.A. ch. 15), addressed in the prose below.

2A. Quick-Reference Budget Mechanics Table

2B. The budget approval sequence under VCIOA

VCIOA separates the process into four steps: adopting the budget, ratifying it, levying assessments, and—where used—imposing special assessments. First, the executive board adopts a proposed budget at least annually for unit owner consideration (§ 3-123(a)).¹ Board adoption is not the final step; it starts the ratification clock. Second, within 30 days of adoption, the board sends all unit owners a summary of the budget—including any reserves and the basis on which reserves are calculated and funded—and simultaneously sets a ratification meeting date that falls between 10 and 60 days after the summary is distributed (§ 3-123(a)).¹ That 10-to-60-day window is Vermont’s verified figure and should not be imported from another state’s statute.

Third, the budget ratifies by default. Unless a majority of all unit owners—or a larger number the declaration specifies—vote to reject at the meeting, the budget is ratified whether or not a quorum is present (§ 3-123(a)).¹ That is negative-option ratification: owners cast no affirmative approval votes, and no quorum is required for ratification to occur. Owner inaction is sufficient to ratify the board’s budget. If a proposed budget is rejected, the last ratified budget stays in effect until owners ratify a subsequent one (§ 3-123(a)).¹

Fourth, ratifying the budget and levying the assessment are two separate steps. Once a budget is in place, the association charges common-expense assessments at least annually, based on the budget, allocated to units as the declaration provides (§ 3-115(a)-(b)).² The budget sets the spending plan; the assessment is the per-unit charge that funds it. Special assessments fall under § 3-123(b)-(c): a board may propose one at any time, and it takes effect only if the board follows the same ratification procedure and owners do not reject it. If the board votes by a two-thirds majority that a special assessment is necessary to address an emergency, that assessment takes effect immediately. The board must then promptly notify all owners and restrict spending to the purposes identified in the vote.¹

2C. Older condominiums and variation

Two statutes operate in parallel. VCIOA governs condominiums and planned communities created on or after January 1, 1999, and other qualifying communities of 12 or more units. The Condominium Ownership Act (COA), 27 V.S.A. chapter 15—recorded in § 1301 as “Added 1967, No. 228 (Adj. Sess.), § 1, eff. Jan. 23, 1968”—governs condominiums created before January 1, 1999.⁶ The threshold question is always the community’s creation date. Under the COA, common expenses are charged annually according to undivided interest, and there is no negative-option budget-ratification step (27 V.S.A. § 1310).¹⁰ Section 1-204 extends certain VCIOA provisions to pre-1999 communities, but the § 3-123 budget-ratification procedure is not among them; the resale-certificate and records provisions (§§ 4-109, 3-118) are.¹¹

Within VCIOA, the budget mechanics are largely mandatory. Section 1-104 bars parties from varying VCIOA provisions by agreement unless the Act expressly authorizes it.⁹ Section 3-123 expressly permits the declaration to raise the rejection threshold above a simple majority, but the 30-day summary deadline, the 10-to-60-day meeting window, and the no-quorum default carry no such permission.¹ Vermont does not mandate reserves. Section 3-102(a)(2) authorizes the association to adopt budgets covering revenues, expenditures, and reserves, but that language enables rather than commands—no provision requires a reserve study or a specific funding level.⁵ The § 3-123 mechanism was added by Act 155 of 2009, effective January 1, 2012, when Vermont incorporated 2008-generation UCIOA revisions; the legislature did not adopt the 2008 mandatory reserve-study provision.¹ Many Vermont associations organize as nonprofit corporations under the Vermont Nonprofit Corporation Act (Title 11B), which supplies the corporate formalities for meetings, directors, and records but sets no budget-approval threshold.¹²

Section 3: Budget-adjacent obligations

A. Reserves in the budget

VCIOA does not mandate a reserve study or reserve funding. Section 3-102(a)(2) authorizes reserves without requiring them, and surplus funds default to owners under § 3-114 unless the declaration provides otherwise.⁷ Reserve decisions are a matter of board judgment governed by the declaration.

B. Special assessments

A special assessment takes effect only if the board follows the § 3-123 ratification procedure and owners do not reject it. Emergency special assessments take effect immediately on a two-thirds board vote (§ 3-123(b)-(c)).¹ That obligation is mandatory under the statute.

C. Assessment increase limits

VCIOA sets no statutory percentage cap on assessment or budget increases. Any limit must appear in the recorded declaration.¹ Where the declaration is silent, increases move through the negative-option ratification process without a ceiling.

D. Financial review, audit, and disclosure tied to the budget cycle

VCIOA imposes no statutory audit or independent-review requirement tied to the budget cycle. The Act does require the association to retain detailed financial records for owner inspection (§ 3-118),⁸ requires a developer’s public offering statement to identify the budgeted reserve amount or confirm there is none (§ 4-103),¹³ and requires a resale certificate that discloses reserves for capital expenditures and the current operating budget (§ 4-109).¹⁴ Those disclosure duties are mandatory; the audit decision is left to the declaration.

Section 4: Recent legislative and judicial activity

A. Recent bills

One bill from the past 24 months touches common-interest-community law.

B. Recent rulings

No Vermont Supreme Court opinion issued between June 2023 and June 2026 interprets VCIOA’s budget-ratification, assessment, or reserve provisions.¹⁶ The most relevant prior decision—Arapaho Owners Association, Inc. v. Alpert (2015 VT 93, July 10, 2015)—held that unanimous owner consent is required to change a common-expense allocation formula. That case falls outside the 36-month window and addresses allocation, not the annual budget-ratification step.¹⁶

C. Active legislative debates

The only active proposal touching common-interest communities is the S.328 study directive on leasing and use. No pending bill proposes adopting additional 2008 UCIOA amendments or altering the budget, assessment, or reserve framework.¹⁵

Section 5: National positioning and related coverage

Vermont is a UCIOA state—one of several jurisdictions, including Alaska, Colorado, Minnesota, Nevada, and West Virginia, where an executive board’s budget is ratified unless owners affirmatively reject it. Vermont’s act carries the “(1994)” title but incorporated 2008-generation UCIOA amendments, as Connecticut, Delaware, and Washington also did. That is why the Community Associations Institute places Vermont among the 2008-version adopters.¹⁷ That positioning sets Vermont apart from California’s increase-cap model. Under California Civil Code § 5605(b), a board “may not impose a regular assessment that is more than 20 percent greater than the regular assessment for the association’s preceding fiscal year or impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year without the approval of a majority of a quorum of members.”¹⁸ Vermont imposes no such cap. For a multi-state operator entering Vermont, the compliance task is running the § 3-123 summary-and-meeting sequence correctly—not securing affirmative owner approval.

Recommendations

• Run the § 3-123 sequence on a documented calendar: board adoption, then summary to all owners within 30 days, then a ratification meeting set 10 to 60 days out. Missing that window is the most common compliance failure and it leaves the prior budget in force.
• Treat ratification as negative-option: do not solicit affirmative approval votes and do not impose a quorum. Confirm whether the declaration raises the rejection threshold above a simple majority—if it does, that higher number controls.
• Do not wait for a reserve mandate that does not exist. Sections 4-103 and 4-109 force reserve disclosure at sale, which means weak reserves surface to buyers and lenders; fund reserves through the ratified budget as a matter of board judgment.
• Revisit this guidance if the Office of Legislative Counsel’s November 15, 2026 report leads to a bill amending §§ 3-123, 3-115, or the reserve provisions, or if the Vermont Supreme Court issues a budget-ratification opinion.

Caveats

• VCIOA imposes no reserve mandate and no assessment-increase cap. Do not apply California, Florida, Nevada, New Jersey, Oregon, Virginia, or Washington rules here. Confirm each community’s declaration for any stricter terms.
• The “(1994)” title is a naming convention. The operative § 3-123 mechanism dates from Act 155 of 2009, effective January 1, 2012. Sources differ on whether to classify Vermont as a 1994- or 2008-generation state, but that classification does not change the verified mechanics.
• S.328’s status is “delivered to Governor”—it is not yet law and carries no Act number. Verify final disposition before relying on it.
• The COA/VCIOA line turns on the community’s creation date relative to January 1, 1999. Confirm the recorded declaration date before applying § 3-123 to an older condominium.

1. 27A V.S.A. § 3-123 (Adoption of budgets; special assessments), Vermont Statutes Online ↩
2. 27A V.S.A. § 3-115 (Assessments for common expenses), Vermont Statutes Online ↩
3. 27A V.S.A. § 1-103(10) (Definitions; cooperative), Vermont Statutes Online ↩
4. 27 V.S.A. ch. 15 (Condominium Ownership Act), Vermont Statutes Online ↩
5. 27A V.S.A. § 3-102(a)(2) (Powers of unit owners’ association), Vermont Statutes Online ↩
6. 27A V.S.A. § 1-201 (New common interest communities), Vermont Statutes Online ↩
7. 27A V.S.A. § 3-114 (Surplus funds), Vermont Statutes Online ↩
8. 27A V.S.A. § 3-118 (Association records), Vermont Statutes Online ↩
9. 27A V.S.A. § 1-104 (Variation by agreement), Vermont Statutes Online ↩
10. 27 V.S.A. § 1310 (Common profits and expenses), Vermont Statutes Online ↩
11. 27A V.S.A. § 1-204 (Preexisting common interest communities), Vermont Statutes Online ↩
12. 11B V.S.A. (Vermont Nonprofit Corporation Act), Vermont Statutes Online ↩
13. 27A V.S.A. § 4-103 (Public offering statement; general provisions), Vermont Statutes Online ↩
14. 27A V.S.A. § 4-109 (Resales of units), Vermont Statutes Online ↩
15. S.328 (2025–2026), An act relating to housing and common interest communities, Bill Status, Vermont General Assembly ↩
16. Vermont Supreme Court Published Opinions and Entry Orders, Vermont Judiciary ↩
17. Community Associations Institute, Reserve Requirements and Funding for Community Associations (state UCIOA classifications) ↩
18. Cal. Civ. Code § 5605(b) (Davis-Stirling Common Interest Development Act), California Legislative Information ↩