Chapter 4 - § 4.4 • ALLOCATED INTERESTS

• Jurisdiction: Colorado

§ 4.4 • ALLOCATED INTERESTS

The declaration must include an allocation of "allocated interests" to each unit.²⁷ The meaning of "allocated interests" is different for each of the three kinds of common interest communities.²⁸ In a condominium, the term refers to the undivided interest in the common elements, the common expense liability, and votes in the association. In a cooperative, it means the common expense liability and the ownership interest and votes in the association. In a planned community, the allocated interests are the common expense liability and votes in the association.²⁹

The CCIOA requires the declaration to make allocations. Allocations are based on the type of project developed. For condominiums, the declaration must allocate to each unit a fraction or percentage of undivided interests in the common elements and common expenses and, to the extent not allocated in the bylaws of the association, a portion of the votes in the association.³⁰ For cooperatives, the declaration must allocate to each unit an ownership interest in the association, a fraction or percentage of the common expenses of the association, and, to the extent not allocated in the bylaws of the association, a portion of the votes in the association.³¹ Finally, for planned communities, the declaration must allocate to each unit a fraction or percentage of the common expenses and, to the extent not allocated in the bylaws, a portion of the votes in the association.³² However, in a "large planned community," the common expenses of the association may be paid from assessments and allocated as set forth in the declaration and the votes in the association may be allocated as set forth in the declaration.³³

Except for the fact that the Uniform Act does not address "large planned communities," the language of the CCIOA closely tracks that of the Uniform Act. A commentary to the Act notes that most legislation on common interest communities requires a single common basis — often related to the "value" of units — that must be used to allocate common element interests (or ownership interests in cooperatives), votes in the association, and common expense liabilities.³⁴ However, the Uniform Act, and thus the CCIOA, "departs radically" from that convention by allowing each allocation to be made on a different basis and by allowing allocations unrelated to value. Under this approach, no allocation needs be tied to any other allocation.³⁵ Allocations may be made equally among all units, in proportion to the relative size of each unit,³⁶ or based on any other formula the declarant selects, regardless of the value of units.³⁷ The comment observes that size could be used to allocate common expenses and common element interests, but votes in the association might be allocated on an equal basis: one vote per unit.

Except for minor variations for rounding, the total of the common expense liabilities must equal one if stated as fractions or one hundred percent if stated as percentages. If there is a discrepancy between an allocated interest and the result derived from application of the pertinent formula, the allocated interest prevails.³⁸

For all types of developments, the declaration must state the formulas used to establish allocations...