Two new laws that go into effect on May 10, 2011, deal with rule-making authority and procedures in non-condo HOA’s. These two new laws will become part of the Utah Community Association Act (but not part of the Utah Condo Act, so you condominiums can ignore them).
Utah Code § 57-8a-217. From now on, before a board can adopt or change a rule (including architectural guidelines or design criteria), they have to provide an open forum at a board meeting giving lot owners an opportunity to be heard. The board has to send out notice at least 15 days before that board meeting to every owner stating that the board is considering a change to a rule. The board also has to send out notice within 15 days after a new rule is adopted.
This means a board has to listen to homeowner concerns before it makes a final decision. The board does not need to conduct a vote of the homeowners to adopt a rule. The decision to initially adopt a new rule is still entirely up to the board.
However, the homeowners can disapprove a new rule by calling a special meeting within 60 days from the date it was adopted. If 51% of the total votes in the association vote to disapprove the rule at the special meeting, then the rule will be nullified. The procedure for lot owners to call a special meeting is usually set forth in the bylaws or CC&Rs. The board has no obligation to call a meeting of the lot owners to consider disapproval unless lot owners submit a petition in accordance with the procedures in the bylaws or CC&Rs.
This is a big change, and an unfortunate one at that. While it has value as a “checks and balances” type recourse for homeowners faced with unfair or inappropriate rules, it simply goes too far and is much too burdensome, especially for larger HOAs. The law doesn’t go into effect until May 10, so it doesn’t apply to any rules a board adopts before then (so you’ve still got a few days to adopt that rule you’ve been putting off adopting without having to go through these new steps).
Utah Code § 57-8a-218. This law mostly just restates common sense and common law principles regarding rules that I and other HOA attorneys have long been preaching (e.g., a rule must be reasonable, an association can adopt generally applicable rules for the use of common areas, and a rule can’t be contrary to the CC&Rs).
However, a couple of new things do come out of it. For one, it states that an association may require a minimum lease term by rule alone (as long as it wouldn’t be contrary to the CC&Rs). So, if you don’t have such a rental restriction in your CC&Rs already, the board can simply adopt a rule prohibiting rentals of less than X amount of time (e.g., 30 days, 6 months, 1 year).
Another thing that’s helpful in this law is that, even if not authorized in the CC&Rs, now an association may by rule:
- impose a fee or charge 1. for the use, rental, or operation of the common areas, and 2. for a service provided to a lot owner, or
- impose a late fee for late payments.
Finally, the law states that a rule may prohibit smoking inside attached dwellings (e.g., townhomes) if such smoking “creates the potential for smoke to enter a neighboring unit, the common areas, or limited common areas.” So, for instance, without amending the CC&Rs, an association could adopt a policy stating that smoking is prohibited anywhere, including inside a unit, if it is possible that smoke will drift into another unit or into the common area or limited common area.
This new law parallels the existing law in the Utah Condo Act and it underscores the Utah Legislature’s position that smoking is a health and safety issue first and foremost. Smoking is not a right, but rather it is every homeowner’s right to enjoy their dwelling free from the carcinogens and health hazards forced upon them at the whim of their smoking neighbors. That is why the law provides that this is not an issue that needs to be voted on by the homeowners, a board can simply adopt a rule protecting the health of the residents and the livability of the units.