New Law on Budgets

Because of a new Utah law that went into effect on May 10, each homeowner-elected board in a non-condo HOA is required to adopt a budget annually and to then present that budget to the homeowners at a meeting.

Since the budget will have already been adopted by the board, there is no need or requirement for the board to hear input or objections or to conduct a vote of the homeowners on the issue at the meeting.   The homeowners can, however, call a special meeting within 45 days of the first meeting and vote to disapprove the budget.  The budget will be disapproved if 51% of the total votes in the association vote to disapprove it “at a special meeting specifically called for that purpose by the lot owners.”

If a budget is disapproved, the budget that the board last adopted that was not disapproved by members continues as the budget until and unless the board presents another budget to members and that budget is not disapproved.

Note that the vote to disapprove the budget can only take place “at a meeting specifically called for that purpose by the lot owners,” which would not normally be the meeting where the budget is first presented by the board because that first meeting would not normally be called by the lot owners or be called for the specific purpose of having a vote to disapprove the budget.  The reason for requiring a separate subsequent meeting is unclear, but it may be to ensure that adequate notice to all lot owners is provided regarding the purpose of the vote, and also possibly because there should be a degree of difficulty in the process of overturning the decision of the board on this issue, since the board is in the best position to determine the budgetary requirements of the association, rather than the homeowners.

Curtis Kimble

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