By Curtis G. Kimble.
It’s the last week of the Utah 2013 general legislative session, which is set to end Thursday, March 14, at midnight, and there are a few HOA bills on the path to becoming law. Here’s a summary and update on where they are in the process:
HB 335 would amend the Condo Act to state a condominium project that recorded its initial declaration before May 12, 2009, would not be able to prohibit or restrict a unit owner’s ability to rent to any greater extent than is described in the declaration that was recorded at the time the unit owner purchased the unit owner’s unit, unless the association obtains the unit owner’s written consent.
This bill is in the House Rules Committee where it has been for a few weeks. This bill will not pass this session.
This substituted version of SB 64 is completely different than the original version (see my prior post). The most important part of this bill, in my opinion, is that now the decision of whether and how to fund a reserve is back where it belongs. If passed, this version of the law will put that decision back to the board (as most CC&Rs require, and where the decision will be subject to the fiduciary obligations of the decision makers). This bill would also allow the homeowners to veto the reserve fund contribution if they don’t like it (whether too low or too high) by a 51% vote of the owners at a special meeting.
Additionally, this bill provides for specific enforcement procedures if the association fails to comply with certain of its provisions. The association will be required to provide a summary each year of the reserve analysis to each owner (not just at the annual meeting) and a complete copy of the reserve analysis to an owner upon request. The board also has to include a reserve fund line item in the annual budget in the amount the board determines and the homeowners can veto that determination (as discussed above).
If an association fails to comply, an owner can sue for a court order compelling the association to comply, for $500 or the owner’s actual damages, whichever is greater, other available remedies, and costs and attorney fees.
This bill has passed through the Senate, though the House committee, and is in the House for a vote. My guess is that this bill will pass, depending on the calendar.
SB 90 1st sub changes which associations the Community Association Act applies to. It currently only applies to wholly residential associations (associations where each member is an owner of a residential lot). This bill makes the Act applicable to any association with at least one residential lot. So, it will apply to mixed-use (commercial/residential) projects with at least one residential lot.
The bill states that, unless otherwise provided in the CC&Rs, developers essentially have control of the association for eternity (that is, for seven years after all declarants have ceased to offer lots for sale in the ordinary course of business (compare this with the Condo Act where it’s 3 years after recording the CC&Rs for a typical project)), or 60 days after 75% of the lots that may be created are sold, whichever happens first.
This bill contains changes to the reserve analysis law, as well, which are very similar to SB 64 1st sub (minus the veto and enforcement provisions).
The bill enacts some provisions relating to making changes to adjoining units or lots acquired by same owner, and relating to the consolidation or merger of associations (i.e., a procedure for merging, if two associations wanted to merge or consolidate).
Finally, the bill cleans up the insurance provisions in the Condo Act and Community Association Act and exempts commercial condominiums and lots from its requirements.
This bill has passed the Senate and is now on its way to the House. Whether it can get through the House in time is anybody’s guess, but my bet is that it will.
SB 274 would require a bank or lender to pay a unit or lot’s share of certain common expenses from the time the lender starts the foreclosure process (by filing a notice of default) on a unit or lot. Many banks start the foreclosure process and then wait for months and sometimes years before completing it, even if the homeowner has given up and long since moved out. Meanwhile, the association still has to carry applicable insurance and carry out maintenance benefiting the unit or lot. The bank won’t foreclose because they don’t want to have to start paying assessments. This bill would address the problem to a small degree by requiring the bank to pay the unit or lots share of “landscaping maintenance in the common areas, water and insurance.”
If this bill gets through the banking lobby, I’d be amazed, but it has passed favorably out of committee and is on the Senate calendar for vote.
The statute requiring all HOAs to register as an HOA with the state of Utah is being merely clarified once again with this bill. There is no change in its requirements or implications. It passed the Senate and House.
SB 262 modifies the Utah Fair Housing Act, which is important for HOAs because the Fair Housing Act prohibits an HOA from discriminating against certain “protected classes” of people in its rules, covenants or practices. If this bill passes, it would prohibit discrimination based on sexual orientation or gender identity. Specifically, the bill states (the underlined language is new language): “It is a discriminatory housing practice to do any of the following because of a person’s race, color, religion, sex, national origin, familial status, source of income, [
or] disability, sexual orientation, or gender identity: . . . deny or make unavailable [any] a dwelling from any person; (b) discriminate against [any] a person in the terms, conditions, or privileges: (i) of the sale or rental of [any] a dwelling; or (ii) in providing facilities or services in connection with the dwelling; . . ..”
This bill passed out of the Senate committee with a favorable recommendation and is on the reading calendar of the Senate (to be voted on).
I’ll let you know which bills pass this session after it ends.