By Curtis G. Kimble.
Continuing our summary of the new laws affecting HOAs in 2015, effective July 1, 2015, both the Utah Condominium Ownership Act and the Utah Community Association Act require board meetings to be open to each homeowner (or homeowner’s designated representative).
Open Meetings; Exception.
Utah Code 57-8-57 (for condos) and 57-8a-226 (for non-condo HOAs) require open board meetings, with the exception that executive sessions may be closed to the owners for the following purposes: to consult with an attorney or to discuss ongoing litigation, personnel matters, contract negotiations, delinquencies, and matters involving an individual if privacy is required.
Comment Period at Meetings.
Additionally, at each board meeting, the board must provide each owner a reasonable opportunity to offer comments, but the board may limit the comments to one specific time period during the meeting and may limit the time allotted to each owner to comment.
Notice of Meetings.
If an owner has requested notice of a board meeting, the association must give written notice of a board meeting at least 48 hours before a meeting to the owner who requested it, unless notice of the meeting is included in a meeting schedule that was previously provided to that owner, or the meeting is to address an emergency and each board member receives notice of the meeting less than 48 hours before the meeting.
The notice to the owner must (i) be delivered to the owner by email, to the email address that the owner provides to the board or the association; (ii) state the time and date of the meeting; (iii) state the location of the meeting; and (iv) if a board member may participate by means of electronic communication, provide the information necessary to allow the owner to participate by the available means of electronic communication.
Exactly what constitutes a board meeting?
A board “meeting” means “a gathering of a board, whether in person or by means of electronic communication, at which the board can take binding action.” (Utah Code 57-8a-102(16), 57-8-3(27)). “Means of electronic communication” means an electronic system that allows individuals to communicate orally in real time, including web conferencing, video conferencing, and telephone conferencing (Utah Code 57-8a-102(15), 57-8-3(26)).
Action/decisions without a Meeting.
A meeting requires a gathering of the board in a way that they are communicating live and in real time. It does not include actions or decisions taken without a meeting, as is commonly done by boards (most commonly through email). However, specific requirements must be followed by a board in taking an action or making a decision without a meeting. These requirements are spelled out (for associations that are nonprofit corporations) in Utah Code Section 16-6a-813, which, significantly, was also changed this year.
Under the prior law, a board could make decisions or take an action without a meeting if each member of the board either: (1) voted for the action, or (2) waived the right to demand that the decision/action be made or taken at a meeting and either voted against the action or abstained from voting. Now, unanimous consent of the members of the board is needed for the action or decision being made or taken without a meeting, unless an association’s bylaws specifically provide that an action or decision may be taken without a meeting without the board unanimously consenting to the action or decision being made.
If the bylaws do authorize it, the statute sets out the required procedure for a board to make a decision or take an action without a meeting without the board unanimously consenting to the action or decision being made (regardless of any contrary procedure in your bylaws). The statute requires notice to be sent to each member of the board containing certain items listed in the statute. Then each member of the board has to either (1) sign a writing in favor of the action/decision, or (2) sign a writing against the action/decision, abstain in writing from voting, or fail to respond or vote or demand in writing that the action or decision be made at a meeting. All of these “writings” and communications can be delivered electronically (e.g., as an email), in which case, the date on which such an electronic transmission is transmitted is considered the date on which the vote, abstention, demand, or revocation is signed.
Declarant/developer Controlled Associations.
The open meetings laws do not apply to associations that are still under “declarant” (developer) control (where the declarant appoints the board).
The law stipulates certain penalties and procedures if an association does not comply. Essentially, an owner can make demand for compliance on the association stating which requirements the association has failed to comply with. Then, if 90 days elapses without compliance after a proper demand, the owner may file an action in court for a court order requiring the association to comply and to pay a $500 penalty. The court may also require that the prevailing party be reimbursed its costs and attorney fees by the non-prevailing party.
This has been long over due!!
In order to send emails to our homeowners regarding meetings, account information and other items, are we required to have a form on file by each homeowner consenting to electronic notices?
No, the association does not need the owner’s written consent to send notice by email or other electronic form. The law states that, “If provided in the declaration, articles, bylaws, or rules, an association may provide notice by electronic means, including text message, email, or the association’s website.” (http://utahhoalaws.com/CommAssnAct214.html)
So, a provision allowing for such electronic notice just needs to be in one of those four governing documents.
Note, however, an owner may opt out by sending a written request to the association that notice only be sent to the owner by regular mail.
In raising monthly dues yearly, is a vote required by each owner ? Is a balance sheet required to each owner to support and justify increase?
No vote is required by law to raise the dues. Some CC&Rs require it, however, so it depends on what the CC&Rs say.
In a non-condo HOA, the board is required to present a budget to the owners annually. The budget would naturally support and justify an increase when an increase is necessary.
The HOA at my condo has turned my water off, removed the handle and placed a lock on the door where my hot water heater and water supply is located. They say they every right to deny me water since I am behind on my dues. They refuse to turn it back on rendering my condo useless until I pay. Can they do this?
Utah law states that a condo HOA board may “terminate a delinquent unit owner’s right:
(a) to receive a utility service for which the unit owner pays as a common expense; or
(b) of access to and use of recreational facilities.”
This is the statute: Utah Code Section 57-8-52
Please note that my comments are informational only and are not legal advice applicable to any particular situation (in other words, I am not acting as your lawyer).
Because the action without a meeting rules are part of the non-profit act, would they apply to associations that are not set up as non-profit corporations? Or are there parallel statutes that apply to for-profit corporations?
The provisions of the Utah Nonprofit Corporation Act do not generally apply to associations that are not incorporated as nonprofit corporations. If an association is a legally organized entity, such as an LLC or corporation, the applicable act would apply (the LLC act to an LLC and so forth).
If an association is not organized as a formal, legal entity at all (which is problematic in its own right and definitely not recommended), then no, there isn’t necessarily a parallel statute that applies regarding action without a meeting.
But, I would say most CC&Rs or bylaws provide for action without a meeting. If the CC&Rs or bylaws do not provide for action without a meeting, and the association is not incorporated, then it is almost certain that the CC&Rs and bylaws for that association are inadequate and should be amended (partly or completely).
You may be alluding to the fact that a new bill was passed this year by the Utah Legislature that goes into effect in May 2017 that amends the open meetings law discussed in the above blog post. The change adds the phrase “Except for an action taken without a meeting in accordance with Section 16-6a-813, a board may take action only at a board meeting.”
Section 16-6a-813 is part of the Nonprofit Corporation Act, which, as mentioned above, does not apply to associations that aren’t incorporated as nonprofits. So, the question is, what if the CC&Rs or bylaws of an unincorporated association provide for action without a meeting? Can the board take action without a meeting in accordance with the association’s own CC&Rs or bylaws? I personally can’t imagine that the bill was intended to override provisions regarding action without a meeting in an association’s governing documents. But, unfortunately it is not entirely clear as the result of poorly drafted legislation.
In light of this new law, it’s more important than ever for an association to ensure they are incorporated as a nonprofit corporation and in good standing with the state.
Useful Article. I can share some useful information about HOA Statutes.
Would the “comment” requirement apply to annual meetings too?
Can the “action in court for the $500 penalty” be done in small claims court to save the HOA attorney fees? Or is that not allowed or recommended for some reason?