New 2020 Utah HOA Laws

May 12, 2020

By Curtis G. Kimble.

Two bills were passed this year in Utah changing parts of the Condominium Ownership Act and the Community Association Act.  The new laws that were passed by the two bills go into effect today, May 12, 2020.

House Bill 155 (2020) requires a seller of a unit or lot, or the association if requested by the seller, to make certain disclosures before closing on a sale, and requires the Department of Commerce to publish certain educational materials on its website.  The bill enact Sections 57-8-6.1 (in the Condo Act (57-8)) and 57-8a-105.1 (in the Community Association Act (57-8a)), and amends Sections 57-8-13.1 and 57-8a-105.  Specifically, before the closing of a sale of a unit or lot, the seller must provide to the buyer (1) a copy of the association’s recorded governing documents, and (2) a link to the Department of Commerce’s educational materials.  The association must, upon request by the seller, provide those two things to the seller.  Additionally, if a condo association has a manager, the association may now opt to include the name and address of the manager rather than that of each board member (community associations are not and were never required to include the name and address of each board member).

The Department of Commerce is required to publish educational materials on its website providing, in simple and easy to understand language, a brief overview of state law governing associations, including: (1) a description of the rights and responsibilities provided in the law to any party under the jurisdiction of an association; and (2) instructions regarding how an association may be organized and dismantled in accordance with the law.

The education materials don’t appear to be published quite yet on the Department’s website.  When I called the Department, they informed me it should be up within a week.  It isn’t clear yet exactly which website will host the information.  It could be at the Department’s primary website at commerce.utah.gov, or at the Homeowner Associations Registry website at secure.utah.gov/hoa, or somewhere else entirely.  I think the Homeowner Associations Registry website would make the most sense.

Senate Bill 183 (2020), “Nonjudicial Foreclosure Amendments,” amends provisions related to nonjudicial foreclosure of a lien on a unit or lot by an association, including establishing limitations on nonjudicial foreclosure.  A nonjudicial foreclosure is a foreclosure without a lawsuit—in the same manner a bank typically forecloses on a home that is in default.

The bill amends Utah Code Sections 57-8-3 and 57-8-46 (in the Condo Act), and 57-8a-303 (in the Community Association Act), by adding definitions of “judicial foreclosure” and “nonjudicial foreclosure” in the Condo Act to mirror the definitions in the Community Association Act, and by changing the notice that must be sent to a unit or lot owner before an HOA starts a nonjudicial foreclosure.  Additionally, the law now prohibits nonjudicial foreclosure of a unit or lot if the lien includes a fine the association imposed in accordance with Section 57-8-37 “Fines” (condo) or 57-8a-208 “Fines” (for noncondos).

Contact Kimble Law if your association needs any assistance with legal issues!


A Follow Up on Fidelity

August 2, 2011

As a quick follow up to my post on June 28, 2011, regarding embezzlement and fidelity insurance, this complaint underscores the importance of fidelity coverage even more.  Even if you never have an issue with misuse of funds or embezzlement, a lack of fidelity coverage could affect the ability of owners to buy and sell units within your association.

FHA, Fannie Mae and Freddie Mac all require that condominium associations carry some level of fidelity insurance, even if the association has professional management which handles the day to day aspects of collecting assessments.   Even a conventional loan with 20% down is likely to be sold by an initial lender on the secondary lending market and thus the loan must meet Fannie Mae and Freddie Mac standards.

While Wells Fargo didn’t exhibit best practices in the situation described in the link above, it’s always the best practice for an HOA to carry fidelity insurance coverage.

Curtis G. Kimble


How the New Laws Affect You: Condos

May 31, 2011

So, here’s a summary of how the new Utah HOA laws that went into effect on May 10, 2011, affect you most, as well as some recommended “action items.”  Contact us for help with any action item.  Also, see the other posts on this blog for more detail on the new laws.  This blog does not contain a comprehensive list of the new laws, just those that affect your daily operations the most.

If you’re a condo:

1.  Register or No Lien.  Register as an HOA (separate and apart from registering as a nonprofit corporation) with the State of Utah and keep it updated when directors change, or else you can’t enforce any liens against delinquent owners.  *Action item:  subscribe to this blog (on the right side of this page under “Email Subscription”) and we’ll post the info on how to register as soon as we know about it.

2.  Insurance.  A condominium association’s insurance policy that is renewed or issued after July 1, 2011, is required to have liability coverage and 100% replacement cost coverage for all permanent improvements, including fixtures and betterments to a unit made by a unit owner.  The association must set aside an amount equal to the amount of the deductible (or $10,000, whichever is less).  The master policy must be primary, even for unit related losses.  However, the law gives the HOA a method to allocate or transfer some risk and responsibility to the unit owner (or unit owner’s policy) for unit related issues.  For claims against the association’s master policy which are associated with a particular unit, the association can require the owner of that unit to pay the deductible if a notice had already been sent to all unit owners stating they will be responsible for the deductible on the association’s master policy.  *Action item: send notice to all owners regarding payment of the deductible, and make sure your deductible is somewhere in the $2,500 to $10,000 range to reduce minor or frivolous claims against the master policy by unit owners that drive up the premiums.

3.  Payoff Info.  An association is now prohibited from charging a fee for providing payoff information needed for closing on a unit, unless the fee is authorized by the CC&Rs, bylaws or rules, and, no matter what, the fee can’t exceed $50.  Payoff information must be provided by the HOA within five business days from when a closing agent makes a proper request for it (has to be in writing, signed and dated by the owner, etc.), or the lien is not enforceable at closing.

When a unit owner is closing on a unit and the owner needs payoff information because he or she has not been paying their share of the common expenses, providing that payoff information is an administrative burden on the HOA that is appropriately paid for by the offending/delinquent owner, not by the other paying owners.   *Action item:  adopt a rule authorizing a fee for providing payoff information.

4.  Reserves.  Every five years, a homeowner-elected board must perform, or hire someone to perform, a reserve analysis by (1) determining which improvements have a useful life of 3 years or more, then (2) determining what the cost is for maintaining those improvements over the next several years, and (3) then determining what they think the appropriate amount of the reserve fund should be.

The reserve analysis has to be reviewed and, if needed, updated every two years.  The reserve analysis has to be presented to the homeowners at the annual meeting each year where the homeowners at the meeting vote to determine whether to fund a reserve account and,  if so, how to fund it and in what amount.  The results of that vote have to be reflected in the minutes.

The money in the reserve fund has to be kept separate from other funds and may not be used for daily maintenance expenses, unless approved by the owners, or for any other purpose other than the purpose for which the reserve fund was established.  *Action Item: for those who haven’t conducted a reserve analysis since March 1, 2008,  the law requires you to do one by July 1, 2012.

5.  Electronic Notice.  A new law states that you can provide notice to homeowners solely by electronic means (e.g., email, website) if authorized by your CC&Rs, bylaws, or rules (unless a homeowner opts out in writing).  *Action Item: adopt a rule authorizing electronic notice instead of notice by mail, at least for certain things.

In the next day or two, I’ll post a summary of how the new laws affect non-condo HOAs (all other HOAs).

Curtis G. Kimble


Important Follow Up – Electronic Notice Law

May 4, 2011

As a quick follow up to my post below, I want to point out that another law goes into effect on May 10 allowing both condo and non-condo HOAs to stop mailing out notices to homeowners and to instead provide notice by electronic means, such as by email or by posting on the association’s website (or even by text message), if it’s authorized by the CC&Rs, bylaws or rules, and if, considering all the circumstances, the notice is fair and reasonable.  The new law will be in the Condo Act at § 57-8-42, and in the Community Association Act at § 57-8a-214.

The reason I’m mentioning this as a follow up to my post below is that, because of the new requirements for adopting new rules in non-condo HOAs which I explain below and that go into effect on May 10, a board may want to quickly meet (or take action by written consent without a meeting) before then and adopt a rule authorizing notice by electronic means.  Even if it’s too late for that, every board should definitely consider this important tool, at the very least for certain types of notice.

Curtis G. Kimble


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