New 2025 HOA Laws and What They Mean For Your HOA

May 7, 2025

The Utah general legislative session for 2025 was January – March 2025.  All of the following laws go into effect May 7, 2025.

HOA Registry – Annual Renewal Required

House Bill 217 (2025) requires a homeowner association to renew its registration with the Utah HOA Registry annually, instead of just when there is a change in its information.  So, previously, an association had to register with the HOA Registry and then had to update its information within 90 days every time there was a change, such as when a board member changed.  Now, an association must renew its registration each year and pay an annual fee set by the Department of Commerce (likely around $90), and it must update its information within 90 days every time there is a change.  See Utah Code § 57-8a-105 or 57-8-13.1, as applicable

Rules

A rule is a restriction that governs conduct or property and that is adopted by a board, rather than by a vote of the owners, and does not include restrictions in the CC&Rs (declaration) or bylaws.

House Bill 217 (2025) says a rule:

  • can’t prohibit an owner from displaying a flag in a window of a condominium unit, or on a lot, a dwelling exterior or the front yard of a dwelling, regardless if the association owns the yard.  But, a rule may regulate the size of flags and the time, place and manner a flag is displayed.  The bill does not define “flag.”  A rule can’t regulate the content or design criteria of a flag, but may restrict a flag that contains obscene, profane, or commercial content.  
  • can’t prohibit an owner from parking in the owner’s driveway, if otherwise legal, unless it’s a commercial vehicle as defined in Section 72-9-102, or a motor home as defined in Section 13-20-2, or a travel trailer, camping trailer, or fifth wheel trailer.  Inoperable vehicles can be prohibited from a driveway and parking in a garage may be required before parking elsewhere.
  • can’t regulate parking on a public street or the use of a public street.
  • can’t restrict a resident from installing, displaying or storing an item that is not visible to someone standing outside the unit or lot.
  • can’t restrict an owner from hiring a contractor solely because the contractor is not on a preferred vendor list or doesn’t have a license, unless a license is required by law.
  • can’t impose a late fee of more than the greater of 10% of the assessment amount or $50, or interest of more than 1.5% per month (18% per annum) for late assessment payments.  Current law states that if the governing documents don’t impose interest on an unpaid assessment, interest accrues at 10% per annum.  (See § 57-8a-301 or 57-8-44).  HB 217 says a board can establish a late fee and interest for late payments by rule.  So, if the CC&Rs don’t impose a late fee or interest, and the association would like to charge a higher interest rate than the default 10%, the board can adopt a rule to do so.  If a late fee or interest are imposed by rule (rather than by the CC&Rs or other governing document that is not adopted by the board), the late fee and interest are capped at those amounts, and before imposing the late fee, the board must formally adopt the fee by rule (and follow any required procedures to adopt a rule) and provide a copy to each owner.  Additionally, in condos, if the board relies on the statute (rather than the CC&Rs) for authority to impose a payment, fee or charge for the use, rental, or operation of the common areas or a service provided to an owner, the fee must be formally adopted by rule and provided to each owner.  Utah Code § 57-8a-201 & 57-8-8.1(5).

See Utah Code § 57-8a-218 or 57-8-8.1.

Additionally, in community associations, a rule

  • can’t prohibit a back yard vegetable garden if the association doesn’t own or maintain the back yard, but it can regulate the vegetable garden to some degree that doesn’t significantly increase the cost or significantly decrease the efficiency of the garden.
  • can’t prohibit a basketball standard on individually-owned property that abuts a public street.

See Utah Code § 57-8a-218

Rentals

Senate Bill 201 (2025) modfies Utah Code § 57-8a-209 and 57-8-10.1 to say:

  • A rule may establish a minimum lease term of six months or less.
  • If a rule requires owners to pay a fee to rent their unit:
    • Before charging the fee, (1) a board meeting must be held to discuss and allow owners to comment on the administrative expenses that the association intends to cover with the fee, and the circumstances that require imposing or increasing the fee; (2) at the board meeting, the board must approve the fee by a majority vote; (2) the association must give notice of the board meeting to every owner 15 days before the meeting. 
    • Within 30 days of adopting the fee, the association must give notice to each owner impacted by the fee describing the “new administrative expenses” that the association intends to cover with the fee, and the circumstances that require imposing or increasing the fee.  An owner may contest the fee if the association doesn’t give the notice.
    • The same required exemptions from the rental restrictions apply to the fee.
    • The fee can only be charged once every 12 months.
    • By way of reminder, the existing law says an association can only charge an owner a fee up to $200 to rent a unit if the association incurs additional administrative expenses directly related to the rental and if at least 35% of the units are allowed to be rented.
  • An owner of a rental may designate in writing a primary contact whom the association may communicate with as if they are the owner.  If an owner designates a primary contact, the association must give the owner written notice that confirms the records have been changed to identify the primary contact.

Transfer Fees (inluding reinvestment fees)

House Bill 217 (2025) amends the transfer fee statute that applies to HOAs, but it should not change anything for an HOA that has already properly adopted a transfer fee (a.k.a. a reinvestment fee).  In short, if the fee is used to pay expenses related to the transfer of the property, the fee does not need to be approved by a vote of the owners or contained in the CC&Rs.  If the fee simply goes into the general coffers of the association, the fee must be authorized in the CC&Rs (or similar document approved by a vote of the owners).

The statue separates and defines those two types of fees:

  • An “association transfer fee” is a fee charged by an association upon transfer of a unit or lot relating to the sale of the unit or lot that is used to pay expenses related to the transfer.
  • A “reinvestment fee” is a fee imposed, directly or indirectly, by an association upon a buyer or seller upon transfer of a unit or lot, and that is dedicated to benefiting the common areas (including payment for association expenses).

In order to charge an “association transfer fee,” approval of the owners is not required.  In order to charge a “reinvestment fee” after May 6, 2025, the fee must be authorized in the declaration (CC&Rs) or a separately recorded covenant and must be approved by a majority of the voting interests or a higher percentage if required in the governing documents.  The separately-recorded notice of the fee is still required.  The amount of the fee must be set in accordance with the CC&Rs or covenant.  The owners may disapprove a reinvestment fee by following a procedure specified in the statute. 

See Utah Code § 57-1-46.

HOA Ombudsman

House Bill 217 (2025) establishes the Office of the Homeowners’ Association Ombudsman, which will issue advisory opinions regarding compliance by an association or owner with statutes applicable to associations and owners.  If an owner or an association are involved in a dispute relating to a violation of a state statute, the owner or association may request an advisory opinion on the issue if: (1) a lawsuit has not yet been filed (or binding arbitration begun), (2) no more than one year has passed since the requester knew or should have known about the act or issue that is the subject of the dispute, (3) the requester has exhausted all existing procedures in the governing documents, other than binding arbitration or a lawsuit, and (4) a $150 filing fee is paid.

The Ombudsman’s office will only issue an advisory opinion when there is an active dispute over an issue between two or more parties and only for issues relating to a violation of a state statute.  The office will not review contract disputes or interpret the governing documents of an association.

An advisory opinion issued by the Ombudsman is not binding on any party and is not admissible as evidence in a dispute, except that if the issue that is the subject of the advisory opinion is then litigated in court and the court rules in favor of the same party as the advisory opinion, the court may award the winning party: (1) attorney fees and court costs from the date of the advisory opinion, and (2) if the court finds that the other party knowingly and intentionally violated the law at issue, a penalty of $250 for each day beginning the later of: (i) 30 days after the advisory opinion is given, or (ii) the day the action is filed in court.

See Utah Code Title 13, Ch. 79, Part 1.

Records

House Bill 86 (2025):

  • increased the penalty that an owner may request a court to require an association to pay if the association fails to make documents available to the owner as required by law or its governing documents from $500 to $1000 (or actual damage, whichever is greater);
  • increased the hourly rate an association can charge an owner for an employee’s or agent’s time making copies in response to a records request by the owner from $15 to $20; and
  • changed whether the winning party in a records request lawsuit will be granted the attorney fees and costs they incur (meaning that the losing party in the lawsuit is required to pay the winner’s attorney fees and costs).  Previously, a court was required to award the prevailing party those fees and costs, but now the law says the court may do so. So now it’s up to the court whether to award those fees and costs. So, for instance, if the association wins the suit, the court may require the owner to pay the association’s attorney fees and costs. See Utah Code Sections 57-8a-227(6) or 57-8-17(6). Note, a different subsection of the statute, subsection (5), says an association is required to pay attorney fees and costs incurred by an owner in obtaining the documents if the association fails to comply with the statute when responding to the request. So, if a court finds an association did comply with the statute, the association does not have to pay those attorney fees and costs. But, if a court finds the association didn’t comply with the statute, the association is required to pay those fees and costs under subsections 57-8a-227(5) or 57-8-17(5). So, the bill changed whether a court is required to award attorney fees and costs to the winning party (which could be the association or the owner), but not whether an association that fails to follow the statute when responding to a records request must pay the attorney fees and costs an owner incurs trying to obtain the records.

House Bill 217 (2025):

  • added two financial statements to the list of records an association must keep and make available to owners who request them, a profit and loss statement and balance sheet for the previous three fiscal years;
  • specifies that an associaition must comply with a request for records by an owner under 57-8a-227(3) within two weeks after the day the association receives the request.  Previously, there was no specific time period for some records.  The records that are required to be always available haven’t changed; 
  • says an association can’t charge for the cost of electronic transmission of documents requested by an owner;
  • allows an association to comply with a request by posting the documents to the association’s website or online owner portal.

See Utah Code § 57-8a-227 or 57-8-17.

Architectural Review

House Bill 217 (2025) requires that if an association denies architectural plans, the association must give written notice to the owner specifying: 

  • each governing document provision that the association relied on when denying the plan, and
  • the specific aspect of the proposed plan that does not conform to that governing document provision.

Additionally, in community associations, an association may not restrict or deny a plan due to the plan’s inclusion of a fire-resistant material in an area with heightened risk of wildfire.  “Fire-resistant material” means a material designed and tested to resist ignition, slow the spread of fire, or withstand high temperatures, including: (i) Class A roofing; (ii) non-combustible siding; (iii) a fiber cement product; (iv) metal roofing; or (v) fire-rated gypsum board.

See Utah Code § 57-8a-109 or 57-8-6.7

Water

Senate Bill 201 finishes a sentence in the existing Community Association Act that just sort of trailed off and created a rather large ambiguity about whether an association could require grass on a lot.  For some reason, last year the statute was changed from saying, “An association may not require a property owner to install or keep in place lawn or turf in an area with a width less than eight feet,” to deleting the last seven words and simply saying, “An association may not require a lot owner to install or keep in place lawn or turf in an area.”  SB 201 adds those words “less than eight feet wide” back in.  So, now it reads, “Except where reasonably necessary for erosion control, an association may not require a lot owner to install or keep in place lawn or turf in an area less than eight feet wide.”

See Utah Code § 57-8a-231 or 57-8-8.1.

Amendment of Declaration

House Bill 217 (2025) imposes a minimum number of owners that must approve an amendment to the CC&Rs (declaration), as well as a minimum quorum requirement, but it doesn’t apply if your documents require a higher number of owners.  The law only applies after the period of administrative control by the developer.

The bill establishes that the minimum number of owners that must participate in a vote to amend the declaration (the quorum requirement) is 51%, or a higher percentage if required in the CC&Rs.  So, in the rare instance that an association’s CC&Rs say the CC&Rs can be amended where a quorum of less than 51% of the owners participate, this statute overrides that requirement and makes it inapplicable.  If the CC&Rs say the CC&Rs can be amended with a quorum that is more than 51% of the owners, this statute has no effect.  For instance, if the CC&Rs require a quorum of 55% of the owners, then the 55% quorum is still required. 

Then, as to the vote itself, the bill establishes that the minimum number of votes that can approve an amendment to the declaration is a majority vote of the voters where at least 51% of the owners participate. “Voters” means owners that actually cast a vote. 

For instance, if the CC&Rs require approval of a majority of voters that vote in a proceeding where at least 30% of the owners participate, the association has 150 owners, 45 owners are present and cast a vote, and 23 vote in favor of amending, that would be sufficient under the CC&Rs to amend before this law.  Now, at least 77 owners must be present (51% of 150) and if 70 of those cast a vote, 35 must vote in favor (a majority of 70).

If the CC&Rs require a higher threshold than this statute, the statute has no effect.  For instance, if the CC&Rs require approval of 60% of the owners and the association has 150 owners, at least 90 affirmative votes (60% of 150) are needed for the amendment to pass (and it doesn’t otherwise matter how many owners vote).

Finally, the bill makes clear that a board alone cannot amend CC&Rs.

Key Point:  If your CC&Rs require approval of an amendment to the CC&Rs by a majority vote of the voters or more, and that a quorum of at least 51% of the voting interests must participate, this statute has no effect for your community.

See Utah Code § 57-8a-104 or 57-8-39.

Solar

House Bill 119 (2025) lowers the percentage of owners required to approve a change to CC&Rs that prohibit solar installations on a lot with a detached dwelling from “greater than 67%” to “at least 51%.”  Also, an association may not prohibit solar installations unless at least 67% of the owners approve the prohibition in an amendment to the CC&Rs (this was changed from “greater than 67%” to “at least 67%”).

Developer

Developer Duties

In 2009, the Utah Supreme Court ruled that a developer owes certain fiduciary duties to an association until the developer relinquishes control of the association.  Those fiduciary duties have now been codified into Utah Code § 57-8a-502 by House Bill 217 (2025) for community associations.

During the period of administrative control of an association, the developer must:

  • use reasonable care and prudence in managing and maintaining the common areas;
  • establish a sound fiscal basis for the association by imposing and collecting assessments and establishing reserves for the maintenance and replacement of common areas;
  • for a service that the association is or will be obligated to provide, disclose to the owners the amount of money the declarant provides for or subsidizes for that service;
  • maintain records and account for the financial affairs of the association from the association’s inception;
  • comply with and enforce the terms of the declaration, including design controls, land-use restrictions, and the payment of assessments; and
  • disclose to the owners all material facts and circumstances affecting:
    (1) the condition of the property that the association is responsible for maintaining, and
    (2) the financial condition of the association, including the interest of the developer and the developer’s affiliates in any contract, lease, or other agreement entered into by the association.

Developer Control Period

Additionally, in community associations, the default for when the period of administrative control terminates is changed to 60 days after the day on which 80% of the lots that may be created in the association are conveyed to owners (unless otherwise stated in the CC&Rs).  Regardless of what the CC&Rs say, the period of administrative control ends on the earlier of: (a) when the developer no longer owns any lot and no longer possesses any development right, or (b) seven years after the day on which the developer has stopped offering lots, including lots that may be created, for sale in the ordinary course of business.

While the developer is still in control of the association, the developer can’t use money paid by homeowners to fight a lawsuit that homeowners have filed against them.

Finally, a developer may not sell any of the common areas during the period of administrative control, except in the same way an association may as provided in Section 10-9a-606 or 17-27a-606, or as allowed by the Condo Act.

See Utah Code §§ 57-8a-502, 57-8a-229, 57-8-58, 57-8a-232 and 57-8-32.

Finally, Senate Bill 201 requires that, in order to sue a developer for defective construction, a condo unit owner must first provide notice to the developer describing the defective construction and requesting repairs and then allow nine months for the repairs to be made.  See Utah Code § 78B-4-513.

How the new laws affect your community and what you need to do to comply with the new laws

  • Make sure the association always has a profit and loss statement and balance sheet for the previous three fiscal years.
  • Review your rules and revise as necessary if the rules:
    • prohibit flags,
    • prohibit an owner from parking in the owner’s driveway,
    • regulate parking on a public street or the use of a public street,
    • restrict items that are not visible to someone standing outside a unit or lot,
    • require using a contractor from a preferred vendor list or that has a license, unless a license is required by law,
    • restrict vegetable gardens in the backyard of property the association doesn’t own or maintain,
    • prohibit a basketball standard on individuallly-owned property that abuts a public street.
  • If a late fee and interest aren’t authorized in the CC&Rs and the board imposes a late fee and interest, ensure they don’t exceed the cap and ensure the late fee is formally adopted in a rule with a copy provided to each owner.  Additionally, for condos, any fee charged for the use, rental, or operation of the common areas and any fee charged for a service provided to a unit owner must be included in a rule provided to each owner.
  • Ensure your association renews its registration with the HOA Registry annually now, instead of just after changes.
  • If the association charges a fee to owners of rental units, make sure to follow the process outlined above.
  • If the association charges a transfer fee (a.k.a. reinvestment fee) that benefits the association generally (e.g., goes into the general fund or reserve fund), rather than paying expenses associated with transferring title to a lot or unit, ensure the fee is authorized in a recorded covenant (such as the CC&Rs) approved by at least a majority of the voting interests of the owners.
  • Don’t reject an architectural review plan submitted by an owner without notifying the owner of the specific governing document provisions relied on when denying the plan and the specific aspect of the proposed plan that does not conform to those governing document provisions.
  • If you are a community association, don’t refuse to allow fire-resistant materials that are proposed in an architectural plan.

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Posted by Curtis G. Kimble

New 2022 HOA Laws and What They Mean For Your HOA

June 1, 2022

The Utah general legislative session for 2022 was January – March 2022, and the general effective date for legislation from the session was May 4, 2022.

Water-efficient Landscaping

Under Senate Bill 152 (2022), all associations (even condominiums) are required to adopt rules supporting water-efficient landscaping, including allowance for low water use on lawns during drought conditions. See Utah Code Sections 57-8a-218(16) and 57-8-8.1(9).  

Under House Bill 282 (2022), an association may not prohibit an owner of a lot with a detached dwelling (aka single family home) from incorporating water wise landscaping on the owner’s lot.  “Water wise landscaping” means any of the following: (1) installation of plant materials suited to the microclimate and soil conditions that can remain healthy with minimal irrigation once established or be maintained without the use of sprinklers, (2) use of water for outdoor irrigation through proper and efficient irrigation design and water application, or (3) the use of other landscape design features that either minimize the need of the landscape for supplemental water from irrigation or reduce the landscape area dedicated to lawn.

However, an association can require a lot owner to comply with a site plan review process, to maintain plants in a healthy condition, and to follow specific water wise landscaping design requirements adopted by the association, and can restrict the use of mulches considered detrimental to the association’s operations, impose minimum or maximum vegetative coverage, and restrict the use of specific plant materials.

The bill enacts a new section of the Community Association Act, Utah Code Section 57-8a-231.

Finally, an association may not require a lot owner to have lawn in an area that’s less than eight feet wide and may not restrict the conversion of a “grass park strip” to water-efficient landscaping.  See Senate Bill 152 and House Bill 282, now codified in Utah Code Sections 57-8a-218(16), 57-8-8.1(9) and 57-8a-231(3)(b).

Records

Senate Bill 152 (2022) limits the records that owners are entitled to see to just the main records, such as minutes, governing documents, financials, etc.  This is a change from prior law where owners were entitled to view and copy virtually all records of their HOA.  Specifically, an association is required to keep and make available to owners a copy of the governing documents, most recent approved minutes, most recent budget and financial statement, most recent reserve analysis, and certificate of insurance for each insurance policy the association holds, plus the records listed in Utah Code Subsections 16-6a-1601(1) through (5).

Additionally, an association must now have all of its governing documents on its website, including the CC&Rs (declaration), articles of incorporation, bylaws, the plat of the development, and the rules, as well as the most recent approved minutes and most recent budget and financial statement.  Previously, just the declaration and bylaws (and most recent approved minutes and most recent budget and financial statement) were required to be on the website.  If the association doesn’t have a website, then it must make the documents available to lot owners free of charge during regular business hours at the association’s address listed with the Utah HOA Registry.  See Utah Code Section 57-8a-227(2) and Section 57-8-17(2).

Electric Vehicle Charging Systems

Senate Bill 152 (2022) added new statutes to both the Condo Act and Community Association Act that provide:

  • an association may not prohibit an owner from installing or using an electric vehicle charging system in a parking space on the owner’s lot or in a limited common area parking space designated for the owner’s exclusive use;
  • an association may (1) require the owner to obtain approval before installing a charging system; (2) require that an electrical contractor install the charger, or if installed on common area, require the owner to reimburse the association for any increase in the insurance premium caused by the installation of the charger; (3) require the system to comply with the association’s design criteria and other restrictions if they do not significantly increase the cost of or decrease the efficiency or performance of the charging station; and (4) require the owner to pay the costs of installation, metering, and use of the system, including the costs of electricity and damage to common area.

See Utah Code Section 57-8a-801 and 802 and Section 57-8-8.2.

Rules

Senate Bill 152 (2022) amends and enacts provisions in Utah Code Sections 57-8a-218 and 57-8-8.1 “Equal treatment by rules required — Limits on association rules and design criteria.”

Religious and Holiday Displays.  A rule may not abridge the rights of an owner to display a religious or holiday sign, symbol, or decoration inside a dwelling or outside a dwelling on: (1) a lot, (2) the exterior of the dwelling, unless the association owns or maintains the exterior, or (3) the front yard of the dwelling, unless the association owns or maintains the yard.  But, the association may adopt a reasonable time, place, and manner restriction with respect to a display that is outside a dwelling and visible from outside the lot.

Political Signs.  The new law says a rule may not prohibit an owner from displaying a political sign inside a dwelling or outside a dwelling on: (1) a lot, (2) the exterior of the dwelling, regardless of whether the association owns the exterior, or (3) the front yard of the dwelling, regardless of whether the association owns the yard.  A rule may reasonably regulate the time, place, and manner of posting a political sign, but may not regulate the content of a political sign. A “design provision” may not establish design criteria for a political sign.

For-Sale Signs.  Finally, a rule may not prohibit an owner from displaying a for-sale sign inside a dwelling or outside a dwelling on: (1) a lot, (2) the exterior of the dwelling, regardless of whether the association owns the exterior, or (3) the front yard of the dwelling, regardless of whether the association owns the yard.  A rule may reasonably regulate the time, place, and manner of posting a for-sale sign.

Continue reading for how the new laws affect your community and what you need to do to comply with the new laws.

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Posted by Curtis G. Kimble

HOA Immunity from COVID-19 Liability

August 31, 2020

Utah HOAs can breathe a little easier because associations are now protected generally from lawsuits and claims relating to COVID-19.  A new Utah law went into effect August 18, 2020, that provides immunity from civil liability for damages or an injury resulting from exposure of an individual to COVID-19 on the premises owned or operated by an HOA, or during an activity managed by the HOA.

Immunity does not apply if an association purposely does something wrong or is reckless.  Specifically, immunity does not apply “to willful misconduct, reckless infliction of harm, or intentional infliction of harm.”  The new law is found in Utah Code Section 78B-4-517.

The new law provides some welcome relief from the stress of potential liability for associations, especially because claims relating to communicable diseases and viruses are usually excluded from association insurance policies.  However, Utah condominium and community associations with common spaces and amenities should still take precautions regarding the coronavirus, such as social distancing and mask usage as appropriate, signage informing residents that a particular facility is used at their own risk – where appropriate, increased cleaning and disinfecting, and notifying residents when the association learns someone has COVID-19 in the development (but don’t mention specific names, of course).

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Posted by Curtis G. Kimble

2018 Utah Legislative Session

May 8, 2018

Happy Laws Go Into Effect Day! (okay, I’m sure there’s a better name for that).  Today, May 8, the HOA laws that were enacted this year go into effect.  Specifically, those laws:

  • include an amendment to the law regarding HOA records,
  • include an amendment to the law regarding HOA reserve fund money,
  • regulate how HOAs keep association funds,
  • clean up a couple of the required exceptions to certain rental restrictions,
  • codify that a management committee acts for an association, and
  • enacts provisions regarding a management committee that imposes sanctions or pursues legal action.

HOA Records

A change to the law this year requires an HOA to make certain documents available to homeowners free of charge, via the association’s website or at the association’s address, requires a homeowner to include certain information in a written request for records, establishes a penalty for the failure of an association to fulfill a request,  and provides that an association is not liable for erroneous documents identified or produced in good faith.

The law already required associations to keep certain records and make them available to homeowners who request them.  Now, the law also requires all associations to keep and make available to homeowners a copy of the association’s: (1) declaration and bylaws, (2) most recent approved minutes, and (3) most recent budget and financial statement.  Associations are required to make those documents available to owners, free of charge, through the association website, or, if the association does not have an active website, it must make physical copies of the documents available to owners during regular business hours at the association’s address registered with the Department of Commerce’s Utah HOA Registry.

If a homeowner wishes to view or copy other association records, then in a written request to the association, the homeowner must include certain information, including how the owner wishes to inspect or to copy the documents.  The owner may elect: (1) that the association or a third party duplicating service make the copies or electronic scans of the requested documents, or (2) that the owner be allowed to bring any necessary imaging equipment to the place of inspection and make copies or electronic scans of the documents while inspecting the documents, or (3) that the association email the requested documents to an email address provided in the request.

If an association produces the copies or electronic scans, the owner must pay the association the reasonable cost of the copies or electronic scans and for time spent meeting with the owner, which may not exceed the actual cost that the association paid to a recognized third party duplicating service to make the copies or electronic scans, or 10 cents per page and $15 per hour for the association employee’s, manager’s, or other agent’s time.

In addition to the penalties already in place for failure by an association to comply with this law, the new law imposes the additional penalty that an association must pay $25 per day for as long as the owner’s records request continues unfulfilled, beginning on the sixth day after a proper written request was made.

Finally, the new law states that an association is not liable for identifying or providing a document in error, if the association identified or provided the erroneous document in good faith.

See Utah Code Section 57-8-17 (condominiums) and Utah Code Section 57-8a-227 (non-condo HOAs).

Reserve Fund Money

A change goes into effect today to the law that prohibited an association from using money in a reserve fund for a purpose other than the purpose for which the reserve fund was established.  Effective today, an association may use money in a reserve fund for a purpose other than the purpose for which the reserve fund was established if a majority of association members vote to approve the use of reserve fund money for that purpose.

See Utah Code Section 57-8-60 (condominiums) and Utah Code Section 57-8a-211 (non-condo HOAs).

Association Funds

Starting today, associations are required to keep all of the association’s funds in an account in the name of the association, and an association may not commingle the association’s funds with the funds of any other person or entity.

See Utah Code Section 57-8-7.5 (condominiums) and Utah Code Section 57-8a-230 (non-condo HOAs).

Exceptions to Certain Rental Restrictions

Utah law requires certain exceptions when an association prohibits rentals or restricts the number and term of rentals in the association.  See Utah Code Section 57-8-10.1 (condominiums) and Utah Code Section 57-8a-209 (non-condo HOAs).

A couple of those exceptions were clarified this year.  The law use to say an owner “whose employer has relocated the owner for no less than two years” is exempt from the prohibition or restriction on the number and term of rentals.  This made little sense as a hardship-type exception.  A temporary, short-term job relocation is more likely to cause a hardship.  Long-term relocations are less in need of a hardship-exception because it’s less of a hardship to have to sell a home for a long-term relocation than a short-term relocation.  So, the statute now states an owner “whose employer has relocated the lot owner for two years or less” is exempt from the prohibition or restriction on the number and term of rentals.

Additionally, the new law clarifies that the exemption for owners who have a rental before a prohibition or restriction on the number and term of rentals is adopted terminates when the home is sold or otherwise conveyed (and defines what constitutes such a conveyance).

Miscellaneous

A couple of minor changes were passed that simply codify what was basically already true, at common law or otherwise.  Utah Code Section 57-8-59 states that a management committee acts in all instances on behalf of the association (except as otherwise stated in the association’s governing documents).  And Utah Code Section 57-8-10.7, in the Condo Act, was adopted to match a parallel section in the Community Association Act.  It states that a management committee must use its reasonable judgment to determine whether to exercise the association’s powers to impose sanctions or pursue legal action for a violation of the governing documents, and it specifies certain circumstances under which an association may not be required to take enforcement action.  And, finally, Utah Code Section 57-8a-212.5, in the Community Association Act, was adopted to match a parallel section in the Condo Act.  It states that owners must comply with the governing documents and enforcement may be sought by an association or an aggrieved owner through an action to recover money for damages, or injunctive relief, or both.

Contact Kimble Law for assistance with any of the issues addressed in these new laws, or for any association issues.

2 Comments | Enforcement, HOA Finances, New Condo Laws, New HOA Laws, New Non-Condo HOA Laws, Reserves | Tagged: , , | Permalink
Posted by Curtis G. Kimble

New 2015 HOA Laws – Open Meetings

July 1, 2015

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).

Penalty.

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.

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Posted by Curtis G. Kimble

2015 Condo and HOA Laws – Fines

June 22, 2015

By Curtis G. Kimble.

This year was another busy year at the Utah legislature for the HOA world.  Many changes and additions were made to the statutes that govern condominiums, community associations and nonprofit corporations.  As always, refer to the UtahHOALaws app on your iOS device or Android device, or on the web at utahhoalaws.com for the current HOA statutes.

The most significant changes that affect HOAs are laws that:

  • Change how fines must be levied and collected,
  • Require board meetings to be open to the association membership,
  • Change what rental restrictions may be adopted by an association after May 12, 2015,
  • Set forth requirements and procedures for record keeping and making records available to members.

Fines.  

Utah Code 57-8a-208 for community associations (non-condo HOAs), and Utah Code 57-8-37 for condos, provides certain requirements for levying fines.  These laws went into effect May 12, 2015.

Before assessing a fine, the board must give the owner a written warning that:

  1. describes the violation;
  2. states the rule or provision of the association’s governing documents that the owner’s conduct violates;
  3. states that the board may assess fines against the owner if a continuing violation is not cured or if the owner commits similar violations within one year; and
  4. if the violation is a continuing violation, states a time that is not less than 48 hours after the day on which the board gives the owner the written warning by which the lot owner must cure the violation.

Then, a board may assess a fine if:

  1. within one year after the board gives written warning, the owner commits another violation of the same rule or provision identified in the written warning; or
  2. for a continuing violation, the owner does not cure the violation within the time period that is stated in the written warning.

Subsequent fines.  If permitted by the association’s governing documents, after the board assesses a fine against an owner, the board may, without further warning, assess an additional fine against the owner each time the owner:

  1. commits a violation of the same rule or provision within one year after the day on which the board assesses a fine for a violation of the same rule or provision; or
  2. allows a violation to continue for 10 days or longer after the day on which the board assesses the fine (thus, there must be a 10-day period between fines for continuous violations).

Note, as indicated for “subsequent fines,” it is important to have a schedule of fines or fining policy in place in the governing documents (if not in the CC&Rs, then in the rules or separate policy) that allows for levying more than one fine for the same violation without having to repeatedly provide notice first.  Contact us for help with that, if needed.

In my next post, I’ll discuss the new laws on open meetings and rentals.

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Posted by Curtis G. Kimble

New 2014 Utah HOA Laws

May 16, 2014

By Curtis G. Kimble.

A few new HOA laws went into effect earlier this week on May 13.  They are not too substantial and shouldn’t significantly alter your way of doing business, but they’re important to know about and comply with.

1.    S.B. 147 deals with rental restrictions.

This bill amended Utah Code Section 57-8-10 and enacted 57-8-10.1 in the Condo Act, and amended 57-8a-209 in the Community Association Act.  It prohibits an association from requiring a homeowner to:

A.  obtain the association’s approval of a prospective renter; or

B.  give the association:
(i) a copy of a rental application;
(ii) a copy of a renter’s or prospective renter’s credit information or credit report;
(iii) a copy of a renter’s or prospective renter’s background check; or
(iv) documentation to verify the renter’s age.

There is an exception if the association’s CC&Rs “prohibits or restricts occupancy of the lots by a certain class of individuals, the association may require a lot owner who owns a rental lot to give the association” those items in B above.  So, for instance, a 55 and older community could require a homeowner to give the association documentation to verify that at least one occupant is 55 or older.

2.    H.B. 26 deals with fines.

This bill amended Utah Code Sections 57-8a-208 and 57-8a-301 in the Community Association Act, and made a minor change in 57-8-37 and 57-8-44 in the Condo Act.

Appealing a Fine.  In the Community Association Act, it limits how and when an owner can appeal a fine that’s levied against the owner.  An owner has 30 days to request a hearing after a fine is levied, and then the owner has up to 6 months to appeal the fine by bringing a court action to challenge the fine.

When the Fine Becomes a Lien.  It further requires that a fine does not become a lien against a lot until, basically, seven months after the fine is levied (because the owner has 30 days to request a hearing before the board and then 180 days after that to bring a court action).   If, after that time, the owner has not sued to challenge the fine in court, the fine becomes a lien against the owner’s lot (if the owner has sued within that time, the fine does not become a lien until the court action is over).    Previously, the owner only had 14 days to request a hearing, an unpaid fine became a lien just like assessments (no 6-7 month waiting period), and the owner was not limited in the time they had to file a lawsuit to challenge the fine.

Condos.  There is nothing much new for condos.  The Condo Act already required that a fine does not become a lien against a unit until, basically, seven months after the fine is levied (because the owner has 30 days to request a hearing before the board and then 180 days after that to bring a court action) and limited an owner to a 6 month period to challenge the fine in court, but it’s now clear that if the owner has sued within that time, the fine does not become a lien until the court action is over.

3.    H.B. 350 deals with removal of board members.

This bill amended Utah Code Section 16-6a-808 in the Nonprofit Corporation Act.  This section provides the requirements to remove a board member (director) from office.  The old section was problematic because (a) it didn’t defer to the association’s bylaws if the bylaws provided a different method for removing a director (the Nonprofit Act should let associations decide for themselves how they want certain things handled and should simply be a default when an association’s bylaws are silent on an issue), and (b) it led to a great deal of confusion because it was not clear how many votes were necessary to remove a director when directors were elected by a plurality vote (where the candidates receiving the most votes win).  Most homeowner associations use plurality voting for electing directors.

The new law states that “unless otherwise provided in the bylaws,” a director may be removed by the vote of a majority of the members entitled to vote.  So, the provisions in your bylaws will govern and apply first and foremost, but if your bylaws are silent, more than 50% of the members have to vote to remove a director in order for that director to be removed from office.

The Utah HOA Law App has been updated with all the new laws and will automatically update on your iphone or Android device when you open the app.  iPad app users will have to update the app itself, which should be available in the App Store in the next week or two.

Leave a Comment » | Enforcement, New Condo Laws, New HOA Laws, New Non-Condo HOA Laws | Tagged: , , , | Permalink
Posted by Curtis G. Kimble

Did the Vote Pass? What Various Voting Requirements Mean

August 27, 2013

By Curtis G. Kimble.

You and the rest of the board have worked hard to communicate the importance of a renovation project to the members and a special assessment is desperately needed to fund the project.  But, the approval of the members is needed to pass the special assessment.  You know your CC&Rs require a majority of members to vote yes to approve a special assessment.  But, you’re not sure if it’s a majority of all of the members, or a majority of those that actually vote, or of those that show up at the meeting.

The language in CC&Rs and bylaws specifying how many votes are needed to pass a proposed action by the members, such as a special assessment or amendment to the CC&Rs, can be difficult for even experienced homeowner association professionals to understand.  CC&Rs usually require that at least one of the following three thresholds be met for a vote to pass: (1) a percentage of the total outstanding voting rights of the association, (2) a percentage of those votes that are actually cast at a meeting, or (3) a percentage of those members present at a meeting.  Here are examples of what those provisions may look like in CC&Rs.  See if you know what they mean.

1.  “This declaration may be amended if members holding at least two-thirds of the total votes of the Association approve the amendment.”

This one should be easy.  But, it can be easy to forget that this is requiring two-thirds of the total votes of the association, and not just two-thirds of the members that show up at a meeting.  So, if an HOA has 100 members with one vote each and a meeting is held to vote on a proposed amendment to the CC&Rs where 50 members attend, how many votes are needed for the amendment to pass?  If you said 67, you’re right (if you said “more than they’ll be able to get at that meeting, you’re also right).

How about the same example as above, except in a condominium association where half the members have a .75% undivided ownership interest in the common area, and the other half have 1.25%?  How many members need to vote yes for the amendment to pass?  If you said it doesn’t matter how many members vote yes, what matters is whether two-thirds of the total voting rights of the association vote yes, then you’re correct.

In a condominium, the law requires voting rights of a member to be directly tied to the undivided ownership interest of the member (Utah Code Section 57-8-24).  This means that if a member has a .75% undivided interest in the common area, that member has a .75% vote in any matter put before the association membership.  In this situation, the association needs the yes votes to add up to 66.66…% of the total voting power of the association for the vote to pass.

2.  “A special assessment shall require the approval of a majority of the members voting in person or by proxy.”

Taking the example above where the HOA has 100 members with one vote each and a meeting is held to vote on a proposed special assessment where 50 members are represented (39 in person and 11 by proxy), how many votes are needed for the special assessment to pass?  If you said “Well Curtis, we can’t tell until you tell us how many members actually voted,” then you’d be correct.  This provision requires approval from a majority of the members that actually cast a vote.  If 45 votes are actually cast, how many votes are needed to pass the assessment?  23 (more than half of the 45 votes cast).

What about this same situation but in the condominium association mentioned above where the members have percentage interests that aren’t equal?  Do you need a majority of the percentage-votes that are cast, or a majority of the actual members that cast a vote?  You need a majority of the percentage-votes that are cast, regardless of how many actual people (members) vote.  Remember, by law, membership voting rights shall be available to the unit owners according to their respective percentage interests (regardless of what the CC&Rs say).

3.  “A special assessment shall require the approval of a majority of the members represented in person or by proxy.”   

Did you spot the difference between this and number 2?  This one requires approval of a majority of the members represented at the meeting, rather than a majority of just those that actually cast a vote.  So, in the example above with 100 members where 50 members are represented at a meeting (39 in person and 11 by proxy) and 45 votes are actually cast, how many yes votes are needed?  If you said 26, you’re correct (a majority, or more than half, of 50).

If the voting language in your CC&Rs or bylaws isn’t clear, be sure the board contacts the association attorney for clarification before the association relies on a misunderstood requirement.

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Posted by Curtis G. Kimble

HOA Neighborhood Watch Liability After Trayvon Martin

August 6, 2013

By Curtis G. Kimble.

Since the Trayvon Martin death in Florida, neighborhood watch groups in HOAs have become a hot button issue.  The neighborhood watch group that George Zimmerman, the man that was carrying a gun and shot Trayvon Martin in self defense, was a part of was overseen by the homeowners association.  That HOA was sued by Trayvon’s family for wrongful death and other claims and ended up settling for an undisclosed amount of money that is thought to be over $1,000,000.

When something like the Trayvon Martin death occurs, claims are filed against anybody who could possibly have any culpability, which will include the HOA when the issue even remotely involves or implicates the HOA.  So, what’s an HOA to do?   Should your condominium or HOA establish, or continue, a neighborhood watch?  What are the risks and how do you mitigate them?  HOA insurance specialist Béat Koszinowski answers these questions in his recent article here: Neighborhood Watch Groups in Your HOA.

The single biggest factor as to whether a watch group will create more issues and liability for an HOA isn’t whether the neighborhood watch volunteer carries a gun or other weapon, because if it gets to the point where a weapon could be used, the HOA will likely be sued either way.  For instance, if the volunteer ends up being beaten to death and was not allowed to carry a weapon by the HOA, the HOA will likely be sued by the family of the volunteer (whether rightfully or not).  Instead, it’s when volunteers go beyond simply reporting suspicious activity and instead take law enforcement into their own hands that the issues and liability open up like floodgates.  As Béat points out, “watch groups can do more harm than good when group volunteers go beyond contacting the local police department and act as the HOA’s own law enforcement.  Watch groups that engage perpetrators, use physical force or carry weapons put your HOA at risk for a lawsuit.”

Béat also points out, and I agree, that, ideally, to reduce liability, a neighborhood watch program should have no official connection to the HOA and the board should have no involvement in the creation or regulation of the watch group.  But if your HOA decides to start a watch group, it’s imperative that the HOA:

  1. establish specific written guidelines and policy for the group stating what the volunteer should and should not do, what the volunteer’s duties are exactly, and a procedure when suspicious activity is encountered,
  2. contact the local police department to receive watch group training, and
  3. check that its insurance covers the watch group.

While neighborhood watch groups can serve an important and effective purpose, they can also create more issues and liability.  An HOA board should contact its association insurance professional and attorney and follow certain risk mitigation steps if it operates, or plans to institute, a neighborhood watch group.

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Posted by Curtis G. Kimble

8 Points of HOA Governance 101

April 24, 2013

By Curtis G. Kimble.

HOA governance isn’t simple or easy and, unfortunately, board members are just volunteers doing their best with too little time and too little money.  I think that’s why even basic principles of HOA governance are often misunderstood by board members (and managers too).  Here is some clarification of 8 frequently misunderstood issues:

1.  Officers and directors are not the same thing.  One of the most fundamental concepts of corporate governance is that directors and officers have entirely separate functions and positions.  Directors are the representatives of the members, elected by the members.  The primary, if not the sole, function of a director is to vote on the decisions before the board.  The directors make up the board, which has the authority to act for the association.

Officers are not (normally) elected by the members, they are elected or appointed by the board.  Usually, the officers are also directors, although there’s no law requiring that they be (but a lot of bylaws require it).  Officers only have the authority or power given to them specifically and expressly, by the bylaws or by the board.  Removing an officer is generally easy, the board is usually authorized to remove an officer, with or without cause.  But if a person is both an officer and a director, removing them as an officer doesn’t remove them as a director.  Removing a director may generally only be done with a vote of the members.

2.  Quorum.  What is a quorum?  Is it important?  A quorum is the minimum number of members that have to be represented at a member meeting in order to have the meeting (or the minimum number of board members that have to be present at a board meeting to have a board meeting).  That magic number will be stated in your bylaws or CC&Rs.  It may be an unreasonably high number (like 50% to 75% of all owners) or it may be a realistic number, but either way it’s required.  If it’s unreasonably high, change it, amend the bylaws, but don’t ignore it.  One of the first things to occur at any meeting should be the determination of a quorum.

3.  The documents that apply.  If your association has CC&Rs (a declaration), bylaws and articles of incorporation, do those documents have to be followed?  If so, how closely do they need to be followed?  The answers are absolutely and to the word.  I’m sure it will come as a surprise to the conscientious readers of this blog, but some boards . . .  how shall I put this . . . don’t appreciate the weight that should be given to what the governing documents say.  They tend to think you are able to pick and choose what you adhere to, or that if they simply aren’t aware of what’s in the documents, then there’s no need to comply with them.  Virtually nothing that is contained in governing documents is optional.  They must be adhered to strictly and literally.

4.  The laws that apply.  There are basically two types of HOAs in Utah – condominium HOAs (or condominium associations) and non-condo HOAs (also called PUDs or community associations).  It’s very important that you know which one you are in (consult your attorney if you don’t).

Condominiums:  The Condominium Ownership Act applies to all condominiums in Utah.

Noncondo HOAs (PUDs or community associations):  The Community Association Act applies to residential non-condo HOAs in Utah (and to mixed-use commercial/residential non-condo projects as of May 14, 2013).

Both:  The Utah Revised Nonprofit Corporation Act also applies to all associations that are incorporated as nonprofit corporations, as most are.

5.  Hierarchy of laws and documents.  If your CC&Rs and bylaws contradict each other, they aren’t simply ignored or tossed out as invalid.  There is a specific heirarchy that generally applies when documents or the law contradict each other.  When a lower document contradicts a higher document, the provision in the higher document is the valid and effective provision and the one in the lower document is ignored (until the documents are amended, which is hopefully promptly after the contradiction is found), unless the higher document is a law that specifically defers to a lower document.

In a condominium, the law states that the following order prevails:

(a) the Condo Act,
(b) the Nonprofit Corporation Act,
(c) articles of incorporation,
(d) declaration (CC&Rs),
(e) bylaws,
(f) rules.

In a non-condo HOA, the order is not set by statute or case law, but the following order should prevail:

(a) the Community Association Act,
(b) the Nonprofit Corporation Act,
(c) declaration (CC&Rs),
(d) articles of incorporation,
(e) bylaws,
(f) rules

6.  Voting Thresholds.  Too often, the subtle distinction between different voting approval thresholds are ignored.  For instance, is there a difference between these two requirements:   “a special assessment shall require the approval of a majority of the members voting in person or by proxy”  and “a special assessment shall require the approval of a majority of the members represented at a meeting in person or by proxy”?

The difference is that the first one requires approval of a majority of those members that actually cast a vote.  The second requires the approval of a majority of the members that show up at the meeting or who are represented by proxy.  So, if 90 members show up to a meeting personally, 10 have given proxies, a vote for a special assessment is held and 94 votes are cast, the number of votes needed for approval under the first requirement above is 48 (a majority of 94).  The number of votes needed for approval under the second requirement is 51 (a majority of 100).

Also remember that, in a condominium, the law requires that voting rights of each owner be directly tied to each owner’s undivided interest in the common area .  This means that if a member has a .837 percent undivided interest in the common area, that member has a .837 vote in any matter put before the association membership (elections, etc.).

7.  A board meeting is not an association meeting or member meeting.  Board meetings (usually held monthly or quarterly) are just that, meetings of the board.  While it is recommended that board meetings be open to the members and the members be allowed to speak during a specified comment period, they are not meetings of the association or member meetings. Typically, the only association meeting or member meeting is the annual meeting held once a year.

8.  HOA Registry.  Finally, remember that the law requires each association to update their information with the Utah HOA Registry within 90 days of any change in that information (e.g., after a board election where a new board member was elected, or after changing managers).  It wasn’t just a one-time requirement and it’s  not an annual renewal.  It must be updated after any change and all information required by the law for condos and the law for non-condos must be included.

This may be new information for some, but hopefully, it just serves as a helpful refresher for others.  In many HOA issues, the devil is in the details and attention to those details will help ensure proper and lawful operation and governance of your association.

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Posted by Curtis G. Kimble

Bills That Passed This Legislative Session and How to Comply

March 26, 2013

By Curtis G. Kimble.

The 2013 Utah General Legislative Session has ended and the bills that passed have been finalized in their enrolled form to await signature by the Governor. Which bills passed and which ones didn’t?

Only three of the six bills I discussed in my last post ended up passing the House and the Senate.  They all affect condo and non-condo HOAs in more or less the same way.

SB 64 Homeowner Association Reserve Account Amendments

As I noted before, this law will give the decision back to the board of whether and how to fund a reserve (as most CC&Rs require, and where the decision makers will be subject to fiduciary duties).  Specifically, the law:

  • Specifies that a reserve analysis must include certain things, such as a list of the maintenance items that will require reserve funds,  their remaining useful life, and their cost to repair or replace; an estimate of the contribution to a reserve fund necessary to meet the cost to repair or replace each component; and a reserve funding plan that recommends how the association may fund the annual contribution.
  • Requires an association to provide a summary each year of the reserve analysis to each owner (not just to those at the annual meeting) and a complete copy of the reserve analysis, including any updates, to an owner upon request.
  • Requires the board to include a reserve fund line item in the annual budget in the amount the board determines based on the reserve analysis and based on what “the board determines is prudent under the circumstances” (there is no requirement that the amount be higher than 1$ or even 0$ – not that I recommend that).  This is important because it is almost inevitable that the association will not agree with the amounts recommended by a professional reserve study.  Almost every association feels that their reserve professional has recommended that they set aside more than they really need.  This law allows flexibility so the board can fund reserves in the amount they deem is prudent with all things considered.   However, if the CC&Rs requires a certain level of reserve funding, the CC&Rs will control; this law does not authorize a board to fund reserves lower than what their governing documents might require.
  • Allows 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 called within 45 days of when the annual budget is adopted.

Additionally, the law provides for specific enforcement procedures if the association fails to comply with certain of its provisions.  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.

HB 101 Homeowners Association Amendments

This revision to the statute requiring all HOAs to register as an HOA with the state of Utah merely restates what it said before in a little different way. There is no change in the law’s requirements or implications.

SB 90 Condominium and Community Association Amendments

  • With this new law, an association cannot charge a fee for review and approval of plans for construction or improvement of a unit or lot that exceeds the actual cost of reviewing and approving the plans.
  • The law clarifies what happens when there’s a loss to a unit that initially doesn’t look like it will exceed the association’s deductible but then the loss ends up costing more than the amount of the deductible.  The law says that if the board determines that a covered loss is likely not to exceed the deductible, and until it becomes apparent the loss exceeds the deductible and a claim is submitted to the association’s insurer, the unit owner’s policy is the primary policy for coverage.  So, the unit owner’s policy is primary, but only until it becomes clear that the damage will cost more to repair than the deductible.
  • For commercial condominium projects ( projects with no residential units), the insurance requirements of Utah Code 57-8-43 no longer apply for insurance policies issued or renewed after July 1, 2013.  For mixed-use projects (projects with both commercial and residential units), a commercial unit, including any fixture, improvement or betterment therein and including appurtenant limited common area, does not have to be insured by the association, unless the CC&Rs require it.
  • The Community Association Act is now applicable to any association with at least one residential lot (not just associations made up entirely of residential lots).  So, it will generally apply to mixed-use (commercial/residential) projects (except the insurance provisions were amended to not be applicable to commercial lots, the same as with condominium projects).

The following changes will not take effect until July 1, 2014:

  • The law will now authorize not only condos, but non-condo HOAs as well to access a unit or lot as necessary for maintenance, repair or replacement of common areas or for making an emergency repair, provided that 24 hours’ notice is given, or reasonable notice is given (or attempted) in an emergency.  The association is liable to repair damage it causes to the common areas or to a lot or unit the association uses to access common areas, and it must repair that damage within a reasonable time, except in developer-controlled community associations (where many of the laws in the Community Association Act don’t apply, thanks to legislators favoring developers much more than homeowners (contact your legislator and let them know favoring developers over homeowners isn’t acceptable!)).
  • The law authorizes a unit or lot owner to remove or alter a wall between two units or lots if the owner owns both units/lots, even if the wall is common area, unless restricted by the CC&Rs (most condo CC&Rs do, in fact, restrict this) and unless it would impair the structural integrity, mechanical systems or support of the building, the common areas, or a unit/lot.  The board may require the owner to submit, at the owner’s expense, an engineer’s or architect’s opinion stating that a proposed change will not impair the structural integrity or mechanical systems of the building or either lot, reduce the support or integrity of common areas, or compromise structural components.  The board may require the owner to pay all of the association’s legal and other expenses related to the proposed alteration, as well.  The removal or alteration of the wall does not change the assessment or voting right attributable to either of the units/lots (unless the CC&Rs say so).
  • The law also contains a procedure for the unlikely event that two or more associations want to consolidate or merge together into one association.

While these bills are not actually law until signed by the Governor, there is little chance that the Governor will veto any of them (I will, of course, let you know if he does).   (UPDATE: Each of these bills were signed by the Governor and are now law.)   The laws take effect May 14, 2013, except the ones mentioned above that don’t take effect until July 1, 2014.

As always, please note that none of the above is legal advice and should not be relied on as statements of the requirements of the law applicable to any particular scenario or circumstance.  The statutes themselves should be referred to for their exact and full contents and an attorney consulted with for application of any relevant law to a particular set of facts.

1 Comment | Governance, Insurance, New Condo Laws, New HOA Laws, New Non-Condo HOA Laws, Reserves | Tagged: | Permalink
Posted by Curtis G. Kimble

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