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

Last Week of Legislative Session: What’s in Store?

March 11, 2013

By Curtis G. Kimble.

It’s the last week of the Utah 2013 general legislative session, which is set to end Thursday, March 14, at midnight, and there are a few HOA bills on the path to becoming law.  Here’s a summary and update on where they are in the process:

HB 335 Condominium Owner Rental Amendments

HB 335 would amend the Condo Act to state a condominium project that recorded its initial declaration before May 12, 2009, would not be able to prohibit or restrict a unit owner’s ability to rent to any greater extent than is described in the declaration that was recorded at the time the unit owner purchased the unit owner’s unit, unless the association obtains the unit owner’s written consent.

This bill is in the House Rules Committee where it has been for a few weeks. This bill will not pass this session.

SB 64 1st sub Homeowner Association Reserve Account Amendments

This substituted version of SB 64 is completely different than the original version (see my prior post).  The most important part of this bill, in my opinion, is that now the decision of whether and how to fund a reserve is back where it belongs. If passed, this version of the law will put that decision back to the board (as most CC&Rs require, and where the decision will be subject to the fiduciary obligations of the decision makers).  This bill would also allow the homeowners to veto the reserve fund contribution  if they don’t like it (whether too low or too high) by a 51% vote of the owners at a special meeting.

Additionally, this bill provides for specific enforcement procedures if the association fails to comply with certain of its provisions.  The association will be required to provide a summary each year of the reserve analysis to each owner (not just at the annual meeting) and a complete copy of the reserve analysis to an owner upon request.  The board also has to include a reserve fund line item in the annual budget in the amount the board determines and the homeowners can veto that determination (as discussed above).

If an association fails to comply, an owner can sue for a court order compelling the association to comply, for $500 or the owner’s actual damages, whichever is greater, other available remedies, and costs and attorney fees.

This bill has passed through the Senate, though the House committee, and is in the House for a vote.  My guess is that this bill will pass, depending on the calendar.

SB 90 1st sub Condominium and Community Association Amendments

SB 90 1st sub changes which associations the Community Association Act applies to.  It currently only applies to wholly residential associations (associations where each member is an owner of a residential lot).  This bill makes the Act applicable to any association with at least one residential lot.  So, it will apply to mixed-use (commercial/residential) projects with at least one residential lot.

The bill states that, unless otherwise provided in the CC&Rs, developers essentially have control of the association for eternity (that is, for seven years after all declarants have ceased to offer lots for sale in the ordinary course of business (compare this with the Condo Act where it’s 3 years after recording the CC&Rs for a typical project)), or 60 days after 75% of the lots that may be created are sold, whichever happens first.

This bill contains changes to the reserve analysis law, as well, which are very similar to SB 64 1st sub (minus the veto and enforcement provisions).

The bill enacts some provisions relating to making changes to adjoining units or lots acquired by same owner, and relating to the consolidation or merger of associations (i.e., a procedure for merging, if two associations wanted to merge or consolidate).

Finally, the bill cleans up the insurance provisions in the Condo Act and Community Association Act and exempts commercial condominiums and lots from its requirements.

This bill has passed the Senate and is now on its way to the House.  Whether it can get through the House in time is anybody’s guess, but my bet is that it will.

SB 274 Condominium Foreclosure Amendments

SB 274 would require a bank or lender to pay a unit or lot’s share of certain common expenses from the time the lender starts the foreclosure process (by filing a notice of default) on a unit or lot.   Many banks start the foreclosure process and then wait for months and sometimes years before completing it, even if the homeowner has given up and long since moved out.  Meanwhile, the association still has to carry applicable insurance and carry out maintenance benefiting the unit or lot.  The bank won’t foreclose because they don’t want to have to start paying assessments.  This bill would address the problem to a small degree by requiring the bank to pay the unit or lots share of “landscaping maintenance in the common areas, water and insurance.”

If this bill gets through the banking lobby, I’d be amazed, but it has passed favorably out of committee and is on the Senate calendar for vote.

HB 101 1st sub Homeowners Association Amendments

The statute requiring all HOAs to register as an HOA with the state of Utah is being merely clarified once again with this bill.   There is no change in its requirements or implications.  It passed the Senate and House.

SB 262 Employment and Housing Antidiscrimination Amendments

SB 262 modifies the Utah Fair Housing Act, which is important for HOAs because the Fair Housing Act prohibits an HOA from discriminating against certain “protected classes” of people in its rules, covenants or practices.  If this bill passes, it would prohibit discrimination based on sexual orientation or gender identity.  Specifically, the bill states (the underlined language is new language):  “It is a discriminatory housing practice to do any of the following because of a person’s race, color, religion, sex, national origin, familial status, source of income, [or] disability, sexual orientation, or gender identity: . . . deny or make unavailable [any] a dwelling from any person; (b) discriminate against [any] a person in the terms, conditions, or privileges: (i) of the sale or rental of [any] a dwelling; or (ii) in providing facilities or services in connection with the dwelling; . . ..”

This bill passed out of the Senate committee with a favorable recommendation and is on the reading calendar of the Senate (to be voted on).

I’ll let you know which bills pass this session after it ends.

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Posted by Curtis G. Kimble

Utah LAC Issues Statement on SB 64 (Reserves)

February 22, 2013

By Curtis G. Kimble.

As many of you may know, the 2013 General Session of the Utah Legislature is in full swing on Capitol Hill.  A few bills enacting or amending HOA laws are in the works and I’ll be summarizing and commenting on those over the next couple of weeks.

As to one such bill, SB 64, CAI’s Utah Legislative Action Committee issued a position statement today coming down quite aggressively against it.  SB 64 amends the reserve funding requirements of Utah Code Sections 57-8-7.5 and 57-8a-211 and, if passed, will require an association to begin funding the reserve fund in the manner and amount determined by the vote of the owners within 90 days after the vote, and to file a certificate of compliance with the Department of Commerce within 30 days of starting to fund a reserve fund.  It also requires that if an association does not file a certificate of compliance within the required 30 days, the association may not levy a special assessment until it files a certificate of compliance.  View SB 64 here.  View the position statement here (I am not a member of ULAC and their position is not necessarily mine, nor mine theirs).

UPDATE March 1: view the substitute bill SB 64 here and a comparison of the changes to the original SB 64 here.

The original requirement of this law requiring the decision of whether to fund a reserve account to be made by a majority of those owners who happen to show up at the annual meeting, is one that I’ve always been opposed to for various reasons, not the least of which is that it unconstitutionally interferes with the obligation contained almost universally in preexisting HOA contracts (CC&Rs) that the board establish a reasonable reserve.  For reasons similar to those contained in the ULAC position statement, I am opposed to SB 64, as well.

If you have an opinion one way or the other on pending legislation, don’t be afraid to voice it to your representatives in the Legislature.  Follow this link to identify who they are and contact them: Utah State District Maps

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

Our New Utah HOA Law App Helps Associations Follow the Law

December 6, 2012

Up until a few years ago, it seems that a board could get away with not referencing the Utah statutes that apply to HOAs.  Especially in non-condo HOAs, there just weren’t a lot of issues addressed by Utah law, except the procedural and corporate issues set out in the Nonprofit Corporation Act.

But today, the landscape is different.  Many day to day issues, such as adoption and enforcement of rules, spending reserve money, records, providing payoffs, insurance, budgets, and so forth are now addressed in the law and their requirements are not optional.  They must be followed or an association risks expensive litigation and other disputes, especially in today’s  increasingly litigious climate for HOAs, where a technicality or trivial failure of association procedure can lead to a major and costly headache.

As part of Kimble Law’s commitment to provide real value to its clients and to help all community associations operate effectively and properly, we brings you a free app for your smartphone and tablet that provides quick reference to the laws that apply to your association.

Now the laws are available right in your pocket, no Internet connection required!  The statutes are formatted and indented for easier reading than the state’s own website, plus search and bookmark functions make it much easier and quicker to use.  Certain federal regulations applicable to HOAs, such as Fair Housing Act and satellite dish regulations are also included, together with summaries and explanations of those requirements.

Utah HOA Law App Now Available.  Access the Web App online, or download the app to your mobile device today for free!

Click below or search Utah HOA Law in the Apple App Store or on Google Play.

Utah HOA Law for iPhone, iPod:

Utah HOA Law for Android:
Android app on Google Play

file-dec-16-6-51-54-pm

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Posted by Curtis G. Kimble

Pop Quiz on New Utah HOA Laws

August 16, 2012

By Curtis G. Kimble.

Many changes were enacted to the laws that govern HOAs in Utah in 2011. We tested your knowledge a year ago soon after the changes went into effect.  How is your knowledge of these changes over a year later?  Take this short quiz and find out (answers at very bottom).

1. (First, a warm up question unrelated to the new laws) All homeowners associations in Utah are bound by the Utah Condominium Ownership Act.
 True

 False

2. In a condominium association, the management committee is required by law to keep detailed, accurate records in chronological order, of the receipts and expenditures affecting the common areas and facilities, specifying and itemizing the maintenance and repair expenses and any other expenses incurred, and is required to make those records available for examination by any unit owner at convenient hours of weekdays no later than _____ days after the unit owner makes a written request to examine the records:
 0, they must be available upon request

 5

 14

 30

3. In a community association (non-condo HOA), a rule ______ regulate the content of political signs and a rule ________ regulate the time, place, and manner of posting a political sign.
 may not . . . may not

 may not . . . may

 may . . . may not

 may . . . may

4. A rule may not be inconsistent with:
 the declaration (CC&Rs)

 the bylaws

 the articles of incorporation

 all of the above

 none of the above, a rule supersedes each of the above

5. In a community association (non-condo HOA), before adopting, modifying, or creating exceptions to the rules and design criteria of the association, the board must:
 A. at least 15 days before the board will meet to consider a change to a rule or design criterion, deliver notice to lot owners that the board is considering a change to a rule or design criterion

 B. provide an open forum at the board meeting giving lot owners an opportunity to be heard at a board meeting

 C. deliver a copy of the change in the rules or design criteria approved by the board to the lot owners within 15 days of adoption.

 D. all of the above

 E. A and C but not B

6. If provided in the declaration, articles, bylaws, or rules, an association may provide notice to its members by electronic means, including text message, email, or the association’s website.
 True

 False

 True, except as to a member who has made written demand to the association to provide notice to the member by mail.

 False, except as to members who have consented in writing beforehand.

 

Don’t look below until you’ve finished!  Warning – answers below!

Now grade yourself.  Here are the answers:

1.  False, only condominiums are governed by the Utah Condominium Ownership Act.

2.  14 days

3.  may not . . . may.

4.  D.  all of the above

5.  all of the above

6.  True, except as to a member who has made written demand to the association to provide notice to the member by mail

Thanks for playing!

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Posted by Curtis G. Kimble

Don’t Forget to Conduct a Reserve Analysis by July 1!

June 12, 2012

By Curtis G. Kimble.

The deadline for all HOA and condominium boards in Utah to conduct a “reserve analysis” is fast approaching.  By July 1, every  board (except developer-controlled boards) needs to obtain or perform a reserve analysis if no reserve analysis has been conducted since March 1, 2008.

A reserve analysis is an analysis to determine:

(a)     the need for a reserve fund to accumulate money to cover the cost of repairing, replacing, and restoring common areas and facilities that have a useful life of three years or more, but excluding any cost that can reasonably be funded from the general budget or other funds of the association; and

(b)     the appropriate amount of any reserve fund.

So, each board must:

  1. determine which improvements have a useful life of 3 years or more, then
  2. determine what the cost is for maintaining those improvements over the next several years, and then
  3. determine what they think the appropriate amount of the reserve fund should be.

There are no requirements in the law as to who has to perform the reserve analysis.  So, a board can perform the analysis or it can engage a professional to perform it.  There are several competent reserve study professionals serving the state of Utah.  There are also websites that will create your reserve study for you based on your input, and some will allow users to run “what if” scenarios with their components and funding plans.  A simple Google search will lead to those sites (I cannot vouch for the quality or value of such online services since I’ve never personally used them or analyzed their results).

There are many options when it comes to fulfilling the requirements of this law.  Each association should find the option that works best for them.

Don’t forget the law also requires each board to, annually, present the reserve study to the homeowners at the annual homeowner meeting or at a special meeting of the homeowners, and provide an opportunity for homeowners to discuss reserves and to vote on whether to fund a reserve fund and, if so, how to fund it and in what amount.  The association must also prepare and keep minutes of the meeting and indicate in the minutes any decision relating to funding a reserve fund.

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

The Results Are In: The 2012 Utah Legislative Session

March 8, 2012

By Curtis G. Kimble.

The 2012 general session of the Utah Legislature ends tonight at midnight and only one small change to a current law and no new laws affecting condominiums and homeowners associations were passed this year.  This is probably welcome news to the many boards and management committees that were likely more than a little overwhelmed by last year’s many changes.

The only change this year is to the law regarding reserve studies.  A board is required to conduct a reserve study every five years and to review and update it every two years.  But, when S.B. 56 goes into effect on May 8 of this year (assuming it’s signed by the Governor), a board will only have to conduct a reserve study every six years and review and update it every three years.  While industry professionals generally agree that a reserve study should be updated more frequently than that, even annually, and many states require an annual review and update of a reserve study, this change to the law will take some pressure off boards.

No other new laws or changes affecting condos and HOAs will go into effect this year.  Next year, expect to see more significant changes proposed that haven’t been seen yet.  I have a feeling we can also expect to see that Ombudsman bill (H.B. 56) that I explained here proposed yet again.

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

The Ups and Downs of the 2012 Utah Legislative Session

February 17, 2012

By Curtis G. Kimble.

As many of you know, we’re right in the middle of the the 2012 general session of the Utah Legislature, which is January 23 to March 8.

So far, the bills being proposed relating to HOAs are fairly minor, with one or two exceptions:

1.  H.B. 56 (the Ombudsman bill) proposes to require every Utah HOA (both condo and non-condo HOAs) to pay 2$ per unit or lot annually to yet another government bureaucracy, the Utah Office of the Property Rights Ombudsman.  The Ombudsman Office would be authorized to represent and advise a unit or lot owner who has a dispute with his or her homeowners association and force the association to mediate or arbitrate the dispute.  So, every unit and lot owner in Utah will be paying for these disputes, whether they’re involved or not.

Unfortunately, this bill is attempting to impose a mandatory solution that just doesn’t work.  There are already better remedies to the problem the bill is attempting to address.  Utah homeowners associations don’t need yet another tax or fee to deplete their already suffering budgets in this foreclosure ridden economy, especially for a program that will likely be less effective and more expensive than other solutions.   Yet another government bureaucracy simply isn’t the answer in this situation.

For more information on this bill, and for comments by our own John Richards, check out this article at the ParkRecord.com: “HOAs and condo owners at odds – Legislation heats debate on how HOAs handle owner disputes”

For the reasons above, I give H.B. 56 the thumbs down.

Other proposed bills include:

Thumbs Up   2.  H.B. 275 (Seismic Requirements for Condominium Conversion Projects) which requires the owner of a structure two or more stories high, and which was built before 1975, to cause a seismic evaluation of the structure to be performed if the owner converts the structure to a condominium.  Because the risk of collapse of a structure should be discovered and disclosed or fixed before selling converted condominiums, I give this bill the thumbs up.

3.  H.B. 406 (Homeowner Association Registration Amendments) which does virtually nothing.  The current law requiring every HOA to register with the state as an HOA gives an HOA 90 days to update its information with the state when any of the information changes or becomes outdated (e.g., the HOA changes property managers).

This bill says that an HOA that hasn’t updated is still in compliance with the law until that 90 days is up, as if that wasn’t already clear.  Why else would the 90 days have been given if it wasn’t as a safe harbor?  The answer is it wouldn’t have been.  If you weren’t in compliance the minute your information changed but before you updated your info with the state, there would be no point in giving 90 days to update your information.  Because this bill doesn’t change anything whether it passes or not, I don’t give it a thumbs up or a thumbs down.

Thumbs Down

4.  Finally, S.B. 56 (Homeowner Association Reserve Account Amendments) amends the current reserve analysis law by changing the required frequency of a reserve analysis (or reserve study) and the review and update of that reserve analysis.  The current requirement is to cause a reserve analysis to be conducted every five years and reviewed (and updated, if necessary) every two years.  S.B. 56 would require a reserve analysis to be conducted every six years and reviewed (and updated, if necessary) every three years.

This would fix what some might see as a mismatch of years between the analysis and the review and update in the current law so it would be more spread out.  However, in our experience, more frequent review and update of a reserve study is generally good practice and necessary, not less.  So, always remember, this law is only intended to establish a minimum requirement and every association should decide on their own what they need to be doing to protect the investments of their homes and the long term viability of their common area improvements and infrastructure.

Because this bill falls short of fixing the problems with the current law noted in my blog post here (link), I give it the thumbs down.

I know other bills are out there in the works (for better or for worse) that may or may not be run this legislative session.  I’ll provide updates as the legislative session progresses.

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Posted by Curtis G. Kimble

Home Ownership and Second Hand Smoke: the American Dream or a Health Nightmare?

January 20, 2012

By Curtis G. Kimble.

How far can a government or an HOA go to dictate what can and can’t be done inside of a homeowners own home? Is an owner of an attached dwelling or a condominium unit able to do whatever they want within the confines of their home as long as it’s not illegal? Is a homeowner entitled to create and distribute from their home a “Class A” carcinogenic substance, which causes cancer and respiratory diseases and disorders, among other problems and which is able to infiltrate neighboring homes?

This is a question being increasingly asked in other states where some state courts have held that smoke transferring between units is a nuisance. But others have determined that the cigarette smoke is like an odor intrusion, a condition of living in a community environment that residents simply have to put up with – a startlingly misguided mentality considering the fact that the EPA has determined that there is no acceptable level of exposure to Class A carcinogens, and considering that second hand smoke causes serious problems for children, including ear problems, middle ear disease, acute respiratory infections, wheeze illness, slowed lung growth, and more severe asthma, and that 430 American newborns die each year from Sudden Infant Death Syndrome (SIDS) caused by second hand smoke.

Incentives offered by the Federal Government have led cities from Austin to Boston to prohibit smoking in public housing. In 2006, a judge ruled that secondhand smoke could be a breach of “warranty of habitability” under New York law.  At least six California cities and counties have banned smoking in all condo units.

Fortunately for Utah residents who don’t appreciate dangerous and toxic chemicals being forced down their breathing passages, Utah law clearly states that smoke transferring between dwelling units is a nuisance and may be the subject of an action brought by “any person whose property is injuriously affected, or whose personal enjoyment is lessened by the nuisance” and “upon judgment, the nuisance may be enjoined or abated, and damages may be recovered.”

A nuisance under Utah law includes tobacco smoke that drifts into any residential unit a person rents, leases, or owns, from another residential or commercial unit and the smoke drifts in more than once in each of two or more consecutive seven-day periods, and is injurious to health, indecent, offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property.

The Utah Condominium Ownership Act states that restrictions in governing documents “regarding the use of the units may include other prohibitions on, or allowance of, smoking tobacco products.”

The Utah Community Association Act, which applies to non-condo HOAs, states that a rule of an association may prohibit an activity within a dwelling if there are attached dwellings, and the activity creates the potential for smoke to enter another lot owner’s dwelling, the common areas, or limited common areas.

Utah law is at the forefront of the national trend to protect the right of every individual to live in their own homes without being subjected to dangerous and toxic chemicals contained in second hand smoke. Contact us to take advantage of these laws and help your association adopt a policy regarding smoking.

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Posted by Curtis G. Kimble

It’s Annual Meeting Season

November 10, 2011

By Curtis G. Kimble

It’s that time of the year for many associations – annual meeting season – which means every board will need to remember the new Utah laws and how to comply with them as they prepare for their association’s annual meeting.

Here are some of the key points to remember:

1.  The association’s reserve analysis or reserve study has to be presented to the members at the annual meeting each year.  The members at the meeting vote on 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 of the meeting.

Utah law requires that 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 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.  For associations who haven’t conducted a reserve analysis since March 1, 2008 (or ever),  the law requires them to do one by July 1, 2012.

2.  Update your association’s registration info with Utah’s Homeowners Association Registry within 90 days of any change.  Be sure to update the information with the Registry if new directors or officers are elected, as appropriate.

The consequence for not registering an HOA and keeping the registration information current is that the HOA will not be able to enforce its liens against delinquent homeowners.  It’s imperative that every HOA register and keep their info current with the state or they will lose their lien rights when collecting past-due assessments, which could have drastic effects on the HOA’s operations and finances.

3.  For non-condominium homeowners associations (single family homes, PUDs, townhomes, etc.), every homeowner-elected board is required to adopt a budget annually and to then present that budget to the homeowners at a meeting.  Since the budget will have already been adopted by the board, there is no requirement that the homeowners vote to approve the budget at the meeting.   The homeowners can, however, call a special meeting within 45 days of the first meeting and vote to disapprove the budget.  The budget will be disapproved if 51% of the total votes in the association vote to disapprove it “at a special meeting specifically called for that purpose by the lot owners.”

While that budget law doesn’t apply to condominium associations, the bylaws may contain certain requirements regarding adopting a budget.  Do you know what your bylaws say regarding budgets?

4.  Don’t forget requirements in the bylaws or other governing documents.  For instance, do you know if your bylaws require the annual meeting to be on a certain date and at a certain time?  Or if a certain notice timeframe is required?  The overarching requirement applicable to all associations is that notice of the meeting must be given and the notice must be given in a fair and reasonable manner (mailing out notices the night before the meeting won’t cut it).

5.  Don’t forget the requirements of the Utah Nonprofit Corporation Act.  For incorporated associations, the notice of an annual meeting must include a description of any matter that must be approved by the members.  Also, unless otherwise provided by the bylaws, if a meeting of members is adjourned to a different date, notice does not have to be given of the new date, if the new date is announced at the meeting before adjournment.

What about when a home is in the middle of being sold, do you know who is entitled to notice and who is entitled to vote (the buyer or seller)?  The bylaws may fix a date as the record date for determining the members entitled to vote at, and to notice of, a members’ meeting.  If the bylaws do not provide for fixing a record date, the board of directors may fix a future date as the record date.  If a record date is not fixed by either of those methods, members entitled to notice of the meeting are the members at the close of business on the business day preceding the day on which notice is given and members entitled to vote at the meeting are the members on the date of the meeting and who are otherwise eligible to vote.

Contact us if you have questions about interpreting or complying with your governing documents or the law this annual meeting season.

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

Answers to the Quiz and Announcement of Experts

August 19, 2011

The results are in.  I purposely designed this quiz to be difficult with subtleties that almost amounted to trick questions, and sure enough, it was a difficult quiz.  But, a few experts emerged from the results (if you haven’t taken the quiz yet, go here (link), and take the quiz and then come back and review the answers below).

Congratulations to the following high scorers who have proven that they are not mere layman in the HOA realm:

  • Michael Johnson, FCS Community Management
  • Vernon Rice, Northpoint Homeowners Association
  • Harold Alston, The Cottonwoods Condominium Homes
The fastest submittal with the highest score and the winner of the grand prize $25 Amazon gift card is Michael Johnson (you should receive the gift card emailed to you shortly, contact me if you don’t).

DO NOT READ FURTHER if you haven’t taken the quiz yet!

Here are the answers (in bold):

1. Each board has to present the issue of reserve funding to the association members for discussion and a vote:

  •  √ every year. 
  •  every two years.
  •  never because the board decides reserve funding issues.
  •  never because the law has reserve funding requirements.

2. A board is required to conduct or have conducted a reserve study every _____ years and review and if necessary update it every ______ year(s).

  •  3 … 1
  •  √ 5 … 2 
  •  7 … 3
  •  It depends on the outcome of a vote of the members.

UPDATE:  As of May, 2012, a board is required to conduct or have conducted a reserve study every 6 years and review and if necessary update it every 3 years

3. Every HOA is now required by law to register both as an HOA and as a nonprofit corporation.

  •  True
  •   √ False  (it is not required by law that an HOA be a nonprofit corporation)

4. For claims on the association master insurance policy associated with a particular unit or lot, the association can require that unit owner to pay the deductible if:

  •  the association has set aside an amount equal to the deductible.
  •  it is authorized by a governing document of the association.
  •  the owner is at fault (caused the incident or was negligent).
  •  √ all owners had been notified of the deductible responsibility.

5. Every HOA in the state has to update their HOA registration information with the Department of Commerce:

  •  annually.
  •  within 30 days of a change in the information.
  •  √ within 90 days of a change in the information. 
  •  never because only an initial one-time registration is required.

6. A board can use reserves funds in an emergency for daily maintenance expenses:

  •  only once in a 2 year period.
  •  if authorized by the association governing documents.
  •  √ after receiving approval from a majority of the members. 
  •  Never.

7. During any period that an HOA fails to be properly registered with the state, the HOA:

  •  cannot file a lien against any unit or lot.
  •  cannot enforce a previous lien against a unit or lot.
  •  can seek a judgment against an owner for past due amounts.
  •  √ all of the above.  (The HOA can still pursue a personal judgment against a delinquent owner or past owner, even if it can’t enforce a lien.  Remember, assessments are both a personal obligation of an owner (meaning the HOA can pursue the personal assets of the owner for payment) and a lien on the property (meaning the HOA can pursue the property itself, by foreclosure or by effectively preventing its sale because of a recorded notice of lien)).

Thanks for playing!

Curtis G. Kimble

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

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