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


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!


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.


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.


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.


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.


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.


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


Test Your Knowledge of the New Utah HOA Laws (for a Prize!)

August 17, 2011

2011 was a significant year for HOAs in Utah and the laws that govern them.  Many new laws and changes were enacted.  How does your knowledge of these changes stack up?  Take this short quiz and find out!  (Note that the quiz is best taken and submitted on our blog itself, for those that receive this post by email).

A $25 Amazon gift card will be awarded to the person scoring the highest and submitting it the quickest after this post is published.  In a few days, I’ll post the answers, as well as the names of those that scored the highest so they can brag about their expertise to other board members, homeowners, or clients.  To submit your answers, fill in your name, email and association or management company and hit submit below.

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.

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

 True

 False

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.

Update: The quiz is closed, but check out the answers to the quiz by clicking here.   Thanks for playing!

Curtis G. Kimble


Utah HOA Registry Now Operational

June 16, 2011

The Utah HOA Registry required by a new Utah law is now up and operational on the website of the Utah Department of Commerce.  As discussed in our blog entry (click here to read it), all HOAs must register with the Department of Commerce by July 1st.   Here’s a link to the registry (note that you do have to create an account to view or register an HOA, but creating an account is free): secure.utah.gov/hoa

It is crucial that you register using the exact same name as the corporate entity of the  HOA, as it is stated in the articles of incorporation and as it is registered with the Division of Corporations & Commercial Code.  For example, if an HOA is a nonprofit corporation with the name “Whiteacre Homeowners Association,” do not register the association in the HOA registry as “White Acre Homeowners Association.”  This is very important because a search on the HOA Registry for White Acre will not bring up Whiteacre.

This concept applies to all business dealings for an HOA.  It must conduct business using its proper corporate name, not the name of the subdivision itself or some other name or variation of the name that isn’t registered as a Utah business entity.  Click here to look up an incorporated HOA to see exactly how it is listed as a corporation:  https://secure.utah.gov/bes/action/index

Curtis G. Kimble


Register Now for Our Seminar on New HOA Laws

June 8, 2011

What is it?  Major changes were made this year to the laws that affect all community associations (HOAs).  We have had numerous requests to present this information to our clients and to property managers in a concise yet detailed manner. We will be providing an informative and educational 2 hour seminar that you must not miss in order to make sure that your actions as a board member comply with Utah law.

When?  Saturday, June 18, 2011, starting promptly at 9:00 am until 11:00 am.

Where?  Our Salt Lake office, 2040 E. Murray Holladay Rd, Suite 106, Holladay, UT 84117 (about 4800 south, just behind the Holladay Bank and Trust). Phone: 801-274-6800.

Cost?  No charge as part of our educational commitment to our clientele.

RSVP Required?  Yes.  Seating is limited to the first 50 people that RSVP.  We kindly ask that no more than 2 people per association attend in order to ensure seating for everyone.  Please RSVP by June 16, 2011, by calling 801-274-6800 or by submitting the following form:


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