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.

Advertisements

Free Movie Tickets to Max this Tuesday Night!

June 25, 2015

As many of you know, Richards, Kimble and Winn has merged with the national law firm Ball Janik LLP, although we are still the same people, same location, same great service!  As a thank you to our clients and potential clients, we are giving away 30 tickets to the showing of the movie Max on Tuesday, June 30, at 6:15 pm at Jordan Commons.

Each ticket includes one free popcorn and soda.  We will also be raffling off a $50 gift card before the movie starts.

See the trailer for Max.

The tickets will be given to the first 30 people who submit a request below.  You do not have to be a client, any HOA homeowner or board member (and guests) may request a ticket.

Request a Free Ticket to Max :

Date: Tues. 6/30/2015

Time: 6:15 pm

Location: Jordan Commons Megaplex, theater #16

Address: 9400 State St, Sandy, UT 84070

Fill in and submit this form.  If requesting more than one ticket fill in and submit the form for each person that will attend (the same email can be used).

(Submission Period Ended)


Construction Defects? Utah’s First Choice for Help

November 9, 2013

Let’s take care of your construction defect issues.

Construction defects can be extremely expensive to fix; can cause your property to deteriorate; decrease your property values; and can subject your community to substantial future special assessments!  Obviously, as a board, you want to do your best to avoid these problems – and fix them when they are discovered.

Kimble Law is pleased to announce the ability to handle your community’s construction defect issues!  Kimble Law has formed a strategic partnership with Ball Janik LLP, which has helped many associations obtain recoveries for construction defects.  While Kimble Law remains your “go to” general HOA law firm, we have teamed up with experienced, successful and knowledgeable attorneys who have a deep understanding of construction issues relating to HOAs of all types.


Keeping Your Board Together – End of Year Checklist

October 10, 2013

It is a familiar scene.  Something happens between Board members causing distrust, scrutiny and even rebellion.  As community leaders and as fiduciaries, Board members have an obligation to each other and to their communities to set aside differences that might arise and stay focused on community business.  The purpose of the brief article is to provide year-end tips for each Board to review to make sure their relationships stay in tact and to help ensure that the community’s interests remain paramount.

1.  Adopt a “code of conduct” for the Board.  This document, signed by each Board member, sets the standard of what the appropriate tone of discussions will be in meetings; reminds everyone to mutually respect differing viewpoints; commits Board members to fulfill their duties and assignments; and strongly outlines that rude, hurtful, or inflammatory comments will not be tolerated.

2.  Make sure that each Board member has a “job.”  Often times, the Board serves as the officers of the Association as well.  Review your Bylaws for such duties or adopt a job description for each officer and Board member.  Before you hold a Board member/officer accountable for their respective roles, you need to clearly define what is expected of each person and position.

3.  Before the end of each year and perhaps each quarter, review AS A GROUP the Board’s strengths and weaknesses.  Write them down (not in the minutes) and make it a goal to improve upon areas where the Board feels it can do better (such as communicate better with members; listen to other Board member’s perspectives more fully before voting on a matter; not spreading gossip or making disparaging comments about other Board members; even learning to read and understand financial statements better is a noble goal).  The variety of goals a Board might want to set for itself are truly limitless – the objective should be to start identifying GROUP weaknesses so improvements can follow.

3.  Request training from your attorney on the ever-changing state and federal laws and trends in the HOA industry.  You will be surprised that your attorney (of course, I’m speaking as an attorney) will likely be more than happy to have training sessions with the Board and provide legal and case law updates if you just ask.

4.  Create a Board member binder that contains yours Articles of Incorporation, CCRs, Bylaws, Rules and Regulations and applicable state codes.  This “Board Binder” should be brought to every meeting and, at random, an Article or Section should simply be reviewed quickly at each Board meeting.  Knowing your own documents, by reading them together, frequently keeps disputes from arising in the first place as you educate yourselves in a Board setting.  (I am not suggesting a lengthy reading of your governing documents at each Board meeting.  I am suggesting something as simple as a Board member is assigned to pick a specific provision in the CCRs – liens for example – and then the Board takes 5 minutes to read the “lien” section of the CCRs.  This process continues over and over with a new topic each meeting.)

5.  Community Surveys.  Do not be afraid to send out regular community surveys to the membership-at-large.  Such surveys are not to rate the performance of a particular Board member, but to rate the community in general…”Do you feel that snow is being adequately removed?”  “Do you like the new landscaping company?”  You get the gist.

6.  Board Surveys.  Rate yourselves as a Board.  I am not suggesting that this survey go out to the membership – this is done by the Board itself.  Did we accomplish X, Y and Z this year?  Why not?  What has been our biggest challenge?  How can we prevent such challenges from arising in the future?

7.  Adopt the following philosophy:  I may disagree from time to time, but I won’t be disagreeable.  In other words, vibrant Board discussions and even debate is healthy for your community.  However, Boards need to be trained to listen to all sides of an issue, compromise when they can, but don’t disagree just to disagree.  Board members must understand that once a majority has made a decision, a BOARD DECISION has now been made and you must stand behind it and not speak ill of those who voted in favor of action that you perhaps did not agree with.  In fact, I often find it helpful to have an agreed upon response if Board members are questioned if they supported an action such as “…we took the matter under serious consideration and had a lot of discussion on topics X and Y.  In the end, I stand by the Board’s decision…”  You can have your own variation on this concept.

These are just a few ideas.  I hope as 2013 is quickly coming to an end, each Board can evaluate its own performance but do so in a way that feelings are not hurt and that the community’s best interests stay above personal agendas and emotion.


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.


Can the Insurance Industry Put Profits Above Good Faith Claims Handling?

January 9, 2012

By Curtis G. Kimble.

In Utah, an insurance company has an obligation to act in good faith in all aspects of claim handling.  “The implied obligation of good faith performance contemplates, at the very least, that the insurer will diligently investigate the facts to enable it to determine whether a claim is valid, will fairly evaluate the claim, and will thereafter act promptly and reasonably in rejecting or settling the claim.  …  The overriding requirement imposed by the implied covenant is that insurers act reasonably, as an objective matter, in dealing with their insureds.” (Billings v. Union Bankers Ins. Co., 918 P.2d 461 (Utah 1996)).

The consequences to an insurer breaching these obligations can be significant.  As the court in the Billings case said, an “insurer who breaches the implied covenant by unreasonably denying the insured the benefits bargained for may be held liable for broad consequential damages foreseeably caused by the breach, damages which might include those for mental anguish” and may include attorney fees incurred as a result of the breach.

On the other hand, when an insured’s claim is fairly disputed by the insurer and it is truly debatable as to whether the claim is covered under the policy, the insurer is entitled to debate it (deny the claim) and cannot be held to have breached the covenant of good faith if it chooses to do so (even if the claim is denied and then later found by a court to be a properly covered claim).  An insurer who has a legitimate dispute with an insured over a claim must act reasonably and in good faith, but they are entitled to have the dispute resolved before having to pay the claim.

The problem arises when the insurers don’t act reasonably, promptly, fairly or in good faith.  A problem that some would say has increased dramatically since the mid-90’s.

As this article explains, “a new system to boost the bottom line” took over the insurance industry in the mid-90’s, where, rather than adjusting claims the traditional way, which gave claims managers wide latitude to serve customers reasonably and fairly, “insurers embraced a computer-driven method that produced purposefully low offers to claimants.”

Those who took the low-ball offers received prompt service, while those who didn’t had their claims purposefully delayed with the strategy of making such claims so expensive and time-consuming that people would just give up.

This strategy “put profits above all,” and has apparently worked in that regard. Allstate made $4.6 billion in profits in 2007, double its earnings in the 1990s, an increase which came through “driving down loss values to an average of 30 percent below the actual market cost.” In other words, the strategy has been to pay dramatically less on claims. A strategy that, in practice, is in direct opposition to the legal obligation of insurers to diligently investigate the facts to enable it to determine whether a claim is valid, to fairly evaluate the claim, and to act reasonably in rejecting or settling the claim.

Again, the article can be found here:  Insurance Claim Delays Deliver Massive Profits To Industry By Shorting Customers.

All consumers who buy insurance, HOAs and homeowners included, should take note of these issues and be prepared to push back when an insurer breaches its obligation to diligently investigate, fairly evaluate, and act reasonably and in good faith in any aspect of claim handling.


Santa Claus and Common Area Chimneys and Reindeer on Common Roofs

December 24, 2011

By John Richards:  john@rkw-law.com

I had a dream last night, or should I say nightmare, where I received a phone call from a concerned Board member.  This Board member was worried about the “wear and tear” Santa Clause would cause by sliding up and down the common area chimneys and the potential damage the reindeer and sleigh would cause to the common area roofs.  After all, the association had just re-done their roofs this past year and there is an express exclusion in their insurance policy for damage due to “magical and supernatural causes.”

I assured this Board member, and made sure she reassured the entire Board, that some risks and costs are worth it.  The potential damage to the chimneys and roofs is far outweighed by the joy Christmas morning brings to those who enjoy and believe in the holiday season – regardless of one’s faith and background.

The joy that a young child receives from an unexpected gift has no monetary value in my mind and, far too often, we don’t dwell on these moments enough.  Maybe you can relate, but life is far too short and though we have important issues to address in the “real world,” come Tuesday morning, I do appreciate a few days do dwell on that which matters most.

Just so you know, I am contemplating adding a line item in our reserve studies for our clients that accounts for such seasonal damages in the future, but at least for tonight, let’s enjoy the holiday and the magic that follows.

Again, seasons greetings.  Your friend and advocate, John Richards, Esq.


%d bloggers like this: