New 2023 HOA Laws and What They Mean For Your HOA

May 25, 2023

The Utah general legislative session for 2023 was January – March 2023, and the general effective date for legislation from the session was May 3, 2023.

Records

Senate Bill 191 (2023) clarifies the Nonprofit Act regarding which records an owner is entitled to see if the owner follows the process specified in Subsection 16-6a-1602(2) (the process that requires the owner to have a “proper purpose” for seeing the records).  The statute now specifies that the records that may be viewed after following that particular process are the “other records” listed in Utah Code Subsections 16-6a-1601(2) through (5), namely: “appropriate” accounting records and a membership list with the names and addresses of all members in alphabetical order and showing the number of votes of each member.  Previously, the subsection referred to “any of the other records of the nonprofit corporation.”  (Since Subsection 16-6a-1602(1) specifies the process to view the records listed in Subsection 16-6a-1601(5), the process specified in Subsection 16-6a-1602(2) only applies to the records listed in 16-6a-1601(2) through (4), which, again are “appropriate” accounting records and the membership list).  

The bill also defines the term “corporate records” in the definitions section of the Utah Revised Nonprofit Corporation Act, to mean the records described in Section 16-6a-1601, and to exclude “correspondence, communications, notes, or other similar information, regardless of format or method of storage, that are not an official decision, published document, or record of the corporation.”  However, the Nonprofit Act never uses the term “corporate records” in any substantive way, so the definition has limited usefulness, if any at all.  See Utah Code Section 16-6a-102(13).

Rental Restrictions

The law prohibits a condo and community association from requiring an owner who rents out their home to pay an additional assessment or fee because the home is a rental.  Senate Bill 191 (2023) amends the statute to provide that an association that permits at least 35% of the units in the association to be rental units may charge an owner who rents their unit an annual fee of up to $200 to defray the association’s additional administrative expenses directly related to that rental unit, as detailed in an accounting provided to the owner.  See Utah Code Sections 57-8a-209(9)(c) and 57-8-10.1(9)(c).

Board Member Qualifications, Sex Offenders

Senate Bill 191 (2023) amends the law to provide that an association may, through governing documents or the board’s internal procedures, disqualify an individual from serving as a director because the individual has either been convicted of a felony or is required to register with the sex offender registry due to a conviction for an offense committed against a person under 18 (a.k.a. a “sex offender”).  See Utah Code Sections 57-8a-501 and 57-8-59.

The bill further provides that an association rule may restrict an adult or juvenile who is required to register with the sex offender registry due to a conviction for an offense committed against a person under 18 (a.k.a. a “sex offender”) from accessing a swimming pool, park or playground that is maintained, operated, or owned by the association (a “protected area”), except an association cannot restrict such access when that person must be in a protected area to perform their parental responsibilities.  See Utah Code Sections 57-8a-218(18) and 57-8-8.1(10).

Definition of “Political Sign”

The law contains restrictions against association rules restricting political signs, except reasonable regulations on the time, place, and manner of posting a political sign.  But, the law never defined what constituted a political sign.  Senate Bill 191 (2023) defines a “political sign” to mean “any sign or document that advocates: (1) the election or defeat of a candidate for public office, or (2) the approval or defeat of a ballot proposition.”  See the new definitions in Utah Code Sections 57-8a-102(21) and 57-8-3(34).  See the restrictions against rules governing political signs in Utah Code Sections 57-8a-218(4) and 57-8-8.1(8).

Community Associations Only

Water-efficient Landscaping

Under Senate Bill 191 (2023), community associations must adopt required rules regarding water efficient landscaping before June 30, 2023.  The requirement for associations to adopt rules supporting water-efficient landscaping, including allowance for low water use on lawns during drought conditions, was made law in 2022.  This new law requires those rules to be adopted by June 30, 2023.  Additionally, the bill explicitly provides that a rule may not prohibit low water use on lawns during drought conditions.  See New 2022 HOA Laws and What They Mean For Your HOA.  See also Utah Code Sections 57-8a-218(16) and 57-8-8.1(9).

House Bill 450 (2023) modifies Utah Code Section 57-8a-231 in the Community Association Act, which was enacted last year and states that an association may not enforce a governing document that prohibits a lot owner of a detached home (aka single family home) from incorporating water wise landscaping on the owner’s lot, except in certain instances.  The bill clarifies that an association may restrict or prohibit the use of specific plant materials other than water wise plant materials (as defined in the statute).  Additionally, the provision in the statute that said an association could adopt a requirement that imposes minimum or maximum vegetative coverage was deleted.  Now the statute says an association may not require an owner to have more than 50% vegetative coverage that is not water wise landscaping on the owner’s lot.

Rules

The law that’s been in place for several years in Utah Code Section 57-8a-217 requires that before a board in a community association adopts or amends a rule, the board must: (1) deliver notice to the owners that the board is considering a change to a rule, (2) provide an open forum at the board meeting giving owners an opportunity to be heard at the board meeting before the board adopts or amends a rule, and (3) deliver a copy of the change in the rules within 15 days after the date of the board meeting.

Senate Bill 152 (2023) amends the law to say that if a board fails to do any of those things, a lawsuit must be brought within 18 months in order to challenge the board action.  See Subsection 57-8a-217(7).

Definition of “Rule”

Both the Condo and Community Association Acts have long had provisions governing “rules” in an association but neither act ever defined what constitutes a rule (other than that a rule is adopted by a board and the provisions of CC&Rs and bylaws are not rules).

Senate Bill 191 (2023) defines “rule” for community associations (but, strangely, not for condos):

“Rule” means a policy, guideline, restriction, procedure, or regulation of an association that:
(1) is not set forth in a contract, easement, article of incorporation, bylaw, or declaration; and
(2) governs the conduct of persons, or the use, quality, type, design, or appearance of real property or personal property.
“Rule” does not include the internal business operating procedures of a board.

See Utah Code Section 57-8a-102(25).

Applicability of the Community Association Act

To avoid any confusion and curtail any argument that the Community Association Act doesn’t apply to a given association just because the association was formed before a certain provision of the act was enacted, Senate Bill 152 (2023) amends the law to provide that the act applies to an association that registers or updates the association’s registration with the Utah HOA Registry.  Of course, registering and updating an association’s registration with the HOA Registry is required by the law.  See Utah Code Section 57-8a-105(7).

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

Your community association (noncondos) must adopt rules supporting water-efficient landscaping, including allowance for low water use on lawns during drought conditions by June 30, 2023. See CounselOurHOA.com for sample rules (for Prudent-Legal subscribers).

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Posted by Curtis G. Kimble

New 2022 HOA Laws and What They Mean For Your HOA

June 1, 2022

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

Water-efficient Landscaping

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

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

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

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

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

Records

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

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

Electric Vehicle Charging Systems

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

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

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

Rules

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

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

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

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

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

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Posted by Curtis G. Kimble

HOA Immunity from COVID-19 Liability

August 31, 2020

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

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

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

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Posted by Curtis G. Kimble

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

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

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.

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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

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Posted by 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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Posted by Curtis G. Kimble

How the New Laws Affect You: Non-Condos

June 2, 2011

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

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

2.  Insurance.  All HOAs in Utah must have property and liability insurance coverage for their common areas (this was not required before in non-condominium HOAs).

Unless the CC&Rs require each homeowner to insure the homeowner’s dwelling, all HOAs with attached housing (such as townhomes) are required to have 100% replacement cost coverage for all permanent improvements, including fixtures and betterments to an attached dwelling made by a homeowner.  The association must set aside an amount equal to the amount of the deductible (or $10,000, whichever is less).  The master policy must be primary, even for unit related losses.   However, the law gives the HOA a method to allocate or transfer risk to the homeowner or homeowner’s policy.  For claims against the association’s master policy which are associated with a particular home, the association can require that homeowner to pay the deductible if a notice had already been sent to all homeowners stating they will be responsible for the deductible on the association’s master policy.  *Action item: send notice to all owners regarding payment of the deductible, and make sure your deductible is somewhere in the $2,500 to $10,000 range to reduce minor or frivolous claims against the master policy by homeowners that drive up the premiums.

3.  Rules.  As of May 10th, rules can no longer be changed or adopted without giving notice to all homeowners 15 days in advance of the board meeting where the rule change will be considered and allowing homeowners an opportunity to be heard at that meeting.  The new or changed rule must then be sent out to all homeowners within 15 days of being adopted.  The homeowners can call a special meeting and disapprove a new rule within 60 days from the date it was adopted, if 51% of the total votes in the association vote to disapprove at the special meeting.

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

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

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

The reserve analysis has to be reviewed and, if needed, updated every two years.  The reserve analysis has to be presented to the homeowners at the annual meeting each year where the homeowners at the meeting vote 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.

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

6.  Budgets.  A new law requires a homeowner-elected board 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.”

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

Curtis G. Kimble

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

How the New Laws Affect You: Condos

May 31, 2011

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

If you’re a condo:

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

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

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

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

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

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

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

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

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

Curtis G. Kimble

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

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