Happy Laws Go Into Effect Day! (okay, I’m sure there’s a better name for that). Today, May 8, the HOA laws that were enacted this year go into effect. Specifically, those laws:
- include an amendment to the law regarding HOA records,
- include an amendment to the law regarding HOA reserve fund money,
- regulate how HOAs keep association funds,
- clean up a couple of the required exceptions to certain rental restrictions,
- codify that a management committee acts for an association, and
- enacts provisions regarding a management committee that imposes sanctions or pursues legal action.
A change to the law this year requires an HOA to make certain documents available to homeowners free of charge, via the association’s website or at the association’s address, requires a homeowner to include certain information in a written request for records, establishes a penalty for the failure of an association to fulfill a request, and provides that an association is not liable for erroneous documents identified or produced in good faith.
The law already required associations to keep certain records and make them available to homeowners who request them. Now, the law also requires all associations to keep and make available to homeowners a copy of the association’s: (1) declaration and bylaws, (2) most recent approved minutes, and (3) most recent budget and financial statement. Associations are required to make those documents available to owners, free of charge, through the association website, or, if the association does not have an active website, it must make physical copies of the documents available to owners during regular business hours at the association’s address registered with the Department of Commerce’s Utah HOA Registry.
If a homeowner wishes to view or copy other association records, then in a written request to the association, the homeowner must include certain information, including how the owner wishes to inspect or to copy the documents. The owner may elect: (1) that the association or a third party duplicating service make the copies or electronic scans of the requested documents, or (2) that the owner be allowed to bring any necessary imaging equipment to the place of inspection and make copies or electronic scans of the documents while inspecting the documents, or (3) that the association email the requested documents to an email address provided in the request.
If an association produces the copies or electronic scans, the owner must pay the association the reasonable cost of the copies or electronic scans and for time spent meeting with the owner, which may not exceed the actual cost that the association paid to a recognized third party duplicating service to make the copies or electronic scans, or 10 cents per page and $15 per hour for the association employee’s, manager’s, or other agent’s time.
In addition to the penalties already in place for failure by an association to comply with this law, the new law imposes the additional penalty that an association must pay $25 per day for as long as the owner’s records request continues unfulfilled, beginning on the sixth day after a proper written request was made.
Finally, the new law states that an association is not liable for identifying or providing a document in error, if the association identified or provided the erroneous document in good faith.
Reserve Fund Money
A change goes into effect today to the law that prohibited an association from using money in a reserve fund for a purpose other than the purpose for which the reserve fund was established. Effective today, an association may use money in a reserve fund for a purpose other than the purpose for which the reserve fund was established if a majority of association members vote to approve the use of reserve fund money for that purpose.
Starting today, associations are required to keep all of the association’s funds in an account in the name of the association, and an association may not commingle the association’s funds with the funds of any other person or entity.
Exceptions to Certain Rental Restrictions
Utah law requires certain exceptions when an association prohibits rentals or restricts the number and term of rentals in the association. See Utah Code Section 57-8-10.1 (condominiums) and Utah Code Section 57-8a-209 (non-condo HOAs).
A couple of those exceptions were clarified this year. The law use to say an owner “whose employer has relocated the owner for no less than two years” is exempt from the prohibition or restriction on the number and term of rentals. This made little sense as a hardship-type exception. A temporary, short-term job relocation is more likely to cause a hardship. Long-term relocations are less in need of a hardship-exception because it’s less of a hardship to have to sell a home for a long-term relocation than a short-term relocation. So, the statute now states an owner “whose employer has relocated the lot owner for two years or less” is exempt from the prohibition or restriction on the number and term of rentals.
Additionally, the new law clarifies that the exemption for owners who have a rental before a prohibition or restriction on the number and term of rentals is adopted terminates when the home is sold or otherwise conveyed (and defines what constitutes such a conveyance).
A couple of minor changes were passed that simply codify what was basically already true, at common law or otherwise. Utah Code Section 57-8-59 states that a management committee acts in all instances on behalf of the association (except as otherwise stated in the association’s governing documents). And Utah Code Section 57-8-10.7, in the Condo Act, was adopted to match a parallel section in the Community Association Act. It states that a management committee must use its reasonable judgment to determine whether to exercise the association’s powers to impose sanctions or pursue legal action for a violation of the governing documents, and it specifies certain circumstances under which an association may not be required to take enforcement action. And, finally, Utah Code Section 57-8a-212.5, in the Community Association Act, was adopted to match a parallel section in the Condo Act. It states that owners must comply with the governing documents and enforcement may be sought by an association or an aggrieved owner through an action to recover money for damages, or injunctive relief, or both.
Contact Kimble Law for assistance with any of the issues addressed in these new laws, or for any association issues.