Utah Condominium Law and HOA Law FAQ's
I've been asked by the College of Community Association Lawyers to prepare responses to a series of questions about Utah Community Association Law; I'll be working on the project for the next several weeks. Here are the questions. If there are any that you'd like to see prioritized, please head over to the Utahcondolaw page, and let me know your preferences. I'll get to them as time permits.
COLLEGE OF COMMUNITY ASSOCIATION LAWYERS
Utah Laws Affecting Common Interest Communities Project Frequently Asked Questions ("FAQs")
1.What state statutes apply to Common Interest Communities in your state?
The two acts in Utah which deal with Common Interest Communities are the Utah Condominium Act, located in chapter 57-8 of the Utah Code, and the Utah Community Associatio Act, located in chapter 57-8a.
The Utah Revised Non-profit Corporation Act, at Utah Code Ann. 16-6a, applies to those Common Interest Communities that elect to have non-profit status. Not all Utah community associations are incorporated, but there are many benefits to being incorporated.
2. Are Common Interest Communities required to incorporate? Can they be incorporated? Advantages / Disadvantages?
Common Interest Communities are not required to incorporate in Utah, but many choose to do so. Incorporation provides additional legal quidance respecting community governance, provides additional legal protections to the associations' governing boards, and facilitates contracting with some entities, particularly some lenders.
Additionally, commencing on July 1, 2011, all associations who wish to use liens in connection with their assessment collections (which presumably includes all associations), will need to be registered with the Utah Department of Commerce. Although the process is not finalized, it is likely that this regisration requirement will be in addition to the existing registrations of those associations who choose to be non-profit corporations.
3. Is there a state agency which has authority to regulate and oversee the affairs of Common Interest Communities? What is the scope of its power and authority?
No, although the Utah Department of Commerce and the Utah Department of Real Estate have limited impact on some associations.
4. On the state level, what are the annual reporting requirements of a Common Interest Community, if any, and to whom?
Commencing on July 1, 2011, all associations that wish to use liens in connection with their assessment collections will be required to register with the Utah Department of Commerce, and renew that information within 90 days of changes. Non-profit corporations are required to register, and to renew that registration, annually.
5. Is an Annual Meeting of Members required?
Non-profit corporations must meet at least annually, unless the bylaws eliminate the need for an annual meeting. (Utah Code Ann. 16-6a-701).
Furthermore, almost all associations are required, by their governing documents, to hold annual meetings. Additionally Utah Code Ann 57-8-7.5 and 57-8a- 211 impliedly require an annual meeting in order for the association members to review the funding of the association's reserves.
6. How are Special Meetings of the Members called?
The method for calling special meetings will generally be set forth in associations' bylaws; typical provisions allow for the president, or two officers, or some percentage (or number of unit owners to call the meeting. Then, the meeting will need to be noticed.
7. What are the Notice Requirements for Membership Meetings?
Nonprofit corporations are required, pursuant to Utah Code Ann. 16-6a-704, to "give notice in accodance with its bylaws... in a fair and reasonable manner." Notice is presumptively fair and reasonable if given by first class mail no fewer than 10 days prior to the meeting.
With respect to unincorporated associations, there is no statute specifically governing this issue, so it will vary among associations; consult your governing documents and/or consult with competent legal counsel.
8.What are Quorum Requirements for Membership Meetings?
As there is no statute governing this issue, it will vary among associations; consult your governing documents and/or consult with competent legal counsel.
9.Can Members use Proxies? Absentee Ballots? Mail Ballots?
These questions provide a good example of the value of incorporation. The Utah Revised Non-profit Corporation Act deals with these issues at Utah Code Ann. 16-6a-707 through 713.
10. Can Members Raise Concerns or Issues at Membership Meetings?
For nonprofit corporations, the association must "give notice of a matter a member intends to raise at the meeting if: requested in writing by [the board, persons authorized by the bylaws, 10% of the members." (Utah Code Ann. 16-6a-702)
11. Can Non-Members attend Membership Meetings? (Attorneys of Members? Guests of Members? Local or National Media representatives?)
12. Are Boards of Directors required to hold Regular Board Meetings?
Once again, a question primarily answered by the Association's governing documents.
13. How are Special Meetings of the Board called?
14. What are the Notice requirements for Board meetings? Are Members required to be notified as well?
15. What constitutes a quorum for Board Meetings?
16. Can Board Members use Proxies?
17. Which meetings of the Board of Directors are open to all homeowners?
18. Does a Member have the right to address the Board of Directors during the meeting?
19. Can the Board of Directors meet in Closed or Executive Session? Ifso, for what purposes?
20. Are Minutes of Board Meetings required? When can Members see the minutes of such meetings?
21. Does a Member have a right to audio-or video-records meetings of the Board? Under what circumstances or conditions?
22. Can Non-Members attend Board Meetings?
23. Does a Member have a right to review books and records of the Association?
a. If so, what books and records can be reviewed?
This, like almost all of these answers, depends on whether it's a condominium, and whether or not it's incorporated. All owners have a right to at least some records, and members of incorporated associations have clearly defined rights to demand inspections.
b. Can the Member obtain copies of the books and records requested?
In most cases, yes. The Association can probably insist that the member present a "proper purpose" for the inspection.
c. Does a Member have to pay for copies of the books and records?
The member will likely have to pay the reasonable costs of copying the records.
d. Are there books and records which the Association can withhold or otherwise prevent a Member from reviewing?
Depending upon the nature and form of the request, the Association may be able to decline production of some records. For example, in the absence of a compelling reason to know the identity of those in default, the Association may choose to decline to produce this information, for fear of liability arising from privacy-related concerns.
24. What are the Reserve requirements in the State? Are Reserve Studies mandated? What reporting requirements does the Association have with respect to the status of the Reserves, the Reserve Accounts or the funding of the Reserves?
Utah does not require formal reserve studies or mandate reserves, but recent laws do require a "reserve analysis" on all associations by July 1, 2012, with bi-annual reviews "if needed." In addition, the associations reserves must be "discussed" at the association's annual meeting, and votes on reserves may be called.
25. What are the resale disclosure requirements?
No resale disclosure requirements apply to associations; to the extent that disclosures are required, they are imposed upon realtors and are imposed by the Utah statutes and forms related to real estate transactions.
26. Does the Membership by Vote or the Board of Directors establish the Assessment?
In most associations, the budget is established by the Board, and presented at the annual meeting. Some governing documents allow for membership vote; others allow overrides. New legislation passed in 2011 allows owners in HOA's to disapprove, by majority vote, of a Board's budget.
27. Is a budget required?
Almost all governing documents establish the boards' obligations respecting the proposal and/or adoption of a budget. The most typical provisions allow the board to adopt and present a budget. Another fairly typical scenario allows a unit override. Lastly, a small minority of documents require the unit owners' approval of the budget.
The 2011 Common Ownership Act amendments contained in SB 167 allow for a unit owner vote to disapprove the association budget. These amendments do not apply to condominiums, in which the governing documents will continue to control.
28. Is an annual audit required?
Annual audits are only required, if at all, pursuant to the provisions contained in associations' governing documents, and these provisions vary widely from association to association. Some associations allow for an audit, at the expense of the requesting owner(s)
29. Does the State regulate the collection of assessments?
The state does not proactively regulate the collection of assesments, although statutes do define associations' collection activities. Associations have several collection options, but state statutes provide owners with certain rights in connection with their defenses to these collection actions.
a. What happens if a Member is delinquent in the payment of assessments?
Associations have several options in connection with the collection of assessments. These include non-judicial remedies, such as the termination of owners' rights, association-paid utilities and access to association amenities), both judicial and non-judicial foreclosures (through which the association demands payment by threatening to acquire title to the owner's unit), an interception of rents if the Unit/Lot is being rented, or a lawsuit seeking a monetary judgment.
b. How can an association increase annual assessments?
This varies widely from association to association, as these matters are generally governed by the associations' governing documents. In the most common provisions, the management committee establishes and announces the budget. Some associations require unit owner approval of the budget; others limit the increases that can be made without owner consent.
c. Under what circumstances can my association levy special assessments?
d. Are there provisions related to additional assessments or adjustments in the budget or assessment level in the event of a deficit?
30. What authority does the association have to access a Unit or Lot? Under what circumstances?
31. Does the Association have the authority to adopt rules and regulations? By law or by statute?
32. Does the Association have the authority to assess charges or fines for violations by Members? Does the Association have the right to suspend the right of use of the common elements or common areas in the event of a violation? To suspend the right of a Member to vote or otherwise participate in the Association in the event of a violation?
33. Is there a requirement to have an internal administrative Complaint or Dispute Process? Is it mandatory and/or a prerequisite to other legal action?
34. Does any applicable statute provide for the removal of a Board Member, several Board members, or the entire Board? Under what conditions? Who decides upon their successors and when?
35. Can an association be placed into receivership by a Court under state law?
36. Does state statute provide for condemnation of common property?
UNIT/LOT OWNER ISSUES
37. What action(s) can an association take in the event of non-payment of association assessments? Is foreclosure an option? Under what circumstances? (Please address judicial and non-judicial foreclosure.)
New laws adopted by the Utah legislature in 2011 are intended, in part, to allow associations to pursue judical and non-judicial foreclosures.
38. Are there state laws that regulate whether a Member can be assessed a charge or otherwise fined by my association for violations? What violations trigger this authority? What procedures must be followed?
a. What actions can the association take to collect these charges or fines;
b. Can my association start foreclosure on my property for non-payment of these charges or fines?
39. What, if any, other internal administrative enforcement options can the association take in the event of a violation of the state statute, association's governing documents, or the rules and regulations of the association?
40. Does any applicable statute regulate the flying of the American Flag?
41. Does any applicable statute regulate solar panels? Clotheslines?
42. What are the rules regarding placement of satellite dishes or antennas on my property? (Link to the OTARD Fact Sheet.)
43. What dispute resolution options do I have if I have a problem with the board?
44. What is the state law regarding recalling board members?
AMENDMENT OF DOCUMENTS
45. Does state statute provide for the amendment of the association's documents?
a. What percentage of the owners must approve?
b. Is percentage based on those voting or totality of the number of owners?
c. Is the vote taken at a meeting or is it required to be by written consent?
d. Is mortgagee approval required? Is there a statutory process for obtaining mortgagee approval or providing for a presumptive mortgagee approval?
USE OF TECHNOLOGY
46. Other than a written document or by voting at a meeting, can an Common Interest Community use the most advanced technology, including e-mail or the internet to:
a. Provide notice to Members of any meeting?
Yes, if allowed in the governing documents, and done carefully.
b. Obtain votes of the Members?
c. Obtain the consents, acknowledgements or ratifications or Members?
d. Obtain the electronic signatures of Members?