S.B. 129

This document includes House Committee Amendments incorporated into the bill on Wed, Feb 11, 2004 at 11:59 AM by chopkin. --> This document includes House Floor Amendments incorporated into the bill on Thu, Feb 19, 2004 at 11:17 AM by chopkin. --> 1

COMMUNITY ASSOCIATIONS
2 2004 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Michael G. Waddoups
5
6 LONG TITLE
7 General Description:
8 This bill modifies the Real Estate Code to enact the Community Association Act.
9 Highlighted Provisions:
10 This bill:
11 . defines terms;
12 . enacts provisions governing the payment of common expenses and assessments of a
13 community association;
14 . provides costs and attorney fees under certain circumstances;
15 . regulates liens and foreclosures related to assessments;
16 . regulates termination of utility services and use of recreational facilities within a
17 community association;
18 . provides for future lease payments to be credited toward an assessment under
19 certain circumstances;
20 . requires written assessment statements under certain circumstances; and
21 . regulates assessment payments by a lien holder.
22 Monies Appropriated in this Bill:
23 None
24 Other Special Clauses:
25 None
26 Utah Code Sections Affected:
27 ENACTS:

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House Floor Amendments 2-19-2004 ch/tcl 28

57-8a-101, Utah Code Annotated 1953
29 57-8a-102, Utah Code Annotated 1953
30 57-8a-103, Utah Code Annotated 1953
31 57-8a-201, Utah Code Annotated 1953
32 57-8a-202, Utah Code Annotated 1953
33 57-8a-203, Utah Code Annotated 1953
34 57-8a-204, Utah Code Annotated 1953
35 57-8a-205, Utah Code Annotated 1953
36 57-8a-206, Utah Code Annotated 1953
37 57-8a-207, Utah Code Annotated 1953
38
39 Be it enacted by the Legislature of the state of Utah:
40 Section 1. Section 57-8a-101 is enacted to read:
41 CHAPTER 8a. COMMUNITY ASSOCIATION ACT
42 Part 1. General Provisions
43 57-8a-101. Title.
44 This chapter is known as the "Community Association Act."
45 Section 2. Section 57-8a-102 is enacted to read:
46 57-8a-102. Definitions.
47 As used in this chapter:
48 (1) (a) "Assessment" means a charge imposed or levied:
49 (i) by the association;
50 (ii) on or against a lot or a lot owner; and
51 (iii) pursuant to a governing document recorded with the county recorder.
52 (b) "Assessment" includes a common expense.
53 (2) (a) Except as provided in Subsection (2)(b), "association" means a corporation H [ ,
54 unincorporated association, ] h or other legal entity, each member of which:
55 (i) is an owner of a residential lot located within the jurisdiction of the association, as
56 described in the governing documents; and
57 (ii) by virtue of membership or ownership of a residential lot is obligated to pay:
58 (A) real property taxes;

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- 3 - 59 (B) insurance premiums;
60 (C) maintenance costs; or
61 (D) for improvement of real property not owned by the member.
62 (b) "Association" or "homeowner association" does not include an association created
63 under Title 57, Chapter 8, Condominium Ownership Act.
64 (3) "Board of directors" or "board" means the entity, regardless of name, with primary
65 authority to manage the affairs of the association.
66 (4) "Common areas" means property that the association:
67 (a) owns;
68 (b) maintains;
69 (c) repairs; or
70 (d) administers.
71 (5) "Common expense" means costs incurred by the association to exercise any of the
72 powers provided for in the association's governing documents.
73 (6) (a) "Governing documents" means a written instrument by which the association
74 may:
75 (i) exercise powers; or
76 (ii) manage, maintain, or otherwise affect the property under the jurisdiction of the
77 association.
78 (b) "Governing documents" includes:
79 (i) articles of incorporation;
80 (ii) bylaws;
81 (iii) a plat;
82 (iv) a declaration of covenants, conditions, and restrictions; and
83 (v) rules of the association.
84 (7) "Lease" or "leasing" means regular, exclusive occupancy of a lot:
85 (a) by a person or persons other than the owner; and
86 (b) for which the owner receives a consideration or benefit, including a fee, service,
87 gratuity, or emolument.
88 (8) "Lot" means:
89 (a) a lot, parcel, plot, or other division of land:

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- 4 - 90 (i) designated for separate ownership or occupancy; and
91 (ii) (A) shown on a recorded subdivision plat; or
92 (B) the boundaries of which are described in a recorded governing document; or
93 (b) (i) a unit in a condominium association if the condominium association is a part of
94 a development; or
95 (ii) a unit in a real estate cooperative if the real estate cooperative is part of a
96 development.
97 (9) "Residential lot" means a lot, the use of which is limited by law, covenant, or
98 otherwise to primarily residential or recreational purposes.
99 Section 3. Section 57-8a-103 is enacted to read:
100 57-8a-103. Scope of chapter.
101 Remedies provided in this chapter, by law, or in equity are not mutually exclusive.
102 Section 4. Section 57-8a-201 is enacted to read:
103 Part 2. Common Expenses and Assessments
104 57-8a-201. Payment of a common expense or assessment.
105 (1) An owner shall pay the owner's proportionate share of:
106 (a) the common expenses; and
107 (b) any other assessments levied by the association.
108 (2) A payment described in Subsection (1) shall be in the amount and at the time
109 determined by the board of directors in accordance with the terms of the:
110 (a) declaration; or
111 (b) bylaws.
112 (3) An assessment levied against a lot is:
113 (a) a debt of the owner at the time the assessment is made; and
114 (b) collectible as a debt described in Subsection (3)(a).
115 Section 5. Section 57-8a-202 is enacted to read:
116 57-8a-202. Unpaid assessment -- Costs and attorney fees.
117 (1) An association may recover all expenses incurred by the association in collecting an
118 unpaid assessment, including reasonable attorney fees.
119 (2) (a) An association may maintain an action to recover a money judgment for an
120 unpaid assessment without foreclosing or waiving the lien securing the unpaid assessment.

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House Floor Amendments 2-19-2004 ch/tcl 121

(b) The prevailing party in an action described in Subsection (2)(a) may recover:
122 (i) costs; and
123 (ii) reasonable attorney fees.
124 Section 6. Section 57-8a-203 is enacted to read:
125 57-8a-203. Unpaid assessment -- Lien -- Foreclosure.
126 (1) (a) If an owner fails or refuses to pay an assessment when due, that amount
127 constitutes a lien on the interest of the owner in the property.
128 (b) Upon the recording of notice of lien by the manager or board of directors, a lien
129 described in Subsection (1)(a) is a lien on the unit owner's interest in the property prior to all
130 other liens and encumbrances, recorded or unrecorded, except:
131 (i) tax and special assessment liens on the unit in favor of any assessing lot or special
132 improvement district; and
133 (ii) encumbrances on the interest of the lot owner:
134 (A) recorded prior to the date of the recording of notice of lien described in Subsection
135 (1)(b); and
136 (B) that by law would be a lien prior to subsequently recorded encumbrances.
137 (2) (a) The manager or board of directors may enforce a lien described in Subsection
138 (1) by sale or foreclosure of the owner's interest.
139 (b) The sale or foreclosure described in Subsection (2)(a) shall be conducted in the
140 same manner as foreclosures in:
141 H [ (i) deeds of trust; ] h
142 H [ (ii) ] (i) h mortgages; or
143 H [ (iii) ] (ii) h any other manner permitted by law.
144 (3) In a sale or foreclosure described in Subsection (2)(a), the owner shall pay:
145 (a) the costs and expenses of the proceedings; and
146 (b) reasonable attorney fees.
147 (4) Unless otherwise provided in the declaration, the manager or board of directors
148 may:
149 (a) bid at a sale or foreclosure described in Subsection (2)(a); and
150 (b) hold, lease, mortgage, or convey the lot that is subject to the lien.
151 Section 7. Section 57-8a-204 is enacted to read:

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- 6 - 152 57-8a-204. Unpaid assessment -- Utility service -- Right of access and use.
153 (1) When authorized in the declaration, bylaws, or rules adopted by the board of
154 directors, if the owner fails or refuses to pay an assessment when due, the board of directors
155 may, after giving notice and an opportunity to be heard in accordance with Subsection (2),
156 terminate an owner's right:
157 (a) to receive utility services paid as a common expense; and
158 (b) of access and use of recreational facilities.
159 (2) (a) Before terminating utility services or right of access and use of recreational
160 facilities under Subsection (1), the manager or board of directors shall give written notice to the
161 owner in the manner provided in the declaration, bylaws, or rules.
162 (b) The notice described in Subsection (2)(a) shall inform the owner:
163 (i) that utility service or right of access and use of recreational facilities will be
164 terminated if payment of the assessment is not received within the time provided in the
165 declaration, bylaws, or rules, which time shall be stated and be at least 48 hours;
166 (ii) of the amount of the assessment due, including any interest or late payment fee; and
167 (iii) of the right to request a hearing under Subsection (3).
168 (3) (a) An owner who is given notice under Subsection (2) may request an informal
169 hearing to dispute the assessment by submitting a written request to the board of directors
170 within 14 days after the date on which the owner receives the notice described in Subsection
171 (2).
172 (b) The hearing shall be conducted by the board of directors in accordance with the
173 standards provided in the declaration, bylaws, or rules.
174 (c) If a hearing is requested, utility services or right of access and use or recreational
175 facilities may not be terminated until after the hearing has been conducted and a final decision
176 has been entered.
177 (4) Upon payment of the assessment due, including any interest or late payment fee, the
178 manager or board of directors shall immediately take action to reinstate the terminated utility
179 services.
180 Section 8. Section 57-8a-205 is enacted to read:
181 57-8a-205. Unpaid assessment -- Future lease payments.
182 (1) When authorized in the declaration, bylaws, or rules adopted by the board of

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- 7 - 183 directors, if the owner of a lot who is leasing the lot fails to pay an assessment for more than 60
184 days after the assessment is due, the board of directors, upon compliance with this section, may
185 demand that the tenant pay to the association all future lease payments due to the owner,
186 beginning with the next monthly or other periodic payment, until the amount due to the
187 association is paid.
188 (2) (a) The manager or board of directors shall give the owner written notice, in
189 accordance with the declaration, bylaws, or association rules, of its intent to demand full
190 payment from the tenant under this section.
191 (b) The notice described in Subsection (2)(a) shall:
192 (i) provide notice to the tenant that full payment of the remaining lease payments will
193 begin with the next monthly or other periodic payment unless the assessment is received within
194 the time period provided in the declaration, bylaws, or association rules;
195 (ii) state the amount of the assessment due, including any interest or late payment fee;
196 (iii) state that any costs of collection, not to exceed $150, and other assessments that
197 become due may be added to the total amount due; and
198 (iv) provide the requirements and rights described in this section.
199 (3) (a) If the owner fails to pay the assessment due by the date specified in the notice
200 described in Subsection (2), the manager or board of directors may deliver written notice to the
201 tenant, in accordance with the declaration, bylaws, or association rules, that demands future
202 payments due to the owner be paid to the association pursuant to Subsection (4).
203 (b) The manager or board of directors shall mail a copy of the notice described in this
204 Subsection (3) to the owner.
205 (c) The notice provided to the tenant under this Subsection (3) shall state:
206 (i) that due to the owner's failure to pay the assessment within the time period allowed,
207 the owner has been notified of the intent of the board of directors to collect all lease payments
208 due to the association;
209 (ii) that until notification by the association that the assessment due, including any
210 interest, collection cost, or late payment fee, has been paid, the tenant shall pay to the
211 association all future lease payments due to the owner; and
212 (iii) that payment by the tenant to the association in compliance with this section will
213 not constitute a default under the terms of the lease agreement.

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- 8 - 214 (d) If a tenant makes payments in compliance with this section, the owner may not
215 initiate an action against the tenant.
216 (4) (a) All funds paid to the association pursuant to this section shall be:
217 (i) deposited in a separate account; and
218 (ii) disbursed to the association until the assessment due, together with any cost of
219 administration which may not exceed $25, is paid in full.
220 (b) Any remaining balance shall be paid to the owner within five business days after
221 payment in full to the association.
222 (5) (a) Within five business days after payment in full of the assessment, including any
223 interest or late payment fee, the manager or board of directors shall notify the tenant in writing
224 that future lease payments are no longer due to the association.
225 (b) The manager or board of directors shall mail a copy of the notification described in
226 Subsection (5)(a) to the unit owner.
227 Section 9. Section 57-8a-206 is enacted to read:
228 57-8a-206. Written statement of unpaid assessment.
229 (1) (a) The manager or board of directors shall issue a written statement indicating any
230 unpaid assessment with respect to a lot covered by the request, upon:
231 (i) the written request of any unit owner; and
232 (ii) payment of a reasonable fee not to exceed $10.
233 (b) The written statement described in Subsection (1)(a) is binding in favor of any
234 person who relies in good faith on the written statement upon the:
235 (i) remaining owners;
236 (ii) manager; and
237 (iii) board of directors.
238 (2) Unless the manager or board of directors complies with a request described in
239 Subsection (1)(a) within ten days, any unpaid assessment that became due prior to the date the
240 request described in Subsection (1)(a) was made is subordinate to a lien held by the person
241 requesting the statement pursuant to Subsection (1)(a).
242 Section 10. Section 57-8a-207 is enacted to read:
243 57-8a-207. Payment of unpaid assessment by encumbrancer.
244 (1) An encumbrancer holding a lien on a lot may pay any unpaid assessment due with

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House Committee Amendments 2-11-2004 ch/tcl 245

respect to the H [ unit ] LOT h .
246 (2) Upon a payment described in Subsection (1), the encumbrancer has a lien on the
247 H [ unit ] LOT h for the amounts paid.

Legislative Review Note
as of 1-22-04 9:25 AM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel