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S.B. 278 Enrolled

             1     

HOMEOWNERS' ASSOCIATION AMENDMENTS

             2     
2010 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Stephen H. Urquhart

             5     
House Sponsor: Don L. Ipson

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill enacts provisions relating to condominium and community associations.
             10      Highlighted Provisions:
             11          This bill:
             12          .    requires a reserve analysis to be conducted and a review of a reserve analysis on a
             13      periodic basis; and
             14          .    enacts provisions governing reserve funds of condominium associations and
             15      community associations.
             16      Monies Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          None
             20      Utah Code Sections Affected:
             21      ENACTS:
             22          57-8-7.5, Utah Code Annotated 1953
             23          57-8a-211, Utah Code Annotated 1953
             24     
             25      Be it enacted by the Legislature of the state of Utah:
             26          Section 1. Section 57-8-7.5 is enacted to read:
             27          57-8-7.5. Reserve analysis -- Reserve fund.
             28          (1) As used in this section, "reserve analysis" means an analysis to determine:
             29          (a) the need for a reserve fund to accumulate money to cover the cost of repairing,


             30      replacing, and restoring common areas and facilities that have a useful life of three years or
             31      more, but excluding any cost that can reasonably be funded from the general budget or other
             32      funds of the association of unit owners; and
             33          (b) the appropriate amount of any reserve fund.
             34          (2) Except as otherwise provided in the declaration, a management committee shall:
             35          (a) (i) subject to Subsection (2)(a)(ii), cause a reserve analysis to be conducted no less
             36      frequently than every five years; and
             37          (ii) if no reserve analysis has been conducted since March 1, 2008, cause a reserve
             38      analysis to be conducted before July 1, 2012; and
             39          (b) review and, if necessary, update a previously conducted reserve analysis no less
             40      frequently than every two years.
             41          (3) The management committee may conduct a reserve analysis itself or may engage a
             42      reliable person or organization, as determined by the management committee, to conduct the
             43      reserve analysis.
             44          (4) (a) A management committee may not use money in a reserve fund:
             45          (i) for daily maintenance expenses, unless a majority of the members of the association
             46      of unit owners vote to approve the use of reserve fund money for that purpose; or
             47          (ii) for any purpose other than the purpose for which the reserve fund was established.
             48          (b) A management committee shall maintain a reserve fund separate from other funds
             49      of the association of unit owners.
             50          (c) This Subsection (4) may not be construed to limit a management committee from
             51      prudently investing money in a reserve fund, subject to any investment constraints imposed by
             52      the declaration.
             53          (5) Subsections (2), (3), and (4) do not apply to an association of unit owners during
             54      the period of declarant management.
             55          Section 2. Section 57-8a-211 is enacted to read:
             56          57-8a-211. Reserve analysis -- Reserve fund.
             57          (1) As used in this section, "reserve analysis" means an analysis to determine:


             58          (a) the need for a reserve fund to accumulate money to cover the cost of repairing,
             59      replacing, and restoring common areas that have a useful life of three years or more, but
             60      excluding any cost that can reasonably be funded from the association's general budget or
             61      from other association funds; and
             62          (b) the appropriate amount of any reserve fund.
             63          (2) Except as otherwise provided in the governing documents, a board shall:
             64          (a) (i) subject to Subsection (2)(a)(ii), cause a reserve analysis to be conducted no less
             65      frequently than every five years; and
             66          (ii) if no reserve analysis has been conducted since March 1, 2008, cause a reserve
             67      analysis to be conducted before July 1, 2012; and
             68          (b) review and, if necessary, update a previously conducted reserve analysis no less
             69      frequently than every two years.
             70          (3) The board may conduct a reserve analysis itself or may engage a reliable person or
             71      organization, as determined by the board, to conduct the reserve analysis.
             72          (4) (a) A board may not use money in a reserve fund:
             73          (i) for daily maintenance expenses, unless a majority of association members vote to
             74      approve the use of reserve fund money for that purpose; or
             75          (ii) for any purpose other than the purpose for which the reserve fund was established.
             76          (b) A board shall maintain a reserve fund separate from other association funds.
             77          (c) This Subsection (4) may not be construed to limit a board from prudently investing
             78      money in a reserve fund, subject to any investment constraints imposed by the governing
             79      documents.
             80          (5) Subsections (2), (3), and (4) do not apply to an association during the period of
             81      administrative control.


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