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S.B. 89 Enrolled

             1     

HOMEOWNER ASSOCIATION RESERVE ACCOUNT
             2      2011 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 modifies provisions of the Condominium Ownership Act and the Community
             10      Association Act relating to reserve accounts.
             11      Highlighted Provisions:
             12          This bill:
             13          .    requires condominium and community associations to allow owners annually to
             14      decide whether and, if so, how to fund a reserve fund; and
             15          .    specifies the applicability of reserve fund provisions.
             16      Money Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          None
             20      Utah Code Sections Affected:
             21      AMENDS:
             22          57-8-7.5, as enacted by Laws of Utah 2010, Chapter 46
             23          57-8a-211, as enacted by Laws of Utah 2010, Chapter 46
             24     
             25      Be it enacted by the Legislature of the state of Utah:
             26          Section 1. Section 57-8-7.5 is amended 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,

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             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), and (6) do not apply to an association of unit owners
             54      during the period of declarant management.
             55          (6) An association of unit owners shall:
             56          (a) annually, at the annual meeting of unit owners or at a special meeting of unit
             57      owners:

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             58          (i) present the reserve study; and
             59          (ii) provide an opportunity for unit owners to discuss reserves and to vote on whether
             60      to fund a reserve fund and, if so, how to fund it and in what amount;
             61          (b) prepare and keep minutes of each meeting held under Subsection (6)(a) and
             62      indicate in the minutes any decision relating to funding a reserve fund.
             63          (7) This section applies to each association of unit owners, regardless of when the
             64      association of unit owners was created.
             65          Section 2. Section 57-8a-211 is amended to read:
             66           57-8a-211. Reserve analysis -- Reserve fund.
             67          (1) As used in this section, "reserve analysis" means an analysis to determine:
             68          (a) the need for a reserve fund to accumulate money to cover the cost of repairing,
             69      replacing, and restoring common areas that have a useful life of three years or more, but
             70      excluding any cost that can reasonably be funded from the association's general budget or from
             71      other association funds; and
             72          (b) the appropriate amount of any reserve fund.
             73          (2) Except as otherwise provided in the governing documents, a board shall:
             74          (a) (i) subject to Subsection (2)(a)(ii), cause a reserve analysis to be conducted no less
             75      frequently than every five years; and
             76          (ii) if no reserve analysis has been conducted since March 1, 2008, cause a reserve
             77      analysis to be conducted before July 1, 2012; and
             78          (b) review and, if necessary, update a previously conducted reserve analysis no less
             79      frequently than every two years.
             80          (3) The board may conduct a reserve analysis itself or may engage a reliable person or
             81      organization, as determined by the board, to conduct the reserve analysis.
             82          (4) (a) A board may not use money in a reserve fund:
             83          (i) for daily maintenance expenses, unless a majority of association members vote to
             84      approve the use of reserve fund money for that purpose; or
             85          (ii) for any purpose other than the purpose for which the reserve fund was established.

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             86          (b) A board shall maintain a reserve fund separate from other association funds.
             87          (c) This Subsection (4) may not be construed to limit a board from prudently investing
             88      money in a reserve fund, subject to any investment constraints imposed by the governing
             89      documents.
             90          (5) Subsections (2), (3), [and] (4), and (6) do not apply to an association during the
             91      period of administrative control.
             92          (6) An association shall:
             93          (a) annually, at the annual meeting of lot owners or at a special meeting of lot owners:
             94          (i) present the reserve study; and
             95          (ii) provide an opportunity for lot owners to discuss reserves and to vote on whether to
             96      fund a reserve fund and, if so, how to fund it and in what amount;
             97          (b) prepare and keep minutes of each meeting held under Subsection (6)(a) and
             98      indicate in the minutes any decision relating to funding a reserve fund.
             99          (7) This section applies to each association, regardless of when the association was
             100      created.

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