H.B. 396

This document includes House Floor Amendments incorporated into the bill on Fri, Mar 7, 2014 at 2:33 PM by jeyring. -->              1     

ASSOCIATION OPEN MEETING AMENDMENTS

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Gregory H. Hughes

             5     
Senate Sponsor: J. Stuart Adams

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill enacts and modifies provisions relating to meetings of the governing body of
             10      an association of unit owners and an association of lot owners.
             11      Highlighted Provisions:
             12          This bill:
             13          .    defines terms;
             14          .    provides that a management committee meeting and a board meeting shall be open
             15      to each unit owner or lot owner;
             16          .    provides certain circumstances under which a management committee or a board
             17      may close a meeting;
             18          .    requires that, upon request, the management committee or the board send written
             19      notice of a meeting to each unit owner or lot owner by email;
             20          .    requires each management committee meeting and each board meeting to include
             21      time for comment from the unit owners or lot owners; and
             22          .    makes technical and conforming changes.
             23      Money Appropriated in this Bill:
             24          None
             25      Other Special Clauses:
             26          This bill takes effect on July 1, 2015.
             27      Utah Code Sections Affected:


             28      AMENDS:
             29           57-8-3 , as last amended by Laws of Utah 2013, Chapters 95 and 152
             30           57-8a-102 , as last amended by Laws of Utah 2013, Chapters 95 and 152
             31           57-8a-104 , as last amended by Laws of Utah 2011, Chapter 137
             32           57-8a-224 (Effective 07/01/14), as enacted by Laws of Utah 2013, Chapter 152
             33      ENACTS:
             34           57-8-56 , Utah Code Annotated 1953
             35           57-8a-225 , Utah Code Annotated 1953
             36     
             37      Be it enacted by the Legislature of the state of Utah:
             38          Section 1. Section 57-8-3 is amended to read:
             39           57-8-3. Definitions.
             40          As used in this chapter:
             41          (1) "Assessment" means any charge imposed by the association, including:
             42          (a) common expenses on or against a unit owner pursuant to the provisions of the
             43      declaration, bylaws, or this chapter; and
             44          (b) an amount that an association of unit owners assesses to a unit owner under
             45      Subsection 57-8-43 (9)(g).
             46          (2) "Association of unit owners" means all of the unit owners:
             47          (a) acting as a group in accordance with the declaration and bylaws; or
             48          (b) organized as a legal entity in accordance with the declaration.
             49          (3) "Building" means a building, containing units, and comprising a part of the
             50      property.
             51          (4) "Commercial condominium project" means a condominium project that has no
             52      residential units within the project.
             53          (5) "Common areas and facilities" unless otherwise provided in the declaration or
             54      lawful amendments to the declaration means:
             55          (a) the land included within the condominium project, whether leasehold or in fee
             56      simple;
             57          (b) the foundations, columns, girders, beams, supports, main walls, roofs, halls,
             58      corridors, lobbies, stairs, stairways, fire escapes, entrances, and exits of the building;


             59          (c) the basements, yards, gardens, parking areas, and storage spaces;
             60          (d) the premises for lodging of janitors or persons in charge of the property;
             61          (e) installations of central services such as power, light, gas, hot and cold water,
             62      heating, refrigeration, air conditioning, and incinerating;
             63          (f) the elevators, tanks, pumps, motors, fans, compressors, ducts, and in general all
             64      apparatus and installations existing for common use;
             65          (g) such community and commercial facilities as may be provided for in the
             66      declaration; and
             67          (h) all other parts of the property necessary or convenient to its existence, maintenance,
             68      and safety, or normally in common use.
             69          (6) "Common expenses" means:
             70          (a) all sums lawfully assessed against the unit owners;
             71          (b) expenses of administration, maintenance, repair, or replacement of the common
             72      areas and facilities;
             73          (c) expenses agreed upon as common expenses by the association of unit owners; and
             74          (d) expenses declared common expenses by this chapter, or by the declaration or the
             75      bylaws.
             76          (7) "Common profits," unless otherwise provided in the declaration or lawful
             77      amendments to the declaration, means the balance of all income, rents, profits, and revenues
             78      from the common areas and facilities remaining after the deduction of the common expenses.
             79          (8) "Condominium" means the ownership of a single unit in a multiunit project
             80      together with an undivided interest in common in the common areas and facilities of the
             81      property.
             82          (9) "Condominium plat" means a plat or plats of survey of land and units prepared in
             83      accordance with Section 57-8-13 .
             84          (10) "Condominium project" means a real estate condominium project; a plan or
             85      project whereby two or more units, whether contained in existing or proposed apartments,
             86      commercial or industrial buildings or structures, or otherwise, are separately offered or
             87      proposed to be offered for sale. Condominium project also means the property when the
             88      context so requires.
             89          (11) "Condominium unit" means a unit together with the undivided interest in the


             90      common areas and facilities appertaining to that unit. Any reference in this chapter to a
             91      condominium unit includes both a physical unit together with its appurtenant undivided interest
             92      in the common areas and facilities and a time period unit together with its appurtenant
             93      undivided interest, unless the reference is specifically limited to a time period unit.
             94          (12) "Contractible condominium" means a condominium project from which one or
             95      more portions of the land within the project may be withdrawn in accordance with provisions
             96      of the declaration and of this chapter. If the withdrawal can occur only by the expiration or
             97      termination of one or more leases, then the condominium project is not a contractible
             98      condominium within the meaning of this chapter.
             99          (13) "Convertible land" means a building site which is a portion of the common areas
             100      and facilities, described by metes and bounds, within which additional units or limited common
             101      areas and facilities may be created in accordance with this chapter.
             102          (14) "Convertible space" means a portion of the structure within the condominium
             103      project, which portion may be converted into one or more units or common areas and facilities,
             104      including limited common areas and facilities in accordance with this chapter.
             105          (15) "Declarant" means all persons who execute the declaration or on whose behalf the
             106      declaration is executed. From the time of the recordation of any amendment to the declaration
             107      expanding an expandable condominium, all persons who execute that amendment or on whose
             108      behalf that amendment is executed shall also come within this definition. Any successors of
             109      the persons referred to in this subsection who come to stand in the same relation to the
             110      condominium project as their predecessors also come within this definition.
             111          (16) "Declaration" means the instrument by which the property is submitted to the
             112      provisions of this act, as it from time to time may be lawfully amended.
             113          (17) "Expandable condominium" means a condominium project to which additional
             114      land or an interest in it may be added in accordance with the declaration and this chapter.
             115          (18) "Governing documents":
             116          (a) means a written instrument by which an association of unit owners may:
             117          (i) exercise powers; or
             118          (ii) manage, maintain, or otherwise affect the property under the jurisdiction of the
             119      association of unit owners; and
             120          (b) includes:


             121          (i) articles of incorporation;
             122          (ii) bylaws;
             123          (iii) a plat;
             124          (iv) a declaration of covenants, conditions, and restrictions; and
             125          (v) rules of the association of unit owners.
             126          (19) "Independent third party" means a person that:
             127          (a) is not related to the unit owner;
             128          (b) shares no pecuniary interests with the unit owner; and
             129          (c) purchases the unit in good faith and without the intent to defraud a current or future
             130      lienholder.
             131          (20) "Leasehold condominium" means a condominium project in all or any portion of
             132      which each unit owner owns an estate for years in his unit, or in the land upon which that unit
             133      is situated, or both, with all those leasehold interests to expire naturally at the same time. A
             134      condominium project including leased land, or an interest in the land, upon which no units are
             135      situated or to be situated is not a leasehold condominium within the meaning of this chapter.
             136          (21) "Limited common areas and facilities" means those common areas and facilities
             137      designated in the declaration as reserved for use of a certain unit or units to the exclusion of the
             138      other units.
             139          (22) "Majority" or "majority of the unit owners," unless otherwise provided in the
             140      declaration or lawful amendments to the declaration, means the owners of more than 50% in
             141      the aggregate in interest of the undivided ownership of the common areas and facilities.
             142          (23) "Management committee" means the committee as provided in the declaration
             143      charged with and having the responsibility and authority to make and to enforce all of the
             144      reasonable rules covering the operation and maintenance of the property.
             145          (24) (a) "Means of electronic communication" means an electronic system that allows
             146      individuals to communicate orally in real time.
             147          (b) "Means of electronic communication" includes:
             148          (i) web conferencing;
             149          (ii) video conferencing; and
             150          (iii) telephone conferencing.
             151          (25) "Meeting" means a gathering of a management committee, whether in person or


             152      by means of electronic communication, at which the management committee can take binding
             153      action.
             154          [(24)] (26) "Mixed-use condominium project" means a condominium project that has
             155      both residential and commercial units in the condominium project.
             156          [(25)] (27) "Par value" means a number of dollars or points assigned to each unit by the
             157      declaration. Substantially identical units shall be assigned the same par value, but units located
             158      at substantially different heights above the ground, or having substantially different views, or
             159      having substantially different amenities or other characteristics that might result in differences
             160      in market value, may be considered substantially identical within the meaning of this
             161      subsection. If par value is stated in terms of dollars, that statement may not be considered to
             162      reflect or control the sales price or fair market value of any unit, and no opinion, appraisal, or
             163      fair market transaction at a different figure may affect the par value of any unit, or any
             164      undivided interest in the common areas and facilities, voting rights in the unit owners'
             165      association, liability for common expenses, or right to common profits, assigned on the basis
             166      thereof.
             167          (28) "Period of administrative control" means the period of control described in
             168      Subsection 57-8-16.5 (1).
             169          [(26)] (29) "Person" means an individual, corporation, partnership, association, trustee,
             170      or other legal entity.
             171          [(27)] (30) "Property" means the land, whether leasehold or in fee simple, the building,
             172      if any, all improvements and structures thereon, all easements, rights, and appurtenances
             173      belonging thereto, and all articles of personal property intended for use in connection
             174      therewith.
             175          [(28)] (31) "Record," "recording," "recorded," and "recorder" have the meaning stated
             176      in Title 57, Chapter 3, Recording of Documents.
             177          [(29)] (32) "Size" means the number of cubic feet, or the number of square feet of
             178      ground or floor space, within each unit as computed by reference to the record of survey map
             179      and rounded off to a whole number. Certain spaces within the units including attic, basement,
             180      or garage space may be omitted from the calculation or be partially discounted by the use of a
             181      ratio, if the same basis of calculation is employed for all units in the condominium project and
             182      if that basis is described in the declaration.


             183          [(30)] (33) "Time period unit" means an annually recurring part or parts of a year
             184      specified in the declaration as a period for which a unit is separately owned and includes a
             185      timeshare estate as defined in Subsection 57-19-2 (19).
             186          [(31)] (34) "Unit" means either a separate physical part of the property intended for any
             187      type of independent use, including one or more rooms or spaces located in one or more floors
             188      or part or parts of floors in a building or a time period unit, as the context may require. A
             189      convertible space shall be treated as a unit in accordance with Subsection 57-8-13.4 (3). A
             190      proposed condominium unit under an expandable condominium project, not constructed, is a
             191      unit two years after the date the recording requirements of Section 57-8-13.6 are met.
             192          [(32)] (35) "Unit number" means the number, letter, or combination of numbers and
             193      letters designating the unit in the declaration and in the record of survey map.
             194          [(33)] (36) "Unit owner" means the person or persons owning a unit in fee simple and
             195      an undivided interest in the fee simple estate of the common areas and facilities in the
             196      percentage specified and established in the declaration or, in the case of a leasehold
             197      condominium project, the person or persons whose leasehold interest or interests in the
             198      condominium unit extend for the entire balance of the unexpired term or terms.
             199          Section 2. Section 57-8-56 is enacted to read:
             200          57-8-56. Management committee meetings -- Open meetings.
             201          (1) (a) At least 48 hours before a meeting, the association of unit owners shall give
             202      written notice via email of the meeting to each unit owner who requests notice of a meeting,
             203      unless:
             204          (i) notice of the meeting is included in a meeting schedule that was previously provided
             205      to the unit owner; or
             206          (ii) (A) the meeting is to address an emergency; and
             207          (B) each management committee member receives notice of the meeting less than 48
             208      hours before the meeting.
             209          (b) A notice described in Subsection (1)(a) shall:
             210          (i) be delivered to the unit owner by email, to the email address that the unit owner
             211      provides to the management committee or the association of unit owners;
             212          (ii) state the time and date of the meeting;
             213          (iii) state the location of the meeting; and


             214          (iv) if a management committee member may participate by means of electronic
             215      communication, provide the information necessary to allow the unit owner to participate by the
             216      available means of electronic communication.
             217          (2) (a) Except as provided in Subsection (2)(b), a meeting shall be open to each unit
             218      owner or the unit owner's representative if the representative is designated in writing.
             219          (b) A management committee may close a meeting to:
             220          (i) consult with an attorney for the purpose of obtaining legal advice;
             221          (ii) discuss ongoing or potential litigation, mediation, arbitration, or administrative
             222      proceedings;
             223          (iii) discuss a personnel matter;
             224          (iv) discuss a matter relating to contract negotiations, including review of a bid or
             225      proposal;
             226          (v) discuss a matter that involves an individual if the discussion is likely to cause the
             227      individual undue embarrassment or violate the individual's reasonable expectation of privacy;
             228      or
             229          (vi) discuss a delinquent assessment or fine.
             230          (3) (a) At each meeting, the management committee shall provide each unit owner a
             231      reasonable opportunity to offer comments.
             232          (b) The management committee may limit the comments described in Subsection (3)(a)
             233      to one specific time period during the meeting.
             234          (4) A management committee member may not avoid or obstruct the requirements of
             235      this section.
             236          (5) Nothing in this section shall affect the validity or enforceability of an action of a
             237      management committee.
             238          (6) The provisions of this section do not apply during the period of administrative
             239      control.
             240          (7) The provisions of this section apply regardless of when the condominium project's
             241      initial declaration was recorded.
             241a      H. (8) The notice requirements described in this section are in addition to any other
             241b      requirements in statute or in the association of unit owners' governing documents. .H
             242          Section 3. Section 57-8a-102 is amended to read:
             243           57-8a-102. Definitions.
             244          As used in this chapter:


             245          (1) (a) "Assessment" means a charge imposed or levied:
             246          (i) by the association;
             247          (ii) on or against a lot or a lot owner; and
             248          (iii) pursuant to a governing document recorded with the county recorder.
             249          (b) "Assessment" includes:
             250          (i) a common expense; and
             251          (ii) an amount assessed against a lot owner under Subsection 57-8a-405 (7).
             252          (2) (a) Except as provided in Subsection (2)(b), "association" means a corporation or
             253      other legal entity, any member of which:
             254          (i) is an owner of a residential lot located within the jurisdiction of the association, as
             255      described in the governing documents; and
             256          (ii) by virtue of membership or ownership of a residential lot is obligated to pay:
             257          (A) real property taxes;
             258          (B) insurance premiums;
             259          (C) maintenance costs; or
             260          (D) for improvement of real property not owned by the member.
             261          (b) "Association" or "homeowner association" does not include an association created
             262      under Title 57, Chapter 8, Condominium Ownership Act.
             263          (3) "Board of directors" or "board" means the entity, regardless of name, with primary
             264      authority to manage the affairs of the association.
             265          (4) "Common areas" means property that the association:
             266          (a) owns;
             267          (b) maintains;
             268          (c) repairs; or
             269          (d) administers.
             270          (5) "Common expense" means costs incurred by the association to exercise any of the
             271      powers provided for in the association's governing documents.
             272          (6) "Declarant":
             273          (a) means the person who executes a declaration and submits it for recording in the
             274      office of the recorder of the county in which the property described in the declaration is
             275      located; and


             276          (b) includes the person's successor and assign.
             277          (7) (a) "Governing documents" means a written instrument by which the association
             278      may:
             279          (i) exercise powers; or
             280          (ii) manage, maintain, or otherwise affect the property under the jurisdiction of the
             281      association.
             282          (b) "Governing documents" includes:
             283          (i) articles of incorporation;
             284          (ii) bylaws;
             285          (iii) a plat;
             286          (iv) a declaration of covenants, conditions, and restrictions; and
             287          (v) rules of the association.
             288          (8) "Independent third party" means a person that:
             289          (a) is not related to the owner of the residential lot;
             290          (b) shares no pecuniary interests with the owner of the residential lot; and
             291          (c) purchases the residential lot in good faith and without the intent to defraud a current
             292      or future lienholder.
             293          (9) "Judicial foreclosure" means a foreclosure of a lot:
             294          (a) for the nonpayment of an assessment; and
             295          (b) (i) in the manner provided by law for the foreclosure of a mortgage on real
             296      property; and
             297          (ii) as provided in Part 3, Collection of Assessments.
             298          (10) "Lease" or "leasing" means regular, exclusive occupancy of a lot:
             299          (a) by a person or persons other than the owner; and
             300          (b) for which the owner receives a consideration or benefit, including a fee, service,
             301      gratuity, or emolument.
             302          (11) "Limited common areas" means common areas described in the declaration and
             303      allocated for the exclusive use of one or more lot owners.
             304          (12) "Lot" means:
             305          (a) a lot, parcel, plot, or other division of land:
             306          (i) designated for separate ownership or occupancy; and


             307          (ii) (A) shown on a recorded subdivision plat; or
             308          (B) the boundaries of which are described in a recorded governing document; or
             309          (b) (i) a unit in a condominium association if the condominium association is a part of
             310      a development; or
             311          (ii) a unit in a real estate cooperative if the real estate cooperative is part of a
             312      development.
             313          (13) (a) "Means of electronic communication" means an electronic system that allows
             314      individuals to communicate orally in real time.
             315          (b) "Means of electronic communication" includes:
             316          (i) web conferencing;
             317          (ii) video conferencing; and
             318          (iii) telephone conferencing.
             319          (14) "Meeting" means a gathering of a board, whether in person or by means of
             320      electronic communication, at which the board can take binding action.
             321          [(13)] (15) "Mixed-use project" means a project under this chapter that has both
             322      residential and commercial lots in the project.
             323          [(14)] (16) "Nonjudicial foreclosure" means the sale of a lot:
             324          (a) for the nonpayment of an assessment; and
             325          (b) (i) in the same manner as the sale of trust property under Sections 57-1-19 through
             326      57-1-34 ; and
             327          (ii) as provided in Part 3, Collection of Assessments.
             328          (17) "Period of administrative control" means the period during which the person who
             329      filed the association's governing documents or the person's successor in interest retains
             330      authority to:
             331          (a) appoint or remove members of the association's board of directors; or
             332          (b) exercise power or authority assigned to the association under the association's
             333      governing documents.
             334          [(15)] (18) "Residential lot" means a lot, the use of which is limited by law, covenant,
             335      or otherwise to primarily residential or recreational purposes.
             336          Section 4. Section 57-8a-104 is amended to read:
             337           57-8a-104. Limitation on requirements for amending governing documents --


             338      Limitation on contracts.
             339          [(1) As used in this section, "period of administrative control" means the period during
             340      which the person who filed the association's governing documents or a successor in interest
             341      retains authority to:]
             342          [(a) appoint or remove members of the association's board of directors; or]
             343          [(b) exercise power or authority assigned to the association under its governing
             344      documents.]
             345          [(2)] (1) (a) (i) Governing documents may not require that an amendment to the
             346      governing documents adopted after the period of administrative control be approved by more
             347      than 67% of the voting interests.
             348          (ii) The vote required to adopt an amendment to governing documents may not be
             349      greater than 67% of the voting interests, notwithstanding a provision of the governing
             350      documents requiring a greater percentage and regardless of whether the governing documents
             351      were adopted before, on, or after May 10, 2011.
             352          (b) Subsection [(2)] (1)(a) does not apply to an amendment affecting only:
             353          (i) lot boundaries; or
             354          (ii) members' voting rights.
             355          [(3)] (2) (a) A contract for services such as garbage collection, maintenance, lawn care,
             356      or snow removal executed on behalf of the association during a period of administrative control
             357      is binding beyond the period of administrative control unless terminated by the board of
             358      directors after the period of administrative control ends.
             359          (b) Subsection [(3)] (2)(a) does not apply to golf course and amenity management,
             360      utilities, cable services, and other similar services that require an investment of infrastructure
             361      or capital.
             362          [(4)] (3) Voting interests under [Subsections (2) and (3)] Subsection (1) are calculated
             363      in the manner required by the governing documents.
             364          [(5)] (4) Nothing in this section affects any other rights reserved by the person who
             365      filed the association's original governing documents or a successor in interest.
             366          Section 5. Section 57-8a-224 (Effective 07/01/14) is amended to read:
             367           57-8a-224 (Effective 07/01/14). Responsibility for the maintenance, repair, and
             368      replacement of common area and lots.


             369          (1) As used in this section:
             370          (a) "Emergency repair" means a repair that, if not made in a timely manner, will likely
             371      result in immediate and substantial damage to a common area or to another lot.
             372          (b) "Reasonable notice" means:
             373          (i) written notice that is hand delivered to the lot at least 24 hours before the proposed
             374      entry; or
             375          (ii) in the case of an emergency repair, notice that is reasonable under the
             376      circumstances.
             377          (2) Except as otherwise provided in the declaration or Part 4, Insurance:
             378          (a) an association is responsible for the maintenance, repair, and replacement of
             379      common areas; and
             380          (b) a lot owner is responsible for the maintenance, repair, and replacement of the lot
             381      owner's lot.
             382          (3) After reasonable notice to the occupant of the lot being entered, the board may
             383      access a lot:
             384          (a) from time to time during reasonable hours, as necessary for the maintenance, repair,
             385      or replacement of any of the common areas; or
             386          (b) for making an emergency repair.
             387          (4) (a) An association is liable to repair damage it causes to the common areas or to a
             388      lot the association uses to access the common areas.
             389          (b) An association shall repair damage described in Subsection (4)(a) within a time that
             390      is reasonable under the circumstances.
             391          (5) Subsections (2), (3), and (4) do not apply during the period of administrative
             392      control [as defined in Section 57-8a-104 ].
             393          Section 6. Section 57-8a-225 is enacted to read:
             394          57-8a-225. Board meetings -- Open meetings.
             395          (1) (a) At least 48 hours before a meeting, the association shall give written notice via
             396      email of the meeting to each lot owner who requests notice of a meeting, unless:
             397          (i) notice of the meeting is included in a meeting schedule that was previously provided
             398      to the lot owner; or
             399          (ii) (A) the meeting is to address an emergency; and


             400          (B) each board member receives notice of the meeting less than 48 hours before the
             401      meeting.
             402          (b) A notice described in Subsection (1)(a) shall:
             403          (i) be delivered to the lot owner by email, to the email address that the lot owner
             404      provides to the board or the association;
             405          (ii) state the time and date of the meeting;
             406          (iii) state the location of the meeting; and
             407          (iv) if a board member may participate by means of electronic communication, provide
             408      the information necessary to allow the lot owner to participate by the available means of
             409      electronic communication.
             410          (2) (a) Except as provided in Subsection (2)(b), a meeting shall be open to each lot
             411      owner or the lot owner's representative if the representative is designated in writing.
             412          (b) A board may close a meeting to:
             413          (i) consult with an attorney for the purpose of obtaining legal advice;
             414          (ii) discuss ongoing or potential litigation, mediation, arbitration, or administrative
             415      proceedings;
             416          (iii) discuss a personnel matter;
             417          (iv) discuss a matter relating to contract negotiations, including review of a bid or
             418      proposal;
             419          (v) discuss a matter that involves an individual if the discussion is likely to cause the
             420      individual undue embarrassment or violate the individual's reasonable expectation of privacy;
             421      or
             422          (vi) discuss a delinquent assessment or fine.
             423          (3) (a) At each meeting, the board shall provide each lot owner a reasonable
             424      opportunity to offer comments.
             425          (b) The board may limit the comments described in Subsection (3)(a) to one specific
             426      time period during the meeting.
             427          (4) A board member may not avoid or obstruct the requirements of this section.
             428          (5) Nothing in this section shall affect the validity or enforceability of an action of a
             429      board.
             430          (6) The provisions of this section do not apply during the period of administrative


             431      control.
             432          (7) The provisions of this section apply regardless of when the association's first
             433      governing document was recorded.
             433a      H. (8) The notice requirements described in this section are in addition to any other
             433b      requirements in statute or in the association's governing documents. .H
             434          Section 7. Effective date.
             435          This bill takes effect on July 1, 2015.




Legislative Review Note
    as of 2-18-14 12:49 PM


Office of Legislative Research and General Counsel


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