H.B. 172

             1     

ASSOCIATION AMENDMENTS

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Gage Froerer

             5     
Senate Sponsor: ____________

             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 fines and reserve accounts.
             11      Highlighted Provisions:
             12          This bill:
             13          .    modifies defined terms;
             14          .    removes certain provisions relating to:
             15              .    the required contents of a reserve analysis; and
             16              .    the inclusion of a reserve fund line item in an association's or an association of
             17      unit owners' annual budget;
             18          .    requires an association or an association of unit owners to:
             19              .    under certain circumstances, provide a copy of the reserve analysis, any update
             20      to the reserve analysis, or a summary of the reserve analysis and any update to
             21      the lot owners or unit owners;
             22              .    each year, provide lot owners or unit owners an opportunity to discuss reserve
             23      funds and the reserve analysis at a meeting of the lot owners or the unit owners;
             24              .    fund a reserve fund in an amount approved by a vote of the lot owners or the
             25      unit owners, or in an amount required by the association's or the association of
             26      unit owners' governing documents;
             27          .    provides procedures for a lot owner or a unit owner to enforce the provisions of this


             28      bill relating to reserve funds;
             29          .    requires an association or an association of unit owners to provide a 24-hour cure
             30      period for a violation of the association's or the association of unit owners'
             31      governing documents that poses a threat to health, safety, or property;
             32          .    provides that, under certain circumstances, an association or an association of unit
             33      owners may assess a fine for a repeat or continuing violation;
             34          .    clarifies the procedures by which a lot owner or a unit owner may appeal an
             35      assessed fine;
             36          .    provides procedures by which an association or an association of unit owners may
             37      collect an unpaid fine;
             38          .    provides that the aggregate amount of fines assessed against a lot owner may not
             39      exceed $500 in any one-month period;
             40          .    repeals future effective provisions that relate to reserve accounts; and
             41          .    makes technical and conforming changes.
             42      Money Appropriated in this Bill:
             43          None
             44      Other Special Clauses:
             45          None
             46      Utah Code Sections Affected:
             47      AMENDS:
             48           57-8-7.5 (Superseded 07/01/14), as last amended by Laws of Utah 2013, Chapter 419
             49           57-8-37 , as enacted by Laws of Utah 2001, Chapter 317
             50           57-8-44 , as last amended by Laws of Utah 2013, Chapter 95
             51           57-8a-102 , as last amended by Laws of Utah 2013, Chapters 95 and 152
             52           57-8a-208 , as enacted by Laws of Utah 2006, Chapter 243
             53           57-8a-211 (Superseded 07/01/14), as last amended by Laws of Utah 2013, Chapter 419
             54           57-8a-301 , as last amended by Laws of Utah 2013, Chapter 95
             55      REPEALS:
             56           57-8-7.5 (Effective 07/01/14), as last amended by Laws of Utah 2013, Chapters 152,
             57      419 and last amended by Coordination Clause, Laws of Utah 2013, Chapter 152
             58           57-8a-211 (Effective 07/01/14), as last amended by Laws of Utah 2013, Chapters 152,


             59      419 and last amended by Coordination Clause, Laws of Utah 2013, Chapter 152
             60     
             61      Be it enacted by the Legislature of the state of Utah:
             62          Section 1. Section 57-8-7.5 (Superseded 07/01/14) is amended to read:
             63           57-8-7.5 (Superseded 07/01/14). Reserve analysis -- Reserve fund.
             64          (1) As used in this section[: (a) "Reserve], "reserve analysis" means an analysis to
             65      determine:
             66          [(i)] (a) the need for a reserve fund to accumulate money to cover the cost of repairing,
             67      replacing, or restoring [common areas and facilities] structures, components, and systems that
             68      the association of unit owners is responsible to maintain and replace and that have a useful life
             69      of no fewer than three years [but less than 30 years, when the], but excluding any cost [cannot]
             70      that can reasonably be funded from the general budget or other funds of the association of unit
             71      owners; and
             72          [(ii)] (b) the appropriate amount of any reserve fund.
             73          [(b) "Reserve fund line item" means a line item in the annual budget of an association
             74      of unit owners that identifies the amount to be placed into a reserve fund.]
             75          (2) Except as otherwise provided in the declaration, a management committee shall:
             76          (a) [(i) subject to Subsection (2)(a)(ii),] cause a reserve analysis to be conducted no
             77      less frequently than every six years; and
             78          [(ii) if no reserve analysis has been conducted since March 1, 2008, cause a reserve
             79      analysis to be conducted before July 1, 2012; and]
             80          (b) review and, if necessary, update a previously conducted reserve analysis no less
             81      frequently than every three years.
             82          (3) [The] A management committee may conduct a reserve analysis itself or may
             83      engage a reliable person or organization, as determined by the management committee, to
             84      conduct the reserve analysis.
             85          [(4) A reserve analysis shall include:]
             86          [(a) a list of the components identified in the reserve analysis that will reasonably
             87      require reserve funds;]
             88          [(b) a statement of the probable remaining useful life, as of the date of the reserve
             89      analysis, of each component identified in the reserve analysis;]


             90          [(c) an estimate of the cost to repair, replace, or restore each component identified in
             91      the reserve analysis;]
             92          [(d) an estimate of the total annual contribution to a reserve fund necessary to meet the
             93      cost to repair, replace, or restore each component identified in the reserve analysis during the
             94      component's useful life and at the end of the component's useful life; and]
             95          [(e) a reserve funding plan that recommends how the association of unit owners may
             96      fund the annual contribution described in Subsection (4)(d).]
             97          [(5) Each year, an association of unit owners shall provide:]
             98          [(a) a summary of the most recent reserve analysis, including any updates, to each unit
             99      owner; and]
             100          [(b) a complete copy of the most recent reserve analysis, including any updates, to a
             101      unit owner upon request.]
             102          [(6) (a) An association of unit owners shall include a reserve fund line item in its
             103      annual budget.]
             104          [(b) The amount of the reserve fund line item shall be determined by:]
             105          [(i) the management committee, based on the reserve analysis and the amount that the
             106      management committee determines is prudent under the circumstances; or]
             107          [(ii) the declaration, if the declaration requires an amount greater than the amount
             108      determined under Subsection (6)(b)(i).]
             109          [(c) Within 45 days after the day on which an association of unit owners adopts its
             110      annual budget, the unit owners may veto the reserve fund line item by a 51% vote of the
             111      allocated voting interests in the association of unit owners at a special meeting called by the
             112      unit owners for the purpose of voting whether to veto a reserve fund line item.]
             113          [(d) If the unit owners veto a reserve fund line item under Subsection (6)(c) and a
             114      reserve fund line item exists in a previously approved annual budget of the association of unit
             115      owners that was not vetoed, the association of unit owners shall fund the reserve account in
             116      accordance with that prior reserve fund line item.]
             117          [(7) (a) Subject to Subsection (7)(b), if an association of unit owners does not comply
             118      with the requirements described in Subsection (5) or (6) and fails to remedy the noncompliance
             119      within the time specified in Subsection (7)(c), a unit owner may file an action in state court
             120      for:]


             121          [(i) injunctive relief requiring the association of unit owners to comply with the
             122      requirements of Subsection (5) or (6);]
             123          [(ii) $500 or actual damages, whichever is greater;]
             124          [(iii) any other remedy provided by law; and]
             125          [(iv) reasonable costs and attorney fees.]
             126          [(b) No fewer than 90 days before the day on which a unit owner files a complaint
             127      under Subsection (7)(a), the unit owner shall deliver written notice described in Subsection
             128      (7)(c) to the association of unit owners.]
             129          [(c) A notice described in Subsection (7)(b) shall state:]
             130          [(i) the requirement in Subsection (5) or (6) with which the association of unit owners
             131      has failed to comply;]
             132          [(ii) a demand that the association of unit owners come into compliance with the
             133      requirements; and]
             134          [(iii) a date, no fewer than 90 days after the day on which the unit owner delivers the
             135      notice, by which the association of unit owners shall remedy its noncompliance.]
             136          [(d) In a case filed under Subsection (7)(a), a court may order an association of unit
             137      owners to produce the summary of the reserve analysis or the complete reserve analysis on an
             138      expedited basis and at the association of unit owners' expense.]
             139          [(8)] (4) (a) A management committee may not use money in a reserve fund:
             140          (i) for daily maintenance expenses, unless a majority of the members of the association
             141      of unit owners vote to approve the use of reserve fund money for that purpose; or
             142          (ii) for any purpose other than the purpose for which the reserve fund was established.
             143          (b) A management committee shall maintain a reserve fund separate from other funds
             144      of the association of unit owners.
             145          (c) This Subsection (4) may not be construed to limit a management committee from
             146      prudently investing money in a reserve fund, subject to any investment constraints imposed by
             147      the declaration.
             148          (5) An association of unit owners shall:
             149          (a) annually, at the annual meeting of unit owners or at a special meeting of unit
             150      owners:
             151          (i) make available a copy of either the most recent reserve analysis or a summary of the


             152      most recent reserve analysis to each unit owner who is present, in person at the meeting;
             153          (ii) provide an opportunity for unit owners to discuss reserve funds and the reserve
             154      analysis; and
             155          (iii) have a vote of the unit owners on whether to fund a reserve fund, and, if so, how to
             156      fund the reserve fund and in what amount;
             157          (b) prepare and keep minutes of each meeting held under Subsection (5)(a) and
             158      indicate in the minutes any decision that relates to funding a reserve fund; and
             159          (c) (i) provide a copy of either the reserve analysis or a summary of the reserve analysis
             160      and any update to the reserve analysis to each unit owner within 30 days after the day on which
             161      the reserve analysis or the update is complete; and
             162          (ii) provide a complete copy of the most recent reserve analysis and any update to the
             163      reserve analysis to a unit owner upon request.
             164          (6) An association of unit owners shall fund a reserve fund in the greater of:
             165          (a) the amount approved by the unit owners in a vote under Subsection (5)(a)(iii); or
             166          (b) the amount required in the association of unit owners' declaration.
             167          (7) (a) Subject to Subsection (7)(b), if an association of unit owners does not comply
             168      with the requirements described in Subsection (5) or (6) and fails to remedy the noncompliance
             169      within the time specified in Subsection (7)(c), a unit owner may file an action in state court for:
             170          (i) injunctive relief requiring the association of unit owners to comply with the
             171      requirements described in Subsection (5) or (6);
             172          (ii) $500 or the unit owner's actual damages, whichever is greater;
             173          (iii) any other remedy provided by law; and
             174          (iv) reasonable costs and attorney fees.
             175          (b) No fewer than 90 days before the day on which a unit owner files an action under
             176      Subsection (7)(a), the unit owner shall deliver written notice described in Subsection (7)(c) to
             177      the association of unit owners.
             178          (c) A notice described in Subsection (7)(b) shall state:
             179          (i) the requirement in Subsection (5) or (6) with which the association of unit owners
             180      has failed to comply;
             181          (ii) a demand that the association of unit owners come into compliance with the
             182      requirement; and


             183          (iii) a date, no fewer than 90 days after the day on which the unit owner delivers the
             184      notice, by which the association of unit owners shall remedy the association of unit owners'
             185      noncompliance.
             186          (d) In an action filed under Subsection (7)(a), the court may summarily order an
             187      association to produce a copy of the summary of the reserve analysis or a copy of the complete
             188      reserve analysis on an expedited basis and at the association of unit owners' expense.
             189          [(9)] (8) Subsections (2)[, (3), (4), and (6)] through (7) do not apply to an association
             190      of unit owners during the period of declarant management.
             191          [(10)] (9) This section applies to each association of unit owners, regardless of when
             192      the association of unit owners was created.
             193          Section 2. Section 57-8-37 is amended to read:
             194           57-8-37. Fines.
             195          (1) [(a) If authorized in the declaration, bylaws, or association rules] Unless otherwise
             196      limited in an association of unit owners' governing documents, the management committee [of
             197      a residential condominium project] may assess a fine against a unit owner [after the
             198      requirements of Subsection (2) have been met for a violation of the rules and regulations of the
             199      association of unit owners which have been promulgated in accordance with this chapter and
             200      the declaration and bylaws.] for a violation of the association of unit owners' governing
             201      documents in accordance with the provisions of this section.
             202          [(b) The management committee of a nonresidential condominium project may not
             203      assess a fine against a unit owner.]
             204          (2) (a) Before assessing a fine under Subsection (1), the management committee shall
             205      give [notice to the unit owner of the violation and inform the owner that a fine will be imposed
             206      if the violation is not cured within the time provided in the declaration, bylaws, or association
             207      rules, which shall be at least 48 hours.] the unit owner a written warning that:
             208          (i) describes the violation;
             209          (ii) states the provision of the association of unit owners' governing documents that the
             210      unit owner's conduct violates; and
             211          (iii) states that the management committee may assess a fine against the unit owner in
             212      accordance with Subsection (2)(c), including the time by which the unit owner must cure the
             213      violation.


             214          (b) If, in accordance with Subsection (2)(c)(iii), a management committee gives a unit
             215      owner 24 hours to cure a violation, in addition to the notice requirements described in
             216      Subsection (2)(a), the management committee shall post a copy of the written warning on the
             217      front door, if any, of the unit owner's unit.
             218          (c) A management committee may assess a fine against a unit owner if:
             219          (i) within one year after the day on which the management committee gives the unit
             220      owner a written warning described in Subsection (2)(a), the unit owner commits another
             221      violation that is similar to the violation described in the written warning;
             222          (ii) the unit owner does not cure the violation within the time period that is:
             223          (A) stated in the written warning described in Subsection (2)(a); and
             224          (B) not less than 48 hours after the day on which the management committee gives the
             225      unit owner the written warning; or
             226          (iii) (A) the management committee or the management committee's agent determines
             227      that the violation poses an immediate threat to health, safety, or property; and
             228          (B) the unit owner does not cure the violation within 24 hours after the day on which
             229      the management committee gives the unit owner the written warning described in Subsection
             230      (2)(a).
             231          (d) If permitted under the association of unit owners' governing documents, after the
             232      management committee assesses a fine against a unit owner under this section, the
             233      management committee may, without further warning under this Subsection (2), assess an
             234      additional fine against the unit owner each time the unit owner:
             235          (i) commits a similar violation within one year after the day on which the management
             236      committee assesses the initial fine; or
             237          (ii) allows a violation to continue for at least 10 days after the day on which the
             238      management committee assessed the initial fine.
             239          (e) The aggregate amount of fines assessed against a unit owner under this section may
             240      not exceed $500 in any one calendar month.
             241          (3) [(a)] A fine assessed under Subsection (1) shall:
             242          [(i)] (a) be made only for a violation of a rule [or regulation which is specifically listed
             243      in the declaration, bylaws, or association rules as an offense which is subject to a fine],
             244      covenant, condition, or restriction that is in the association of unit owners' governing


             245      documents;
             246          [(ii)] (b) be in the amount [specifically] provided for in the [declaration, bylaws, or
             247      association rules for that specific type of violation, not to exceed $500] association of unit
             248      owners' governing documents; and
             249          [(iii)] (c) accrue interest and late fees as provided in the [declaration, bylaws, or
             250      association rules] association of unit owners' governing documents.
             251          [(b) Cumulative fines for a continuing violation may not exceed $500 per month.]
             252          (4) (a) A unit owner who is assessed a fine under Subsection (1) may request an
             253      informal hearing before the management committee to [protest or] dispute the fine within 30
             254      days [from the date] after the day on which the unit owner receives notice that the fine is
             255      assessed.
             256          (b) [The] A management committee shall conduct a hearing [shall be conducted] under
             257      Subsection (4)(a) in accordance with:
             258          (i) the standards provided in the [declaration, bylaws, or association rules.] association
             259      of unit owners' governing documents; or
             260          (ii) if the association of unit owners' governing documents do not provide standards for
             261      a hearing described in Subsection (4)(a), the standards established by the management
             262      committee in accordance with Subsection (4)(c).
             263          (c) The standards described in Subsection (4)(b)(ii) shall provide the unit owner an
             264      opportunity to present the unit owner's position, in person, to the management committee.
             265          (d) [No] If a unit owner timely requests a hearing under Subsection (4)(a), no interest
             266      or late fees may accrue until after the management committee conducts the hearing [has been
             267      conducted] and issues a final decision [has been rendered].
             268          (5) A unit owner may appeal a fine [issued] assessed under Subsection (1) by initiating
             269      a civil action within 180 days after the day on which:
             270          (a) [a hearing has been held and a final decision has been rendered by] the management
             271      committee issues a final decision after a hearing under Subsection (4); or
             272          (b) if the unit owner does not timely request a hearing under Subsection (4), the time to
             273      request [an informal] a hearing under Subsection (4) [has expired without the unit owner
             274      making such a request] expires.
             275          [(6) A fine assessed under Subsection (1) which remains unpaid after the time for


             276      appeal under Subsection (5) has expired becomes a lien against the unit owner's interest in the
             277      property in accordance with the same standards as a lien for the nonpayment of common
             278      expenses under Section 57-8-20 .]
             279          (6) An association of unit owners may collect an unpaid fine as an unpaid assessment
             280      in accordance with the provisions of this chapter.
             281          (7) A management committee may delegate the management committee's rights and
             282      responsibilities under this section to a managing agent.
             283          (8) This section applies to an association of unit owners regardless of when the
             284      association of unit owners is created.
             285          Section 3. Section 57-8-44 is amended to read:
             286           57-8-44. Lien in favor of association of unit owners for assessments and costs of
             287      collection.
             288          (1) (a) Except as provided in Section 57-8-13.1 , an association of unit owners has a
             289      lien on a unit for:
             290          (i) an assessment;
             291          (ii) except as provided in the declaration, fees, charges, and costs associated with
             292      collecting an unpaid assessment, including:
             293          (A) court costs and reasonable attorney fees;
             294          (B) late charges;
             295          (C) interest; and
             296          (D) any other amount that the association of unit owners is entitled to recover under the
             297      declaration, this chapter, or an administrative or judicial decision; and
             298          (iii) a fine that the association of unit owners imposes against [the owner of the unit.] a
             299      unit owner in accordance with Section 57-8-37 , if:
             300          (A) the time for appeal described in Subsection 57-8-37 (5) has expired and the unit
             301      owner did not file an appeal; or
             302          (B) the unit owner timely filed an appeal under Subsection 57-8-37 (5) and the district
             303      court issued a final order upholding a fine imposed under Subsection 57-8-37 (1).
             304          (b) The recording of a declaration constitutes record notice and perfection of a lien
             305      described in Subsection (1)(a).
             306          (2) If an assessment is payable in installments, a lien described in Subsection (1)(a)(i)


             307      is for the full amount of the assessment from the time the first installment is due, unless the
             308      association of unit owners otherwise provides in a notice of assessment.
             309          (3) An unpaid assessment or fine accrues interest at the rate provided:
             310          (a) in Subsection 15-1-1 (2); or
             311          (b) in the governing documents, if the governing documents provide for a different
             312      interest rate.
             313          (4) A lien under this section has priority over each other lien and encumbrance on a
             314      unit except:
             315          (a) a lien or encumbrance recorded before the declaration is recorded;
             316          (b) a first or second security interest on the unit secured by a mortgage or deed of trust
             317      that is recorded before a recorded notice of lien by or on behalf of the association of unit
             318      owners; or
             319          (c) a lien for real estate taxes or other governmental assessments or charges against the
             320      unit.
             321          (5) A lien under this section is not subject to Title 78B, Chapter 5, Part 5, Utah
             322      Exemptions Act.
             323          (6) Unless the declaration provides otherwise, if two or more associations of unit
             324      owners have liens for assessments on the same unit, the liens have equal priority, regardless of
             325      when the liens are created.
             326          Section 4. Section 57-8a-102 is amended to read:
             327           57-8a-102. Definitions.
             328          As used in this chapter:
             329          (1) (a) "Assessment" means a charge imposed or levied:
             330          (i) by the association;
             331          (ii) on or against a lot or a lot owner; and
             332          (iii) pursuant to a governing document recorded with the county recorder.
             333          (b) "Assessment" includes:
             334          (i) a common expense; and
             335          (ii) an amount assessed against a lot owner under Subsection 57-8a-405 (7).
             336          (2) (a) Except as provided in Subsection (2)(b), "association" means a corporation or
             337      other legal entity, any member of which:


             338          (i) is an owner of a residential lot located within the jurisdiction of the association, as
             339      described in the governing documents; and
             340          (ii) by virtue of membership or ownership of a residential lot is obligated to pay:
             341          (A) real property taxes;
             342          (B) insurance premiums;
             343          (C) maintenance costs; or
             344          (D) for improvement of real property not owned by the member.
             345          (b) "Association" or "homeowner association" does not include an association created
             346      under Title 57, Chapter 8, Condominium Ownership Act.
             347          (3) "Board of directors" or "board" means the entity, regardless of name, with primary
             348      authority to manage the affairs of the association.
             349          (4) "Common areas," unless otherwise provided in the declaration, means property that
             350      the association:
             351          (a) owns;
             352          (b) maintains;
             353          (c) repairs; or
             354          (d) administers.
             355          (5) "Common expense" means costs incurred by the association to exercise any of the
             356      powers provided for in the association's governing documents.
             357          (6) "Declarant":
             358          (a) means the person who executes a declaration and submits it for recording in the
             359      office of the recorder of the county in which the property described in the declaration is
             360      located; and
             361          (b) includes the person's successor and assign.
             362          (7) (a) "Governing documents" means a written instrument by which the association
             363      may:
             364          (i) exercise powers; or
             365          (ii) manage, maintain, or otherwise affect the property under the jurisdiction of the
             366      association.
             367          (b) "Governing documents" includes:
             368          (i) articles of incorporation;


             369          (ii) bylaws;
             370          (iii) a plat;
             371          (iv) a declaration of covenants, conditions, and restrictions; and
             372          (v) rules of the association.
             373          (8) "Independent third party" means a person that:
             374          (a) is not related to the owner of the residential lot;
             375          (b) shares no pecuniary interests with the owner of the residential lot; and
             376          (c) purchases the residential lot in good faith and without the intent to defraud a current
             377      or future lienholder.
             378          (9) "Judicial foreclosure" means a foreclosure of a lot:
             379          (a) for the nonpayment of an assessment; and
             380          (b) (i) in the manner provided by law for the foreclosure of a mortgage on real
             381      property; and
             382          (ii) as provided in Part 3, Collection of Assessments.
             383          (10) "Lease" or "leasing" means regular, exclusive occupancy of a lot:
             384          (a) by a person or persons other than the owner; and
             385          (b) for which the owner receives a consideration or benefit, including a fee, service,
             386      gratuity, or emolument.
             387          (11) "Limited common areas" means common areas described in the declaration and
             388      allocated for the exclusive use of one or more lot owners.
             389          (12) "Lot" means:
             390          (a) a lot, parcel, plot, or other division of land:
             391          (i) designated for separate ownership or occupancy; and
             392          (ii) (A) shown on a recorded subdivision plat; or
             393          (B) the boundaries of which are described in a recorded governing document; or
             394          (b) (i) a unit in a condominium association if the condominium association is a part of
             395      a development; or
             396          (ii) a unit in a real estate cooperative if the real estate cooperative is part of a
             397      development.
             398          (13) "Mixed-use project" means a project under this chapter that has both residential
             399      and commercial lots in the project.


             400          (14) "Nonjudicial foreclosure" means the sale of a lot:
             401          (a) for the nonpayment of an assessment; and
             402          (b) (i) in the same manner as the sale of trust property under Sections 57-1-19 through
             403      57-1-34 ; and
             404          (ii) as provided in Part 3, Collection of Assessments.
             405          (15) "Residential lot" means a lot, the use of which is limited by law, covenant, or
             406      otherwise to primarily residential or recreational purposes.
             407          Section 5. Section 57-8a-208 is amended to read:
             408           57-8a-208. Fines.
             409          (1) Unless otherwise [provided] limited in the association's governing documents, the
             410      board of [a homeowner] an association may assess a fine against a lot owner for a violation of
             411      the association's governing documents [after the requirements of Subsection (2) are met] in
             412      accordance with the provisions of this section.
             413          (2) (a) Before assessing a fine under Subsection (1), the board shall[:] give the lot
             414      owner a written warning that:
             415          [(a) notify the lot owner of the violation; and]
             416          [(b) inform the owner that a fine will be imposed if the violation is not remedied within
             417      the time provided in the association's governing documents, which shall be at least 48 hours.]
             418          (i) describes the violation;
             419          (ii) states the provision of the association's governing documents that the lot owner's
             420      conduct violates; and
             421          (iii) states that the board may assess a fine against the lot owner in accordance with
             422      Subsection (2)(c), including the time by which the unit owner must cure the violation.
             423          (b) If, in accordance with Subsection (2)(c)(iii), a board gives a lot owner 24 hours to
             424      cure a violation, in addition to the notice requirements described in Subsection (2)(a), the board
             425      shall post a copy of the written warning on the front door of any dwelling on the lot owner's lot.
             426          (c) A board may assess a fine against a lot owner if:
             427          (i) within one year after the day on which the board gives the lot owner a written
             428      warning described in Subsection (2)(a), the lot owner commits another violation that is similar
             429      to the violation described in the written warning;
             430          (ii) the lot owner does not cure the violation within the time period that is:


             431          (A) stated in the written warning described in Subsection (2)(a); and
             432          (B) not less than 48 hours after the day on which the board gives the lot owner the
             433      written warning; or
             434          (iii) (A) the board or the board's agent determines that the violation poses an immediate
             435      threat to health, safety, or property; and
             436          (B) the lot owner does not cure the violation within 24 hours after the day on which the
             437      board gives the lot owner the written warning described in Subsection (2)(a).
             438          (d) If permitted under the association's governing documents, after the board assesses a
             439      fine against a lot owner under this section, the board may, without further warning under this
             440      Subsection (2), assess an additional fine against the lot owner each time the lot owner:
             441          (i) commits a similar violation within one year after the day on which the board
             442      assesses the initial fine; or
             443          (ii) allows a violation to continue for at least 10 days after the day on which the board
             444      assessed the initial fine.
             445          (e) The aggregate amount of fines assessed against a unit owner under this section may
             446      not exceed $500 in any one calendar month.
             447          (3) [(a)] A fine assessed under Subsection (1) shall:
             448          [(i)] (a) be made only for a violation of a rule, covenant, condition, or restriction that is
             449      [specifically listed] in the association's governing documents;
             450          [(ii)] (b) be in the amount [specifically] provided for in the association's governing
             451      documents [for that specific type of violation or in an amount commensurate with the nature of
             452      the violation]; and
             453          [(iii)] (c) accrue interest and late fees as provided in the association's governing
             454      documents.
             455          [(b) Unpaid fines may be collected as an unpaid assessment as set forth in the
             456      association's governing documents or in this chapter.]
             457          (4) (a) A lot owner who is assessed a fine under Subsection (1) may request an
             458      informal hearing before the board to [protest or] dispute the fine within [14] 30 days [from the
             459      date] after the day on which the lot owner receives notice that the fine is assessed.
             460          (b) [A] A board shall conduct a hearing [requested] under Subsection (4)(a) [shall be
             461      conducted] in accordance with:


             462          (i) the standards provided in the association's governing documents[.]; or
             463          (ii) if the association's governing documents do not provide standards for a hearing
             464      described in Subsection (4)(a), the standards established by the board in accordance with
             465      Subsection (4)(c).
             466          (c) The standards described in Subsection (4)(b)(ii) shall provide the lot owner an
             467      opportunity to present the lot owner's position, in person, to the board.
             468          [(c)] (d) [No] If a lot owner timely requests an informal hearing under Subsection
             469      (4)(a), no interest or late fees may accrue until after the board conducts the hearing [has been
             470      conducted] and issues a final decision [has been rendered].
             471          (5) A lot owner may appeal a fine issued under Subsection (1) by initiating a civil
             472      action:
             473          (a) if the lot owner timely requests an informal hearing under Subsection (4), within
             474      180 days after the day on which a final decision from the informal hearing is issued; or
             475          (b) if the lot owner does not timely request an informal hearing under Subsection (4),
             476      within 180 days after the day on which the time to request an informal hearing expires.
             477          (6) An association may collect an unpaid fine as an unpaid assessment in accordance
             478      with the provisions of this chapter.
             479          (7) A board may delegate the board's rights and responsibilities under this section to a
             480      managing agent.
             481          (8) This section applies to an association regardless of when the association is created.
             482          Section 6. Section 57-8a-211 (Superseded 07/01/14) is amended to read:
             483           57-8a-211 (Superseded 07/01/14). Reserve analysis -- Reserve fund.
             484          (1) As used in this section[: (a) "Reserve], "reserve analysis" means an analysis to
             485      determine:
             486          (i) (a) the need for a reserve fund to accumulate money to cover the cost of repairing,
             487      replacing, or restoring [common areas] structures, components, and systems that the
             488      association is responsible to maintain and replace and that have a useful life of no fewer than
             489      three years [but less than 30 years, when the], but excluding any cost [cannot] that can
             490      reasonably be funded from the association's general budget or from other association funds;
             491      and
             492          [(ii)] (b) the appropriate amount of any reserve fund.


             493          [(b) "Reserve fund line item" means a line item in the annual budget of an association
             494      that identifies the amount to be placed into a reserve fund.]
             495          (2) Except as otherwise provided in the governing documents, a board shall:
             496          (a) [(i) subject to Subsection (2)(a)(ii),] cause a reserve analysis to be conducted no
             497      less frequently than every six years; and
             498          [(ii) if no reserve analysis has been conducted since March 1, 2008, cause a reserve
             499      analysis to be conducted before July 1, 2012; and]
             500          (b) review and, if necessary, update a previously conducted reserve analysis no less
             501      frequently than every three years.
             502          (3) [The] A board may conduct a reserve analysis itself or may engage a reliable person
             503      or organization, as determined by the board, to conduct the reserve analysis.
             504          [(4) A reserve analysis shall include:]
             505          [(a) a list of the components identified in the reserve analysis that will reasonably
             506      require reserve funds;]
             507          [(b) a statement of the probable remaining useful life, as of the date of the reserve
             508      analysis, of each component identified in the reserve analysis;]
             509          [(c) an estimate of the cost to repair, replace, or restore each component identified in
             510      the reserve analysis;]
             511          [(d) an estimate of the total annual contribution to a reserve fund necessary to meet the
             512      cost to repair, replace, or restore each component identified in the reserve analysis during the
             513      component's useful life and at the end of the component's useful life; and]
             514          [(e) a reserve funding plan that recommends how the association may fund the annual
             515      contribution described in Subsection (4)(d).]
             516          [(5) Each year, an association shall provide:]
             517          [(a) a summary of the most recent reserve analysis, including any updates, to each lot
             518      owner; and]
             519          [(b) a complete copy of the most recent reserve analysis, including any updates, to a lot
             520      owner upon request.]
             521          [(6) (a) An association shall include a reserve fund line item in its annual budget.]
             522          [(b) The amount of the reserve fund line item shall be determined by:]
             523          [(i) the board, based on the reserve analysis and the amount that the board determines


             524      is prudent under the circumstances; or]
             525          [(ii) the governing documents, if the governing documents require an amount greater
             526      than the amount determined under Subsection (6)(b)(i).]
             527          [(c) Within 45 days after the day on which an association adopts its annual budget, the
             528      lot owners may veto the reserve fund line item by a 51% vote of the allocated voting interests
             529      in the association at a special meeting called by the lot owners for the purpose of voting
             530      whether to veto a reserve fund line item.]
             531          [(d) If the lot owners veto a reserve fund line item under Subsection (6)(c) and a
             532      reserve fund line item exists in a previously approved annual budget of the association that was
             533      not vetoed, the association shall fund the reserve account in accordance with that prior reserve
             534      fund line item.]
             535          [(7) (a) Subject to Subsection (7)(b), if an association does not comply with the
             536      requirements described in Subsection (5) or (6) and fails to remedy the noncompliance within
             537      the time specified in Subsection (7)(c), a lot owner may file an action in state court for:]
             538          [(i) injunctive relief requiring the association to comply with the requirements of
             539      Subsection (5) or (6);]
             540          [(ii) $500 or the lot owner's actual damages, whichever is greater;]
             541          [(iii) any other remedy provided by law; and]
             542          [(iv) reasonable costs and attorney fees.]
             543          [(b) No fewer than 90 days before the day on which a lot owner files a complaint under
             544      Subsection (7)(a), the lot owner shall deliver written notice described in Subsection (7)(c) to
             545      the association.]
             546          [(c) A notice described in Subsection (7)(b) shall state:]
             547          [(i) the requirement in Subsection (5) or (6) with which the association has failed to
             548      comply;]
             549          [(ii) a demand that the association of unit owners come into compliance with the
             550      requirements; and]
             551          [(iii) a date, no fewer than 90 days after the day on which a lot owner delivers the
             552      notice, by which the association shall remedy its noncompliance.]
             553          [(d) In a case filed under Subsection (7)(a), a court may summarily order an association
             554      to produce the summary of the reserve analysis or the complete reserve analysis on an


             555      expedited basis and at the association's expense.]
             556          [(8)] (4) (a) A board may not use money in a reserve fund:
             557          (i) for daily maintenance expenses, unless a majority of association members vote to
             558      approve the use of reserve fund money for that purpose; or
             559          (ii) for any purpose other than the purpose for which the reserve fund was established.
             560          (b) A board shall maintain a reserve fund separate from other association funds.
             561          (c) This Subsection (4) may not be construed to limit a board from prudently investing
             562      money in a reserve fund, subject to any investment constraints imposed by the governing
             563      documents.
             564          (5) An association shall:
             565          (a) annually, at the annual meeting of lot owners or at a special meeting of lot owners:
             566          (i) make available a copy of either the most recent reserve analysis or a summary of the
             567      most recent reserve analysis to each lot owner who is present, in person, at the meeting;
             568          (ii) provide an opportunity for lot owners to discuss reserve funds and the reserve
             569      analysis; and
             570          (iii) have a vote of the lot owners on whether to fund a reserve fund and, if so, how to
             571      fund the reserve fund and in what amount;
             572          (b) prepare and keep minutes of each meeting held under Subsection (5)(a) and
             573      indicate in the minutes any decision that relates to funding a reserve fund; and
             574          (c) (i) provide either a copy of the reserve analysis or a summary of the reserve analysis
             575      and any update to the reserve analysis to each lot owner within 30 days after the day on which
             576      the reserve analysis or the update is complete; and
             577          (ii) provide a complete copy of the most recent reserve analysis and any update to the
             578      reserve analysis to a lot owner upon request.
             579          (6) An association shall fund a reserve fund in the greater of:
             580          (a) the amount approved by the lot owners in a vote under Subsection (5)(a)(iii); or
             581          (b) the amount required in the association's governing documents.
             582          (7) (a) Subject to Subsection (7)(b), if an association does not comply with the
             583      requirements described in Subsection (5) or (6) and fails to remedy the noncompliance within
             584      the time specified in Subsection (7)(c), a lot owner may file an action in state court for:
             585          (i) injunctive relief requiring the association to comply with the requirements described


             586      in Subsection (5) or (6);
             587          (ii) $500 or the lot owner's actual damages, whichever is greater;
             588          (iii) any other remedy provided by law; and
             589          (iv) reasonable costs and attorney fees.
             590          (b) No fewer than 90 days before the day on which a lot owner files an action under
             591      Subsection (7)(a), the lot owner shall deliver written notice described in Subsection (7)(c) to
             592      the association.
             593          (c) A notice described in Subsection (7)(b) shall state:
             594          (i) the requirement in Subsection (5) or (6) with which the association has failed to
             595      comply;
             596          (ii) a demand that the association come into compliance with the requirement; and
             597          (iii) a date, no fewer than 90 days after the day on which a lot owner delivers the
             598      notice, by which the association shall remedy the association's noncompliance.
             599          (d) In an action filed under Subsection (7)(a), a court may summarily order an
             600      association to produce a copy of the summary of the reserve analysis or a copy of the complete
             601      reserve analysis on an expedited basis and at the association's expense.
             602          [(9)] (8) Subsections (2)[, (3), (4), and (6)] through (7) do not apply to an association
             603      during the period of administrative control.
             604          [(10)] (9) This section applies to each association, regardless of when the association
             605      was created.
             606          Section 7. Section 57-8a-301 is amended to read:
             607           57-8a-301. Lien in favor of association for assessments and costs of collection.
             608          (1) (a) Except as provided in Section 57-8a-105 , an association has a lien on a lot for:
             609          (i) an assessment;
             610          (ii) except as provided in the declaration, fees, charges, and costs associated with
             611      collecting an unpaid assessment, including:
             612          (A) court costs and reasonable attorney fees;
             613          (B) late charges;
             614          (C) interest; and
             615          (D) any other amount that the association is entitled to recover under the declaration,
             616      this chapter, or an administrative or judicial decision; and


             617          (iii) a fine that the association imposes against [the owner of the lot.] a lot owner in
             618      accordance with Section 57-8a-208 , if:
             619          (A) the time for appeal described in Subsection 57-8a-208 (5) has expired and the lot
             620      owner did not file an appeal; or
             621          (B) the lot owner timely filed an appeal under Subsection 57-8a-208 (5) and the district
             622      court issued a final order upholding a fine imposed under Subsection 57-8a-208 (1).
             623          (b) The recording of a declaration constitutes record notice and perfection of a lien
             624      described in Subsection (1)(a).
             625          (2) If an assessment is payable in installments, a lien described in Subsection (1)(a)(i)
             626      is for the full amount of the assessment from the time the first installment is due, unless the
             627      association otherwise provides in a notice of assessment.
             628          (3) An unpaid assessment or fine accrues interest at the rate provided:
             629          (a) in Subsection 15-1-1 (2); or
             630          (b) in the declaration, if the declaration provides for a different interest rate.
             631          (4) A lien under this section has priority over each other lien and encumbrance on a lot
             632      except:
             633          (a) a lien or encumbrance recorded before the declaration is recorded;
             634          (b) a first or second security interest on the lot secured by a mortgage or trust deed that
             635      is recorded before a recorded notice of lien by or on behalf of the association; or
             636          (c) a lien for real estate taxes or other governmental assessments or charges against the
             637      lot.
             638          (5) A lien under this section is not subject to Title 78B, Chapter 5, Part 5, Utah
             639      Exemptions Act.
             640          (6) Unless the declaration provides otherwise, if two or more associations have liens
             641      for assessments on the same lot, the liens have equal priority, regardless of when the liens are
             642      created.
             643          Section 8. Repealer.
             644          This bill repeals:
             645          Section 57-8-7.5 (Effective 07/01/14), Reserve analysis -- Reserve fund.
             646          Section 57-8a-211 (Effective 07/01/14), Reserve analysis -- Reserve fund.





Legislative Review Note
    as of 2-28-14 12:06 PM


Office of Legislative Research and General Counsel


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