Representative Marc K. Roberts proposes the following substitute bill:


1     
NONJUDICIAL FORECLOSURE AMENDMENTS

2     
2020 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Curtis S. Bramble

5     
House Sponsor: Marc K. Roberts

6     

7     LONG TITLE
8     General Description:
9          This bill amends provisions of the Condominium Ownership Act and the Community
10     Association Act.
11     Highlighted Provisions:
12          This bill:
13          ▸     amends terms;
14          ▸     amends provisions related to nonjudicial foreclosure on a unit, including:
15               •      establishing limitations on nonjudicial foreclosure; and
16               •     exempting time share estates from certain limitations;
17          ▸     amends provisions related to nonjudicial foreclosure on a lot, including:
18               •     establishing limitations on nonjudicial foreclosure; and
19               •     exempting time share estates from certain limitations; and
20          ▸     makes technical and conforming changes.
21     Money Appropriated in this Bill:
22          None
23     Other Special Clauses:
24          None
25     Utah Code Sections Affected:
26     AMENDS:
27          57-8-3, as last amended by Laws of Utah 2017, Chapter 131
28          57-8-47, as enacted by Laws of Utah 2011, Chapter 355
29          57-8a-102, as last amended by Laws of Utah 2017, Chapters 131 and 424
30          57-8a-303, as enacted by Laws of Utah 2011, Chapter 355
31     

32     Be it enacted by the Legislature of the state of Utah:
33          Section 1. Section 57-8-3 is amended to read:
34          57-8-3. Definitions.
35          As used in this chapter:
36          (1) "Assessment" means any charge imposed by the association, including:
37          (a) common expenses on or against a unit owner pursuant to the provisions of the
38     declaration, bylaws, or this chapter; and
39          (b) an amount that an association of unit owners assesses to a unit owner under
40     Subsection 57-8-43(9)(g).
41          (2) "Association of unit owners" or "association" means all of the unit owners:
42          (a) acting as a group in accordance with the declaration and bylaws; or
43          (b) organized as a legal entity in accordance with the declaration.
44          (3) "Building" means a building, containing units, and comprising a part of the
45     property.
46          (4) "Commercial condominium project" means a condominium project that has no
47     residential units within the project.
48          (5) "Common areas and facilities" unless otherwise provided in the declaration or
49     lawful amendments to the declaration means:
50          (a) the land included within the condominium project, whether leasehold or in fee
51     simple;
52          (b) the foundations, columns, girders, beams, supports, main walls, roofs, halls,
53     corridors, lobbies, stairs, stairways, fire escapes, entrances, and exits of the building;
54          (c) the basements, yards, gardens, parking areas, and storage spaces;
55          (d) the premises for lodging of janitors or persons in charge of the property;
56          (e) installations of central services such as power, light, gas, hot and cold water,
57     heating, refrigeration, air conditioning, and incinerating;
58          (f) the elevators, tanks, pumps, motors, fans, compressors, ducts, and in general all
59     apparatus and installations existing for common use;
60          (g) such community and commercial facilities as may be provided for in the
61     declaration; and
62          (h) all other parts of the property necessary or convenient to its existence, maintenance,
63     and safety, or normally in common use.
64          (6) "Common expenses" means:
65          (a) all sums lawfully assessed against the unit owners;
66          (b) expenses of administration, maintenance, repair, or replacement of the common
67     areas and facilities;
68          (c) expenses agreed upon as common expenses by the association of unit owners; and
69          (d) expenses declared common expenses by this chapter, or by the declaration or the
70     bylaws.
71          (7) "Common profits," unless otherwise provided in the declaration or lawful
72     amendments to the declaration, means the balance of all income, rents, profits, and revenues
73     from the common areas and facilities remaining after the deduction of the common expenses.
74          (8) "Condominium" means the ownership of a single unit in a multiunit project
75     together with an undivided interest in common in the common areas and facilities of the
76     property.
77          (9) "Condominium plat" means a plat or plats of survey of land and units prepared in
78     accordance with Section 57-8-13.
79          (10) "Condominium project" means a real estate condominium project; a plan or
80     project whereby two or more units, whether contained in existing or proposed apartments,
81     commercial or industrial buildings or structures, or otherwise, are separately offered or
82     proposed to be offered for sale. Condominium project also means the property when the
83     context so requires.
84          (11) "Condominium unit" means a unit together with the undivided interest in the
85     common areas and facilities appertaining to that unit. Any reference in this chapter to a
86     condominium unit includes both a physical unit together with its appurtenant undivided interest
87     in the common areas and facilities and a time period unit together with its appurtenant
88     undivided interest, unless the reference is specifically limited to a time period unit.
89          (12) "Contractible condominium" means a condominium project from which one or
90     more portions of the land within the project may be withdrawn in accordance with provisions
91     of the declaration and of this chapter. If the withdrawal can occur only by the expiration or
92     termination of one or more leases, then the condominium project is not a contractible
93     condominium within the meaning of this chapter.
94          (13) "Convertible land" means a building site which is a portion of the common areas
95     and facilities, described by metes and bounds, within which additional units or limited common
96     areas and facilities may be created in accordance with this chapter.
97          (14) "Convertible space" means a portion of the structure within the condominium
98     project, which portion may be converted into one or more units or common areas and facilities,
99     including limited common areas and facilities in accordance with this chapter.
100          (15) "Declarant" means all persons who execute the declaration or on whose behalf the
101     declaration is executed. From the time of the recordation of any amendment to the declaration
102     expanding an expandable condominium, all persons who execute that amendment or on whose
103     behalf that amendment is executed shall also come within this definition. Any successors of
104     the persons referred to in this subsection who come to stand in the same relation to the
105     condominium project as their predecessors also come within this definition.
106          (16) "Declaration" means the instrument by which the property is submitted to the
107     provisions of this act, as it from time to time may be lawfully amended.
108          (17) "Electrical corporation" means the same as that term is defined in Section 54-2-1.
109          (18) "Expandable condominium" means a condominium project to which additional
110     land or an interest in it may be added in accordance with the declaration and this chapter.
111          (19) "Gas corporation" means the same as that term is defined in Section 54-2-1.
112          (20) "Governing documents":
113          (a) means a written instrument by which an association of unit owners may:
114          (i) exercise powers; or
115          (ii) manage, maintain, or otherwise affect the property under the jurisdiction of the
116     association of unit owners; and
117          (b) includes:
118          (i) articles of incorporation;
119          (ii) bylaws;
120          (iii) a plat;
121          (iv) a declaration of covenants, conditions, and restrictions; and
122          (v) rules of the association of unit owners.
123          (21) "Independent third party" means a person that:
124          (a) is not related to the unit owner;
125          (b) shares no pecuniary interests with the unit owner; and
126          (c) purchases the unit in good faith and without the intent to defraud a current or future
127     lienholder.
128          (22) "Judicial foreclosure" means a foreclosure of a unit:
129          (a) for the nonpayment of an assessment;
130          (b) in the manner provided by law for the foreclosure of a mortgage on real property;
131     and
132          (c) as provided in this chapter.
133          [(22)] (23) "Leasehold condominium" means a condominium project in all or any
134     portion of which each unit owner owns an estate for years in his unit, or in the land upon which
135     that unit is situated, or both, with all those leasehold interests to expire naturally at the same
136     time. A condominium project including leased land, or an interest in the land, upon which no
137     units are situated or to be situated is not a leasehold condominium within the meaning of this
138     chapter.
139          [(23)] (24) "Limited common areas and facilities" means those common areas and
140     facilities designated in the declaration as reserved for use of a certain unit or units to the
141     exclusion of the other units.
142          [(24)] (25) "Majority" or "majority of the unit owners," unless otherwise provided in
143     the declaration or lawful amendments to the declaration, means the owners of more than 50%
144     in the aggregate in interest of the undivided ownership of the common areas and facilities.
145          [(25)] (26) "Management committee" means the committee as provided in the
146     declaration charged with and having the responsibility and authority to make and to enforce all
147     of the reasonable rules covering the operation and maintenance of the property.
148          [(26)] (27) " Management committee meeting" means a gathering of a management
149     committee, whether in person or by means of electronic communication, at which the
150     management committee can take binding action.
151          [(27)] (28) (a) "Means of electronic communication" means an electronic system that
152     allows individuals to communicate orally in real time.
153          (b) "Means of electronic communication" includes:
154          (i) web conferencing;
155          (ii) video conferencing; and
156          (iii) telephone conferencing.
157          [(28)] (29) "Mixed-use condominium project" means a condominium project that has
158     both residential and commercial units in the condominium project.
159          (30) "Nonjudicial foreclosure" means the sale of a unit:
160          (a) for the nonpayment of an assessment;
161          (b) in the same manner as the sale of trust property under Sections 57-1-19 through
162     57-1-34; and
163          (c) as provided in this chapter.
164          [(29)] (31) "Par value" means a number of dollars or points assigned to each unit by the
165     declaration. Substantially identical units shall be assigned the same par value, but units located
166     at substantially different heights above the ground, or having substantially different views, or
167     having substantially different amenities or other characteristics that might result in differences
168     in market value, may be considered substantially identical within the meaning of this
169     subsection. If par value is stated in terms of dollars, that statement may not be considered to
170     reflect or control the sales price or fair market value of any unit, and no opinion, appraisal, or
171     fair market transaction at a different figure may affect the par value of any unit, or any
172     undivided interest in the common areas and facilities, voting rights in the unit owners'
173     association, liability for common expenses, or right to common profits, assigned on the basis
174     thereof.
175          [(30)] (32) "Period of administrative control" means the period of control described in
176     Subsection 57-8-16.5(1).
177          [(31)] (33) "Person" means an individual, corporation, partnership, association, trustee,
178     or other legal entity.
179          [(32)] (34) "Property" means the land, whether leasehold or in fee simple, the building,
180     if any, all improvements and structures thereon, all easements, rights, and appurtenances
181     belonging thereto, and all articles of personal property intended for use in connection
182     therewith.
183          [(33)] (35) "Record," "recording," "recorded," and "recorder" have the meaning stated
184     in Chapter 3, Recording of Documents.
185          [(34)] (36) "Rentals" or "rental unit" means:
186          (a) a unit that:
187          (i) is not owned by an entity or trust; and
188          (ii) is occupied by an individual while the unit owner is not occupying the unit as the
189     unit owner's primary residence; or
190          (b) an occupied unit owned by an entity or trust, regardless of who occupies the unit.
191          [(35)] (37) "Size" means the number of cubic feet, or the number of square feet of
192     ground or floor space, within each unit as computed by reference to the record of survey map
193     and rounded off to a whole number. Certain spaces within the units including attic, basement,
194     or garage space may be omitted from the calculation or be partially discounted by the use of a
195     ratio, if the same basis of calculation is employed for all units in the condominium project and
196     if that basis is described in the declaration.
197          [(36)] (38) "Time period unit" means an annually recurring part or parts of a year
198     specified in the declaration as a period for which a unit is separately owned and includes a
199     timeshare estate as defined in Section 57-19-2.
200          [(37)] (39) "Unconstructed unit" means a unit that:
201          (a) is intended, as depicted in the condominium plat, to be fully or partially contained
202     in a building; and
203          (b) is not constructed.
204          [(38)] (40) (a) "Unit" means a separate part of the property intended for any type of
205     independent use, which is created by the recording of a declaration and a condominium plat
206     that describes the unit boundaries.
207          (b) "Unit" includes one or more rooms or spaces located in one or more floors or a
208     portion of a floor in a building.
209          (c) "Unit" includes a convertible space, in accordance with Subsection 57-8-13.4(3).
210          [(39)] (41) "Unit number" means the number, letter, or combination of numbers and
211     letters designating the unit in the declaration and in the record of survey map.
212          [(40)] (42) "Unit owner" means the person or persons owning a unit in fee simple and
213     an undivided interest in the fee simple estate of the common areas and facilities in the
214     percentage specified and established in the declaration or, in the case of a leasehold
215     condominium project, the person or persons whose leasehold interest or interests in the
216     condominium unit extend for the entire balance of the unexpired term or terms.
217          Section 2. Section 57-8-46 is amended to read:
218          57-8-46. Notice of nonjudicial foreclosure -- Limitations on nonjudicial
219     foreclosure.
220          (1) At least 30 calendar days before [initiating] the day on which an association of unit
221     owners initiates a nonjudicial foreclosure[, an] by filing for record a notice of default in
222     accordance with Section 57-1-24, the association of unit owners shall [provide] deliver notice
223     to the owner of the unit that is the intended subject of the nonjudicial foreclosure.
224          (2) The notice under Subsection (1):
225          (a) shall:
226          (i) notify the unit owner that the association of unit owners intends to pursue
227     nonjudicial foreclosure with respect to the owner's unit to enforce the association of unit
228     owners' lien for an unpaid assessment;
229          (ii) notify the unit owner of the owner's right to demand judicial foreclosure in the
230     place of nonjudicial foreclosure;
231          (iii) be in substantially the following form:
232          "NOTICE OF NONJUDICIAL FORECLOSURE AND RIGHT TO DEMAND
233     JUDICIAL FORECLOSURE
234          The (insert the name of the association of unit owners), the association for the project in
235     which your unit is located, intends to foreclose upon your unit and allocated interest in the
236     common areas and facilities for delinquent assessments using a procedure that will not require
237     it to file a lawsuit or involve a court. This procedure is governed by Utah Code, Sections
238     57-8-46 and 57-8-47, and is being followed in order to enforce the association's lien against
239     your unit and to collect the amount of an unpaid assessment against your unit, together with
240     any applicable late fees and the costs, including attorney fees, associated with the foreclosure
241     proceeding. This procedure cannot and will not be used to foreclose upon your unit for
242     delinquent fines for a violation of the association of unit owners' governing documents.
243     Alternatively, you have the right to demand that a foreclosure of your property for delinquent
244     assessments be conducted in a lawsuit with the oversight of a judge. If you make this demand,
245     the association of unit owners may also include a claim for delinquent fines for a violation of
246     the association of unit owners' governing documents. Additionally, if you make this demand
247     and the association prevails in the lawsuit, the costs and attorney fees associated with the
248     lawsuit will likely be significantly higher than if a lawsuit were not required, and you may be
249     responsible for paying those costs and attorney fees. If you want to make this demand, you
250     must state in writing that 'I demand a judicial foreclosure proceeding upon my unit,' or words
251     substantially to that effect. You must send this written demand by first class and certified U.S.
252     mail, return receipt requested, within [15] 30 days after the [date of the postmark on the
253     envelope in which] day on which this notice was [mailed] delivered to you. The address to
254     which you must mail your demand is (insert the address of the association of unit owners for
255     receipt of a demand)."; and
256          (iv) be sent to the unit owner by certified mail, return receipt requested; and
257          (b) may be included with other association correspondence to the unit owner.
258          (3) An association of unit owners may not use a nonjudicial foreclosure to enforce a
259     lien if:
260          (a) the association of unit owners fails to provide notice in accordance with Subsection
261     (1);
262          (b) the unit owner mails the association of unit owners a written demand for judicial
263     foreclosure:
264          [(a)] (i) by U.S. mail, certified with a return receipt requested;
265          [(b)] (ii) to the address stated in the association of unit owners' notice under Subsection
266     (1); and
267          [(c)] (iii) within [15] 30 days after the [date of the postmark on the envelope of] day on
268     which the return receipt described in Subsection (2)(a)(iv) shows the association of unit
269     owners' notice under Subsection (1)[.] is delivered;
270          (c) the lien includes a fine described in Subsection 57-8-44(1)(a)(iii); or
271          (d) unless the lien is on a time share estate as defined in Section 57-19-2, the lien does
272     not include an assessment described in Subsection 57-8-44(1)(a)(i) that is delinquent more than
273     180 days after the day on which the assessment is due.
274          Section 3. Section 57-8a-102 is amended to read:
275          57-8a-102. Definitions.
276          As used in this chapter:
277          (1) (a) "Assessment" means a charge imposed or levied:
278          (i) by the association;
279          (ii) on or against a lot or a lot owner; and
280          (iii) pursuant to a governing document recorded with the county recorder.
281          (b) "Assessment" includes:
282          (i) a common expense; and
283          (ii) an amount assessed against a lot owner under Subsection 57-8a-405(7).
284          (2) (a) Except as provided in Subsection (2)(b), "association" means a corporation or
285     other legal entity, any member of which:
286          (i) is an owner of a residential lot located within the jurisdiction of the association, as
287     described in the governing documents; and
288          (ii) by virtue of membership or ownership of a residential lot is obligated to pay:
289          (A) real property taxes;
290          (B) insurance premiums;
291          (C) maintenance costs; or
292          (D) for improvement of real property not owned by the member.
293          (b) "Association" or "homeowner association" does not include an association created
294     under Title 57, Chapter 8, Condominium Ownership Act.
295          (3) " Board meeting" means a gathering of a board, whether in person or by means of
296     electronic communication, at which the board can take binding action.
297          (4) "Board of directors" or "board" means the entity, regardless of name, with primary
298     authority to manage the affairs of the association.
299          (5) "Common areas" means property that the association:
300          (a) owns;
301          (b) maintains;
302          (c) repairs; or
303          (d) administers.
304          (6) "Common expense" means costs incurred by the association to exercise any of the
305     powers provided for in the association's governing documents.
306          (7) "Declarant":
307          (a) means the person who executes a declaration and submits it for recording in the
308     office of the recorder of the county in which the property described in the declaration is
309     located; and
310          (b) includes the person's successor and assign.
311          (8) "Electrical corporation" means the same as that term is defined in Section 54-2-1.
312          (9) "Gas corporation" means the same as that term is defined in Section 54-2-1.
313          (10) (a) "Governing documents" means a written instrument by which the association
314     may:
315          (i) exercise powers; or
316          (ii) manage, maintain, or otherwise affect the property under the jurisdiction of the
317     association.
318          (b) "Governing documents" includes:
319          (i) articles of incorporation;
320          (ii) bylaws;
321          (iii) a plat;
322          (iv) a declaration of covenants, conditions, and restrictions; and
323          (v) rules of the association.
324          (11) "Independent third party" means a person that:
325          (a) is not related to the owner of the residential lot;
326          (b) shares no pecuniary interests with the owner of the residential lot; and
327          (c) purchases the residential lot in good faith and without the intent to defraud a current
328     or future lienholder.
329          (12) "Judicial foreclosure" means a foreclosure of a lot:
330          (a) for the nonpayment of an assessment; [and]
331          (b) [(i)] in the manner provided by law for the foreclosure of a mortgage on real
332     property; and
333          [(ii)] (c) as provided in Part 3, Collection of Assessments.
334          (13) "Lease" or "leasing" means regular, exclusive occupancy of a lot:
335          (a) by a person or persons other than the owner; and
336          (b) for which the owner receives a consideration or benefit, including a fee, service,
337     gratuity, or emolument.
338          (14) "Limited common areas" means common areas described in the declaration and
339     allocated for the exclusive use of one or more lot owners.
340          (15) "Lot" means:
341          (a) a lot, parcel, plot, or other division of land:
342          (i) designated for separate ownership or occupancy; and
343          (ii) (A) shown on a recorded subdivision plat; or
344          (B) the boundaries of which are described in a recorded governing document; or
345          (b) (i) a unit in a condominium association if the condominium association is a part of
346     a development; or
347          (ii) a unit in a real estate cooperative if the real estate cooperative is part of a
348     development.
349          (16) (a) "Means of electronic communication" means an electronic system that allows
350     individuals to communicate orally in real time.
351          (b) "Means of electronic communication" includes:
352          (i) web conferencing;
353          (ii) video conferencing; and
354          (iii) telephone conferencing.
355          (17) "Mixed-use project" means a project under this chapter that has both residential
356     and commercial lots in the project.
357          (18) "Nonjudicial foreclosure" means the sale of a lot:
358          (a) for the nonpayment of an assessment; [and]
359          (b) [(i)] in the same manner as the sale of trust property under Sections 57-1-19
360     through 57-1-34; and
361          [(ii)] (c) as provided in Part 3, Collection of Assessments.
362          (19) "Period of administrative control" means the period during which the person who
363     filed the association's governing documents or the person's successor in interest retains
364     authority to:
365          (a) appoint or remove members of the association's board of directors; or
366          (b) exercise power or authority assigned to the association under the association's
367     governing documents.
368          (20) "Rentals" or "rental lot" means:
369          (a) a lot that:
370          (i) is not owned by an entity or trust; and
371          (ii) is occupied by an individual while the lot owner is not occupying the lot as the lot
372     owner's primary residence; or
373          (b) an occupied lot owned by an entity or trust, regardless of who occupies the lot.
374          (21) "Residential lot" means a lot, the use of which is limited by law, covenant, or
375     otherwise to primarily residential or recreational purposes.
376          (22) "Solar energy system" means:
377          (a) a system that is used to produce electric energy from sunlight; and
378          (b) the components of the system described in Subsection (22)(a).
379          Section 4. Section 57-8a-303 is amended to read:
380          57-8a-303. Notice of nonjudicial foreclosure -- Limitations on nonjudicial
381     foreclosure.
382          (1) At least 30 calendar days before [initiating] the day on which an association
383     initiates a nonjudicial foreclosure[, an] by filing for record a notice of default in accordance
384     with Section 57-1-24, the association shall [provide] deliver notice to the owner of the lot that
385     is the intended subject of the nonjudicial foreclosure.
386          (2) The notice under Subsection (1):
387          (a) shall:
388          (i) notify the lot owner that the association intends to pursue nonjudicial foreclosure
389     with respect to the owner's lot to enforce the association's lien for an unpaid assessment;
390          (ii) notify the lot owner of the owner's right to demand judicial foreclosure in the place
391     of nonjudicial foreclosure;
392          (iii) be in substantially the following form:
393          "NOTICE OF NONJUDICIAL FORECLOSURE AND RIGHT TO DEMAND
394     JUDICIAL FORECLOSURE
395          The (insert the name of the association), the association for the project in which your lot
396     is located, intends to foreclose upon your lot and allocated interest in the common areas for
397     delinquent assessments using a procedure that will not require it to file a lawsuit or involve a
398     court. This procedure is governed by Utah Code, Sections 57-8a-303 and 57-8a-304, and is
399     being followed in order to enforce the association's lien against your lot and to collect the
400     amount of an unpaid assessment against your lot, together with any applicable late fees and the
401     costs, including attorney fees, associated with the foreclosure proceeding. This procedure
402     cannot and will not be used to foreclose upon your lot for delinquent fines for a violation of the
403     association's governing documents. Alternatively, you have the right to demand that a
404     foreclosure of your property for delinquent assessments be conducted in a lawsuit with the
405     oversight of a judge. If you make this demand, the association may also include a claim for
406     delinquent fines for a violation of the association's governing documents. Additionally, if you
407     make this demand and the association prevails in the lawsuit, the costs and attorney fees
408     associated with the lawsuit will likely be significantly higher than if a lawsuit were not
409     required, and you may be responsible for paying those costs and attorney fees. If you want to
410     make this demand, you must state in writing that 'I demand a judicial foreclosure proceeding
411     upon my lot,' or words substantially to that effect. You must send this written demand by first
412     class and certified U.S. mail, return receipt requested, within [15] 30 days after the [date of the
413     postmark on the envelope in which] day on which this notice was [mailed] delivered to you.
414     The address to which you must mail your demand is (insert the association's address for receipt
415     of a demand)."; and
416          (iv) be sent to the lot owner by certified mail, return receipt requested; and
417          (b) may be included with other association correspondence to the lot owner.
418          (3) An association may not use a nonjudicial foreclosure to enforce a lien if:
419          (a) the association fails to provide notice in accordance with Subsection (1);
420          (b) the lot owner mails the association a written demand for judicial foreclosure:
421          [(a)] (i) by U.S. mail, certified with a return receipt requested;
422          [(b)] (ii) to the address stated in the association's notice under Subsection (1); and
423          [(c)] (iii) within [15] 30 days after the [date of the postmark on the envelope of] day on
424     which the return receipt described in Subsection (2)(a)(iv) shows the association's notice under
425     Subsection (1)[.] is delivered;
426          (c) the lien includes a fine described in Subsection 57-8a-301(1)(a)(iii); or
427          (d) unless the lien is on a time share estate as defined in Section 57-19-2, the lien does
428     not include an assessment described in Subsection 57-8a-301(1)(a)(i) that is delinquent more
429     than 180 days after the day on which the assessment is due.