1     
AMENDING GOVERNING DOCUMENTS MODIFICATIONS

2     
2024 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Carol S. Moss

5     
Senate Sponsor: ____________

6     

7     LONG TITLE
8     General Description:
9          This bill addresses the process to amend an association's governing documents.
10     Highlighted Provisions:
11          This bill:
12          ▸     authorizes a court to grant a petition to amend an association's governing documents
13     if:
14               •     the association's vote on the amendment failed to meet the required vote
15     threshold;
16               •     the vote otherwise complied with the governing documents;
17               •     more than 50% of the owners voted in favor of the amendment;
18               •     the petitioner provides notice to each person affected by the petition; and
19               •     the amendment is not against public policy or illegal.
20     Money Appropriated in this Bill:
21          None
22     Other Special Clauses:
23          None
24     Utah Code Sections Affected:
25     AMENDS:
26          57-8-39, as last amended by Laws of Utah 2017, Chapter 324
27          57-8a-104, as last amended by Laws of Utah 2015, Chapters 34, 325 and 387
28     

29     Be it enacted by the Legislature of the state of Utah:
30          Section 1. Section 57-8-39 is amended to read:
31          57-8-39. Limitation on requirements for amending governing documents --
32     Petition to amend governing documents -- Limitation on contracts.
33          (1) (a) (i) To amend the governing documents, the governing documents may not
34     require:
35          (A) for an amendment adopted after the period of administrative control, the vote or
36     approval of unit owners with more than 67% of the voting interests;
37          (B) the approval of any specific unit owner; or
38          (C) the vote or approval of lien holders holding more than 67% of the first position
39     security interests secured by a mortgage or trust deed in the association of unit owners.
40          (ii) Any provision in the governing documents that prohibits a vote or approval to
41     amend any part of the governing documents during a particular time period is invalid.
42          (b) Subsection (1)(a) does not apply to an amendment affecting only:
43          (i) the undivided interest of each unit owner in the common areas and facilities, as
44     expressed in the declaration;
45          (ii) unit boundaries; or
46          (iii) unit owners' voting rights.
47          (2) Subject to Subsection (3), a unit owner may file, and a court may grant a petition to
48     amend the governing documents if:
49          (a) each requirement to amend the governing documents as provided in the governing
50     documents is satisfied, except that the vote on the proposed amendment failed to meet the vote
51     threshold;
52          (b) the association conducted the vote on the proposed amendment in accordance with
53     the governing documents;
54          (c) unit owners with more than 50% of the voting interests voted in favor of the
55     amendment;
56          (d) a court determines the amendment is not against public policy or illegal; and
57          (e) at least 15 days before the day on which the court holds a hearing on the petition,
58     the petitioner gives notice of the hearing to:
59          (i) each unit owner;
60          (ii) any mortgagee of a mortgage or beneficiary of a deed of trust who is entitled to
61     notice under the terms of the governing documents; and
62          (iii) each municipality and county in which the association is located that is entitled to
63     notice under terms of the governing documents.
64          (3) A court may not grant a petition to amend an association's governing documents if
65     the amendment would:
66          (a) impair the security interest of a mortgagee of a mortgage or the beneficiary of a
67     deed of trust; or
68          (b) eliminate any special right, preference, or privilege designated in the governing
69     documents.
70          [(2)] (4) (a) A contract for services such as garbage collection, maintenance, lawn care,
71     or snow removal executed on behalf of the association of unit owners during a period of
72     administrative control is binding beyond the period of administrative control unless terminated
73     by the management committee after the period of administrative control ends.
74          (b) [Subsection (2)(a)] Subsection (4)(a) does not apply to golf course and amenity
75     management, utilities, cable services, and other similar services that require an investment of
76     infrastructure or capital.
77          [(3)] (5) Voting interests under Subsection (1) are calculated in the manner required by
78     the governing documents.
79          [(4)] (6) Nothing in this section affects any other rights reserved by the declarant.
80          [(5)] (7) This section applies to an association of unit owners regardless of when the
81     association of unit owners is created.
82          Section 2. Section 57-8a-104 is amended to read:
83          57-8a-104. Limitation on requirements for amending governing documents --
84     Petition to amend governing documents -- Limitation on contracts.
85          (1) (a) (i) To amend the governing documents, the governing documents may not
86     require:
87          (A) for an amendment adopted after the period of administrative control, the vote or
88     approval of lot owners with more than 67% of the voting interests;
89          (B) the approval of any specific lot owner; or
90          (C) the vote or approval of lien holders holding more than 67% of the first position
91     security interests secured by a mortgage or trust deed in the association.
92          (ii) Any provision in the governing documents that prohibits a vote or approval to
93     amend any part of the governing documents during a particular time period is invalid.
94          (b) Subsection (1)(a) does not apply to an amendment affecting only:
95          (i) lot boundaries; or
96          (ii) lot owner's voting rights.
97          (2) Subject to Subsection (3), a lot owner may file, and a court may grant a petition to
98     amend the governing documents if:
99          (a) each requirement to amend the governing documents as provided in the governing
100     documents is satisfied, except that the vote on the proposed amendment failed to meet the vote
101     threshold;
102          (b) the association conducted the vote on the amendment in accordance with the
103     governing documents;
104          (c) lot owners with more than 50% of the voting interests voted in favor of the
105     amendment;
106          (d) a court determines the amendment is not against public policy or illegal; and
107          (e) at least 15 days before the day on which the court holds a hearing on the petition,
108     the petitioner gives notice to the hearing to:
109          (i) each member of the association;
110          (ii) any mortgagee of a mortgage or beneficiary of a deed of trust who is entitled to
111     notice under the terms of the governing documents; and
112          (iii) each municipality and county in which the association is located and that is
113     entitled to notice under terms of the governing documents.
114          (3) A court may not grant a petition to amend an association's governing documents if
115     the amendment would:
116          (a) impair the security interest of a mortgagee of a mortgage or the beneficiary of a
117     deed of trust; or
118          (b) eliminate any special right, preference, or privilege designated in the governing
119     documents.
120          [(2)] (4) (a) A contract for services such as garbage collection, maintenance, lawn care,
121     or snow removal executed on behalf of the association during a period of administrative control
122     is binding beyond the period of administrative control unless terminated by the board of
123     directors after the period of administrative control ends.
124          (b) [Subsection (2)(a)] Subsection (4)(a) does not apply to golf course and amenity
125     management, utilities, cable services, and other similar services that require an investment of
126     infrastructure or capital.
127          [(3)] (5) Voting interests under Subsection (1) are calculated in the manner required by
128     the governing documents.
129          [(4)] (6) Nothing in this section affects any other rights reserved by the person who
130     filed the association's original governing documents or a successor in interest.
131          [(5)] (7) This section applies to an association regardless of when the association is
132     created.
133          Section 3. Effective date.
134          This bill takes effect on May 1, 2024.