57-8a-228. Organization of an association -- Governing document hierarchy -- Reorganization

(1) As used in this section, "organizational documents" means the documents related to the formation or operation of a nonprofit corporation or other legal entity formed by the board or the declarant.

(2) If permitted, required, or acknowledged by the declaration, the board may organize an association as:
      (a) a nonprofit corporation in accordance with Title 16, Chapter 6a, Utah Revised Nonprofit Corporation Act; or
      (b) any other entity organized under other law.

(3) To the extent possible, organizational documents for a nonprofit corporation or other entity formed in accordance with Subsection (2) may not conflict with the rights and obligations found in the declaration or any of the association's bylaws recorded at the time of the formation of a nonprofit corporation or other entity.

(4) Notwithstanding any conflict with the declaration or any recorded bylaws, the organizational documents of a nonprofit corporation or other entity formed in accordance with Subsection (2) may include an additional indemnification and liability limitation provision for:
      (a) board members or officers; or
      (b) similar persons in a position of control.

(5) In the event of a conflict between this chapter's provisions, a statute under which the association is organized, documents concerning the organization of the association as a nonprofit corporation or other entity, the plat, the declaration, the bylaws, and association rules or policies, the following order prevails:
      (a) this chapter controls over a conflicting provision found in any of the sources listed in Subsections (5)(b) through (f);
      (b) Title 16, Chapter 6a, Utah Revised Nonprofit Corporation Act, or any other law under which an entity is organized controls over a conflicting provision in any of the sources listed in Subsections (5)(c) through (f);
      (c) the plat and the declaration control equally over a conflicting provision in any of the sources listed in Subsections (5)(d) through (f);
      (d) an organizational document filed in accordance with Title 16, Chapter 6a, Utah Revised Nonprofit Corporation Act, or any other law under which an entity is organized controls over a conflicting provision in any of the sources listed in Subsections (5)(e) and (f); 
      (e) the bylaws control over a conflicting provision in a source described in Subsection (5)(f); and
      (f) an association rule or policy that is adopted by the board yields to a conflicting provision in any of the sources listed in Subsections (5)(a) through (e).

(6) Immediately upon the legal formation of an entity in compliance with this section, the association and unit ownersfn1 are subject to any right, obligation, procedure, and remedy applicable to that entity.

(7)(a) The board may modify a form "articles of incorporation" or similar organizational document attached to a declaration for filing or re-filing if the modified version is otherwise consistent with this section's provisions.
      (b) An organizational document attached to a declaration that is filed and concerns the organization of an entity may be amended in accordance with the organizational document's own terms or any applicable law, regardless of whether the organizational document is recorded.
      (c) Except for amended bylaws, an initial or amended organizational document properly filed with the state does not need to be recorded.fn2

(8) This section applies to the reorganization of an association previously organized if the entity's status is terminated or dissolved without the possibility of reinstatement.

(9)(a) This section applies regardless of when the association is created.
      (b) This section does not validate or invalidate the organization of an association that occurred before May 9, 2017, regardless of whether the association was otherwise in compliance with this section.


Enacted 2017, ch. 324, eff. May 9, 2017.


 

FN 1.  Neither "unit" nor "unit owners" are defined terms in the Community Association Act.

FN 2.  This provision contradicts Section 57-8a-216 regarding recording of bylaws (with the county recorder, against all the lots).  This provision states that initial bylaws do not need to be recorded if they are filed with the state, while Section 57-8a-216 states the initial bylaws must be recorded before the first lot is sold (and does not provide an exception if the initial bylaws are filed with the state).  However, since in practice bylaws are not filed with the state, the contradiction has no real effect. 

This provision distinguishes bylaws from amended bylaws without stating or even implying a reason for the distinction.  This is puzzling, but the bigger question is whether this provision requires all amended bylaws to be recorded.  I don't believe it does.  I believe this provision is saying that if an association is required to record its amended bylaws, then the association must still do so even if the association also files the amended bylaws with the state.  

See Section 57-8a-216 (and footnotes thereto) regarding requirements for recording of bylaws. 


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