Which Laws Apply to My Association?
By Curtis G. Kimble, Esq.
Quick Summary: The Condo Act applies to property which the owner (generally, the "declarant") submits to the Act by recording a declaration as provided in the Act. To determine if the property has been submitted to the Act, look for language in the first few pages of the CC&Rs/declaration that says the property is submitted to the Condominium Act. If there is no such reference to the Condominium Act, the property is likely not a condo (but always consult an attorney to know for sure).
Author's Note: I use the term "HOA" to generically refer to all associations, including homeowners associations and property owners associations (which are not actually legally distinct types of associations), condominium associations (including commercial condominiums and "condotels"), community associations, and any other type of common interest association.
Condominium projects are bound by the Utah Condominium Ownership Act, which is found in Utah Code Title 57, chapter 8 (Utah Code Section 57-8-1 et seq).
Condominiums can look identical to non-condominium townhomes or other PUDs, with the exception of "stacked" condos, where at least one unit sits directly above another unit. With stacked condo projects, it's easy to identify the project as a condo (because it's mostly unheard of that such a project would not be condominiumized).
In a non-stacked project, an owner may not know for sure whether their project is a condo. If a project or development has not been "condominiumized" by specifically submitting the project to the Utah Condominium Ownership Act, then the project is not a condo and, thus, the Condo Act does not apply to it.
That is, the declaration, or "CC&Rs," must contain a statement that the Condo Act applies to the property, or that the property is submitted to the Condo Act, or something similar, e.g., a sentence such as the following should appear in the first few pages of the CC&Rs - sometimes in the recitals, sometimes in the "property description" section: "the project is hereby submitted to the Utah Condominium Ownership Act."
The sole determining factor for whether a project is a condominium or not is whether the project has been submitted to the provisions of the Condo Act by duly executing and recording a declaration that contains "a statement of intention that [the Act] applies to the property." (Utah Code 57-8-2 and 57-8-10(2)(vi)).
II. Non-condo HOAs (Community Associations)
The Utah Community Association Act applies to "associations," as defined in that Act, in planned communities, PUDs, townhomes and so forth (where the project is not a condominium). I'll refer to these as community associations. An "association" is defined by the Act as
. . . a corporation or other legal entity, any member of which:
(i) is an owner of a residential lot located within the jurisdiction of the association, as described in the governing documents; and
(ii) by virtue of membership or ownership of a residential lot is obligated to pay: (A) real property taxes; (B) insurance premiums; (C) maintenance costs; or (D) for improvement of real property not owned by the member.
(b) "Association" or "homeowner association" does not include an association created under Title 57, Chapter 8, Condominium Ownership Act.
(Utah Code 57-8a-102(2)(a)).
Thus, basically, the Utah Community Association Act applies to all HOAs that are not condominium associations.
But, note that the Community Association Act does apply to community associations that have condominium units within the community association defines a "lot" to include not just typical lots, but also units "in a condominium association if the condominium association is a part of a development." This means is a condominium project is a sub-association with a master association, the master association is a community association and it must treat each condo unit owner as a lot owner under the Act. So, for instance, the procedures required before the master association can levy a fine against a lot owner apply before the master association can levy a fine against to a condo unit owner, as well. (This does not mean the Community Association Act applies to condominium associations that have a master association, just that the Act applies to master associations as to condo units within the master association's jurisdiction).
III. Nonprofit Corporations
All associations that are incorporated as nonprofit corporations are subject to the Utah Revised Nonprofit Corporation Act. Nothing requires an HOA to incorporate as a nonprofit corporation, but I would estimate 97% of Utah HOAs are nonprofit corporations.
IV. How the Individual Statutes Apply
Not all of the individual statutes within a given act may apply to your homeowners association.
a. Deferral Language
Some statutes only apply as a default if your own governing documents (e.g., CC&Rs, bylaws, articles of incorporation) are silent on the issue. If a statute contains deferral language that states something like, "unless otherwise provided in the bylaws," or "except as otherwise provided in the governing documents," then the ensuing language in that statute only applies if your governing documents do not state something different than what is in the statute, or if your governing documents are silent on the issue.
For instance, Section 57-8a-211(2) in the Community Association Act states, "(2) Except as otherwise provided in the governing documents, a board shall:
(a) cause a reserve analysis to be conducted no less frequently than every six years; and
(b) review and, if necessary, update a previously conducted reserve analysis no less frequently than every three years."
Thus, if the CC&Rs or rules for an association state that the board shall conduct a reserve analysis every eight years, and review and, if necessary, update a previous reserve analysis every four years, then the CC&Rs or rules would apply and Section 57-8a-211(2) would not.
On the other hand, Section 57-8a-211(5) states, "(5) An association shall: (a) annually provide lot owners a summary of the most recent reserve analysis or update; and (b) provide a copy of the complete reserve analysis or update to a lot owner who requests a copy."
The "deferral language" is not there, which means this provision applies no matter what your governing documents say.
b. Certain Associations Only
A statute may only apply to certain associations, or it may only apply in certain circumstances stated in the statute itself. For instance, Utah Code Section 57-8a-209 in the Community Association Act establishes certain requirements and limitations that apply to HOA rental restrictions. But, subsection 57-8a-209(6) states that a lot of those requirements and limitations "do not apply to . . . an association that is formed before May 12, 2009, unless, on or after May 12, 2015, the association: (A) adopts a rental restriction or prohibition; or (B) amends an existing rental restriction or prohibition."
So, the provisions of 57-8a-209(1) through (5) only apply to associations formed after May 11, 2009, and to associations who adopt or amend rental restrictions on or after May 12, 2015.
Note that subsection 57-8a-209(6) also goes on to state, "An association that adopts a rental restriction or amends an existing rental restriction or prohibition before May 9, 2017, is not required to include the exemption described in Subsection (2)(a)(iv)." Subsection (2)(a)(iv) contains a requirement that a lot owned by an entity that is occupied by an individual who owns the entity be exempted from the rental restrictions. So, the requirement in 57-8a-209(2)(a)(iv) did not have to be included in rental restrictions adopted before May 9, 2017.
V. Other Utah Statutes
Various other Utah statutes apply to HOAs. Some obviously apply directly to HOAs, and some do not apply as directly as, say, the Condo Act, Community Association Act and Nonprofit Act.
a. Directly Applicable Statutes
For instance, Utah Code 57-1-46 (Transfer fee and reinvestment fee covenants) directly applies to condominium associations and community associations because the statute specifically regulates how condominium associations and community associations may charge a fee that is due upon transfer of title of real property (a transfer fee, now commonly called a reinvestment fee).
b. Indirectly Applicable Statutes
Whereas, a statute such as 78B-6-1101 (Definitions - Nuisance - Right of action) indirectly applies to HOAs because it defines a "nuisance" as "tobacco smoke that drifts into any residential unit a person rents, leases, or owns, from another residential or commercial unit and the smoke: (a) drifts in more than once in each of two or more consecutive seven-day periods; and (b) [is injurious to health, indecent, offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property]."
Thus, this statute is particularly relevant in those HOAs where living units share walls.
There is a great deal that goes into interpreting and applying current law to any given situation. When an expert is needed, use an expert. But, every board member should have at least a basic understanding of how the laws apply to their association.