New 2021 HOA Laws and What They Mean For Your HOA

The Utah general legislative session for 2021 was January - March 2021, and the general effective date for legislation from the session is May 5, 2021 (except that one bill does not go into effect until October 1, 2021).

Reserve Funds

Senate Bill 75 (2021) modified both the Condo Act and Community Association Act to:

  • specifically permit the use of reserve funds to cover a budget shortfall during a declared emergency (such as a pandemic) if more than 10% of the owners are delinquent in payment of assessments as a result of the events giving rise to the state of emergency;
  • require that a reserve fund analysis include an estimate of the annual contribution to a reserve fund that is necessary to prepare for a shortfall in the general budget that the association may use reserve funds to cover; and
  • permit the use of reserve funds to pay for daily maintenance expenses without a majority member vote if there exists in the general budget a shortfall that the association may use reserve funds to cover.  However, members of the association may prohibit the use of reserve fund money for daily maintenance expenses if there is such a shortfall, by a 51% vote of all voting interests at a special meeting called for that purpose and for which each owner receives at least 48 hours notice.  Utah Code Sections 57-8-7.5 and 57-8a-211.

Security Cameras

Senate Bill 31 (2021) prevents an association rule from prohibiting an owner from installing a personal security camera on or near the owner's dwelling unit (note that the new bill does not affect the provisions of CC&Rs).

  • For community associations, an association rule may not prohibit a lot owner from installing a personal security camera immediately adjacent to an entryway, window, or other outside entry point of the owner's dwelling unit.  Utah Code § 57-8a-218(14).
  • For condo associations, a rule may not prohibit a unit owner from installing a security camera immediately adjacent to the entryway, window, or other outside entry point of the owner's unit.  A rule may prohibit a unit owner from installing a security camera in a common area not physically connected to the owner's unit.  Utah Code § 57-8-8.1(6).  Note that a condo association's CC&Rs often prohibit attachment to or drilling into the exterior common area walls of a building and this new law does not affect such CC&R provisions.  The new law only applies to rules adopted by a board, not the recorded CC&Rs.

Discriminatory CC&Rs

House Bill 374 (2021) enacts Utah Code § 57-21-6.1, which:

  • provides that any recorded covenant (such as a CC&R provision) that expresses any preference, limitation, or discrimination based on race, color, religion, sex, national origin, familial status, source of income, disability, sexual orientation, or gender identity is void and that enforcement of such a covenant constitutes discrimination;
  • requires a board to investigate a claim that the association's governing documents include such a discriminatory provision within 90 days of an owner's request to remove the provision;
  • allows a condominium or community association to amend the association's governing documents to remove a discriminatory restrictive covenant without any vote or approval of the association members; and
  • prevents a county recorder from charging a fee for recording such an amendment.

Rental of Basement Apartments

House Bill 82 (2021) prevents a community association from restricting the construction or rental of an "internal accessory dwelling unit."  An "internal accessory dwelling unit" is an accessory dwelling unit created within the footprint of a primary dwelling for the purpose of rental of 30 days or longer.1  An "accessory dwelling unit" is a "habitable living unit"2 created within an owner-occupied, detached dwelling3 for the purpose of rental for 30 days or longer.  A "habitable living unit" is generally a separate, additional living unit (such as a basement apartment or an apartment over a garage) that includes a kitchen and sleeping and bathroom facilities. 

So, even if an association prohibits rentals, the association has to allow the rental (for 30 days or longer) of a habitable living unit that is within an owner-occupied, detached (free-standing) non-condo home. That doesn’t include room rentals, but it does include a basement apartment that has its own kitchen and sleeping and bathroom facilities, as long as the owner lives in the home and the home is not a townhome, duplex or other attached home and is not a condo.  The effective date of the law is October 1, 2021.  The new provisions are found in Utah Code § 57-8a-209 and 57-8a-218.

FN 1.  See Utah Code § 10-9a-530(1)(a).
FN 2.  See Utah Code § 10-9a-103(1).
FN 3.  See Utah Code § 10-9a-530(1)(b).

How the new laws affect your community and what you need to do to comply with the new laws

Reserves

An association’s reserve study must now include an estimate of the annual contribution to a reserve fund that is necessary to prepare for a shortfall in the general budget that the association may use reserve funds to cover.

What this means for the most part is that if a shortfall in an association’s budget was caused by the pandemic because the pandemic caused more than 10% of the owners to be delinquent in payment of assessments, or the board determines that a future state of emergency in Utah could result in such a shortfall, the board should update the association’s reserve study right away to include an estimate of the annual contribution to the reserve fund that is necessary to prepare for such a future shortfall in the budget.

The law does not state whether an association must update its reserve study now or simply during the next time the association updates or conducts its reserve study (usually review/update every three years and conduct a new one every six years).  So, if a shortfall in the association’s budget was caused by the pandemic because the pandemic caused more than 10% of the owners to be delinquent in payment of assessments, or the board determines that a future state of emergency in Utah could result in such a shortfall, the board should update the association’s reserve study right away to include an estimate of the annual contribution to the reserve fund that is necessary to prepare for such a future shortfall in the budget.  If the board determines that a future state of emergency in Utah is not likely to result in such a shortfall, the board can wait until the next regular review or update and address it then.

Resolution 2 "Reserve Analysis, Reserve Fund" has been updated on the site to include the requirement of the new law (for Prudent-Legal subscribers).

Security Cameras

If the association’s rules prohibit owners from installing a personal security camera immediately adjacent to the entryway, window, or other outside entry point of the owner’s unit, the rule should be changed as soon as possible to delete that restriction.  Note that this only applies to rules, not to the CC&Rs.

Discriminatory CC&Rs

If the CC&Rs contain a provision that discriminates based on race, color, religion, sex, national origin, familial status, source of income, disability, sexual orientation, or gender identity, the provision must not be enforced and should be deleted by recording an amendment to the CC&Rs.

Rental of Basement Apartments

If the rules or CC&Rs restrict the construction or rental of a separate, habitable living unit created within an owner-occupied, detached dwelling for the purpose of rental for 30 days or longer, the association must be careful, at a minimum, to not enforce the restriction after October 1, 2021, and the best approach by far is to amend the rule or CC&Rs to remove the restriction to avoid potential litigation and similar risks.


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