57-8a-227. Records -- Availability for examination

(1) (a) Subject to Subsection (1)(b), an association shall keep and make documents available to lot owners in accordance with Sections 16-6a-1601 through 1603, 16-6a-1605, 16-6a-1606, and 16-6a-1610:
            (i) regardless of whether the association is incorporated under Title 16, Chapter 6a, Utah Revised Nonprofit Corporation Act; and
            (ii) including keeping and making available to lot owners a copy of the association's:
                  (A) declaration and bylaws;
                  (B) most recent approved minutes; and
                  (C) most recent budget and financial statement.
      (b) An association may redact the following information from any document the association produces for inspection or copying:
            (i) a Social Security number;
            (ii) a bank account number; or
            (iii) any communication subject to attorney-client privilege.

(2) (a) In addition to the requirements described in Subsection (1), an association shall:
            (i) make documents available to lot owners in accordance with the association's governing documents; and
            (ii) (A) if the association has an active website, make the documents described in Subsection (1)(a)(ii) available to lot owners, free of charge, through the website; or
                  (B) if the association does not have an active website, make physical copies of the documents described in Subsection (1)(a)(ii) available to lot owners during regular business hours at the association's address registered with the Department of Commerce under Section 57-8a-105.
      (b) Subsection (2)(a)(ii) does not apply to an association as defined in Section 57-19-2.
      (c) If a provision of an association's governing documents conflicts with a provision of this section, the provision of this section governs.

(3) In a written request to inspect or copy documents:
      (a) a lot owner shall include:
            (i) the association's name;
            (ii) the lot owner's name;
            (iii) the lot owner's property address;
            (iv) the lot owner's email address;
            (v) a description of the documents requested; and
            (vi) any election or request described in Subsection (3)(b); and
      (b) a lot owner may:
            (i) elect whether to inspect or copy the documents;
            (ii) if the lot owner elects to copy the documents, request hard copies or electronic scans of the documents; or
            (iii) subject to Subsection (4), request that:
                  (A) the association make the copies or electronic scans of the requested documents;
                  (B) a recognized third party duplicating service make the copies or electronic scans of the requested documents; or
                  (C) the lot owner be allowed to bring any necessary imaging equipment to the place of inspection and make copies or electronic scans of the documents while inspecting the documents; or
                  (D) the association email the requested documents to an email address provided in the request.

(4) (a) An association shall comply with a request described in Subsection (3).
      (b) If an association produces the copies or electronic scans:
            (i) the copies or electronic scans shall be legible and accurate; and
            (ii) the lot owner shall pay the association the reasonable cost of the copies or electronic scans and for time spent meeting with the lot owner, which may not exceed:
                  (A) the actual cost that the association paid to a recognized third party duplicating service to make the copies or electronic scans; or
                  (B) 10 cents per page and $15 per hour for the employee's, manager's, or other agent's time.
      (c) If a lot owner requests a recognized third party duplicating service make the copies or electronic scans:
            (i) the association shall arrange for the delivery and pick up of the original documents; and
            (ii) the lot owner shall pay the duplicating service directly.
      (d) If a lot owner requests to bring imaging equipment to the inspection, the association shall provide the necessary space, light, and power for the imaging equipment.

(5) Subject to Subsection (9), if, in response to a lot owner's request to inspect or copy documents, an association fails to comply with a provision of this section, the association shall pay:
      (a) the reasonable costs of inspecting and copying the requested documents; and
      (b) for items described in Subsection (1)(a)(ii), $25 to the lot owner who made the request for each day the request continues unfulfilled, beginning the sixth day after the day on which the lot owner made the request; and
      (c) reasonable attorney fees and costs incurred by the lot owner in obtaining the inspection and copies of the requested documents.

(6) (a) In addition to any remedy in the association's governing documents or otherwise provided by law, a lot owner may file an action in court under this section if:
            (i) subject to Subsection (9), an association fails to make documents available to the lot owner in accordance with this section, the association's governing documents, or as otherwise provided by law; and
            (ii) the association fails to timely comply with a notice described in Subsection (6)(d).
      (b) In an action described in Subsection (6)(a):
            (i) the lot owner may request: 
                  (A) injunctive relief requiring the association to comply with the provisions of this section;
                  (B) $500 or actual damage, whichever is greater; or
                  (C) any other relief provided by law; and
            (ii) the court shall award costs and reasonable attorney fees to the prevailing party, including any reasonable attorney fees incurred before the action was filed that relate to the request that is the subject of the action.
      (c) (i) In an action described in Subsection (6)(a), upon motion by the lot owner, notice to the association, and a hearing in which the court finds a likelihood that the association failed to comply with a provision of this section, the court shall order the association to immediately comply with the provision.
            (ii) The court shall hold a hearing described in Subsection (6)(c)(i) within 30 days after the day on which the lot owner files the motion.
      (d) At least 10 days before the day on which a lot owner files an action described in Subsection (6)(a), the lot owner shall deliver a written notice to the association that states:
            (i) the lot owner's name, address, telephone number, and email address;
            (ii) each requirement of this section with which the association has failed to comply;
            (iii) a demand that the association comply with each requirement with which the association has failed to comply; and
            (iv) a date by which the association shall remedy the association's noncompliance that is at least 10 days after the day on which the lot owner delivers the notice to the association.

(7) (a) The provisions of Section 16-6a-1604 do not apply to an association.
      (b) The provisions of this section apply regardless of any conflicting provision in Title 16, Chapter 6a, Utah Revised Nonprofit Corporation Act.

(8) A lot owner's agent may, on the lot owner's behalf, exercise or assert any right that the lot owner has under this section.

(9) An association is not liable for identifying or providing a document in error, if the association identified or provided the erroneous document in good faith.


Enacted 2015, ch. 325, eff. May 12, 2015 (technically renumbered to avoid duplication of section number also used in HB304, Chapter 213, and HB99, Chapter 387).  Amended 2018, ch. 395, eff. May 8, 2018.


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Questions and Answers   

kaayo
# HOA gives records late, but without the $25/day penaltykaayo 2020-06-03 21:17
The law does not state any obligation for the one making the request to follow up in a certain number of days, with his 10 day notice of court action.

So, is there no maximum to that $25/day penalty? (For example, a year after the request, can the owner give the HOA the 10 day notice that he plans to file in court, demanding the requested record, and the penalty of $25/day x 365 days?)

If the HOA fulfills the records request, but does it late, without paying the $25/day, is the request still “unfulfilled,” and can the one making the request still give the HOA the official 10 day notice of court action, demanding the unpaid $25/day penalty, and the additional $500?
Curtis G. Kimble, esq.
# RE: HOA gives records late, but without the $25/day penaltyCurtis G. Kimble, esq. 2020-06-04 09:40
To your first question, no, there is no maximum to the $25/day penalty imposed in Subsection (5) for failure of an HOA to provide on its website or at its registered office the declaration, bylaws, most recent approved minutes, and most recent budget and financial statement.

As you state, the law does not specifically require the owner that made the request to follow up or do anything further other than what is specifically required in the statute. However, if the owner waits a long time for no apparent reason and without taking any other action and then pursues a court action, it may appear to a judge that the owner was simply letting the penalties accumulate so the owner could be paid more and more money. Or, it could be argued the owner gave up their claim because they didn't pursue it in a timely manner. Other arguments could be made as well. In that case, a court may or may not require the HOA to pay the full amount. It would depend on the specific facts of the case, how much time passed, the particular judge, how egregious the failure of the HOA was, etc.

So, to your example, yes, the owner can give the HOA the 10 day notice in Subsection (6)(d) stating that the owner plans to file an action in court and demanding the requested record and the penalty of $25/day x 365 days. However, depending on what happened during that year, it may be wise for the owner to be very open to negotiating a much lower dollar amount than the $9,000.

To your last question, the statute says an “owner may file an action in court under this section if: (i) . . . an association fails to make documents available to the lot owner in accordance with this section . . . and (ii) the association fails to timely comply with a notice described in Subsection (6)(d)." Subsection (6)(d) says the notice of court action must state “. . . (ii) each requirement of this section with which the association has failed to comply; (iii) a demand that the association comply with each requirement with which the association has failed to comply . . .”

So, if the notice to the association included something like:
Quote:
“In response to my request for documents of the association under Utah Code Section 57-8a-227, the association failed to comply with Subsection 57-8a-227(5)(b) requiring the association to pay $25 to me for each day my request for the declaration, bylaws, most recent approved minutes, and most recent budget and financial statement, continued unfulfilled, beginning the sixth day after the day on which the request was made. The request was made April 1, 2020, and was not fulfilled until May 1, 2020. Accordingly, the association is required to pay me $600 and the association has failed to do so.

This is formal demand that the association comply with each requirement with which the association has failed to comply, namely Section 57-8a-227(5)(b) as explained above, by May 20, 2020."
And that notice was delivered at least 10 days before May 20, 2020, and the association failed to comply with it, the owner could file a court action requesting $500 or actual damage and the $25/day penalty and so forth.

*All of the above is hypothetical and not applicable to any particular person. This is not legal advice.
kaayo
# Do answers also apply to other records in Nonprofit Act?kaayo 2020-06-04 15:43
Quoting Curtis G. Kimble, esq.:
...for failure of an HOA to provide on its website or at its registered office the declaration, bylaws, most recent approved minutes, and most recent budget and financial statement.


Just to clarify: In addition, do your answers also apply to records the Nonprofit Act requires an HOA to keep, and an owner's email request that they be emailed to the owner? Thanks.
Curtis G. Kimble, esq.
# RE: Do answers also apply to other records in Nonprofit Act?Curtis G. Kimble, esq. 2020-06-04 17:59
The $25/day penalty is imposed only if an HOA fails to fulfill an owner's records request for the declaration, bylaws, most recent approved minutes, or most recent budget and financial statement.

If an owner properly requested that other HOA records (such as required by the Nonprofit Act) be delivered to the owner by email, and the HOA failed to provide them as required by the law, the owner could deliver the 10 day notice explaining the HOA's failure to comply with 57-8a-227(3)(b)(iii)(D) and the owner's request that the association email the requested documents to the owner, and demand that the HOA comply.

The $500 penalty is only triggered if an HOA fails to comply with the 10 day notice of court action. Thus, if an HOA complies with the notice, Subsection (6)(b) (stating what the owner may request in a court action) isn't triggered. A prerequisite of being able to file the court action is that the HOA failed to comply with the notice. The notice can't ask for the $500 because the HOA hasn't failed to comply with the notice yet.

However, if the owner has suffered actual damage or harm (quantifiable economic harm, etc.), including if the owner has incurred attorney fees as a result of the failure of the HOA to comply with the records request, the statute does appear to authorize the owner to file suit asking a court for those things, even if the association otherwise complies with the 10 day notice. If there are such damages, the owner should include them in the 10 day notice to give the HOA the opportunity to address them before a court action is filed.
kaayo
# Good faith vs non-compliancekaayo 2020-07-04 11:51
For purposes of the per day penalty, is it considered a "good faith" error, or non-compliance if, upon request for governing documents, the HOA provides By-laws or CC&Rs that do not include amendments? (Thanks. Last question.)
Curtis G. Kimble, esq.
# RE: Good faith vs non-complianceCurtis G. Kimble, esq. 2020-07-06 09:37
That will depend partly on whether or not the board knows about the amendments. Although, just because the board doesn't know about a past amendment doesn't necessarily mean they can rely on the excuse that they provided all the documents they knew about in good faith. It's possible that failing to be aware of and possess all of the association's governing documents could be a breach of a board member's fiduciary duties (such as the duty to discharge a board member's duties with the care an ordinarily prudent HOA board member would exercise under similar circumstances). Whether that's the case will depend on the specific facts and circumstances in a given situation.

If the board has the amendments or knows about them but doesn't provide them, then generally it would be considered noncompliance for purposes of the per day penalty, unless the board could articulate a reason they failed to provide the amendments in good faith.

In such a case of noncompliance, it is the board's obligation to show and prove they made an error in good faith.

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