Restrictions on the Number and Term of Rentals

HOAs in Utah may adopt restrictions on the number and term (length) of rentals or prohibit rentals altogether under Sections 57-8a-209 or 57-8-10.1 (except as to internal accessory dwelling units, see "Accessory Dwelling Units" below).

Definition of Rental.  It's important to note that a "rental" in these sections is not what is commonly meant by a rental (namely, where a tenant pays a landlord rent in exchange for the right to live in a property).  "Rental" basically means non-owner-occupied.  Specifically, under the Condo Act and Community Association Act, "rental" means either:

(1) a unit that is not owned by an entity or trust and is occupied by someone while the owner is not occupying the unit as the owner's primary residence, or 
(2) an occupied unit owned by an entity or trust, regardless of who actually occupies the unit.^fn1 

In order to restrict either the number of rentals (such as by imposing a rental cap where only say 30% of the units may be rented) or the term^fn2 (length, duration) of rentals, or to prohibit rentals altogether:

• The restriction must be in the association's declaration (CC&Rs) itself (not merely in the rules), except a rule may require a minimum lease term of six months.
• Certain exceptions are required, namely the following must be exempted from restrictions on the number or term of rentals:
  1. an owner in the military for the period of the owner's deployment,
  2. a unit occupied by the owner's parent, child, or sibling,
  3. an owner whose employer has relocated the owner for two years or less,
  4. a unit owned by an entity that is occupied by an individual who has voting rights in the entity and has at least a 25% ownership and control interest in the entity.  For example, a unit is owned by an LLC.  The LLC has three members with equal ownership and control of the LLC (33 1/3% each).  One member of the LLC occupies the unit.  That unit must be exempted from the rental restrictions.
  5. a unit owned by a trust created for the estate of the unit's current resident or the parent, child, or sibling of the current resident.

NOTE: The exceptions aren't required if the association was formed before May 12, 2009, and has not adopted or amended a rental restriction or prohibition after May 11, 2015.  Additionally, a declaration recorded prior to the transfer of the first unit from the initial declarant may restrict rentals without providing the exceptions.

• An owner who has a rental in the association before the rental restriction is recorded must be allowed to continue renting until:
  1. the unit owner occupies the unit,
  2. an officer, owner, member, trustee, beneficiary, director, or person holding a similar position of ownership or control of an entity or trust that holds an ownership interest in the unit, occupies the unit, or
  3. the unit is transferred.

Rules Regarding Rentals

In a community association, if an owner owns a rental and is in compliance with the association's governing documents, a rule may not treat the owner differently because the owner owns a rental unit, unless the CC&Rs authorize rules to do so.  Additionally, in a community association, any restriction on leasing must be contained in the CC&Rs, and not simply the rules, if the initial CC&Rs were recorded after May 10, 2011.

In a condo association, if an owner owns a rental and is in compliance with the declaration and any rule adopted under Subsection (4) of Section 57-8-8.1, a rule may not treat the owner differently because the owner owns a rental unit, unless the CC&Rs authorize rules to do so.

However, a rule may:
            (i) limit or prohibit a rental owner from using the common areas for purposes other than attending an association meeting or managing the rental unit; 
            (ii) if the owner retains the right to use the common areas, even occasionally:
                  (A) impose a fee on an owner to use the common areas; or
                  (B) for a unit that an owner leases for a term of less than 30 days, impose a reasonable limit on the number of individuals who may use the common areas as guests of the tenant or owner.

Example:  A condo association has a rule requiring a unit owner to own a unit for 12 months before the owner may rent the unit.  The restriction is not prohibited by law because it does not restrict the number or term of rentals or prohibit rentals and it does not treat an owner differently because the owner owns a rental unit.

Example:  A community association with an initial declaration recorded in 2013 has a rule requiring a lot owner to own a lot for 12 months before the owner may rent the lot.  The rule is improper because the law requires any restriction on leasing in a community association to be contained in the CC&Rs, and not simply the rules, if the initial CC&Rs were recorded after May 10, 2011.

Rental Fee.  A rule may authorize a fee up to $200 against a rental unit owner if the association incurs additional administrative expenses directly related to the rental and if at least 35% of the units are allowed to be rented.  However, before charging the fee, (1) a board meeting must be held to discuss and allow owners to comment on the administrative expenses that the association intends to cover with the fee and the circumstances that require imposing or increasing the fee; (2) at the board meeting, the board must approve the fee by a majority vote of the board; and (3) the association must give notice of the board meeting to every owner 15 days before the meeting.

Within 30 days of adopting the fee, the association must give notice to each owner impacted by the fee describing the new administrative expenses that the association intends to cover with the fee and the circumstances that require imposing or increasing the fee. An owner may contest the fee if the association doesn't give the notice.

The same required exemptions from the rental restrictions apply to the fee.  The fee can only be charged once every 12 months.

Finally, an association's governing documents may hold the tenant and the rental owner jointly and severally liable for a violation of a provision of the governing documents.

See Utah Code Sections 57-8a-218 and 209 or 57-8-8.1 and 10.1

Accessory Dwelling Units

In a community association, a rule may not (but the CC&Rs may) prohibit the owner of a residential lot from constructing an internal accessory dwelling unit, as defined in Section 10-9a-530, within the owner's residential lot, unless the construction would violate a local land use ordinance or a building, health, or fire code.  Further, an association may not, by rule or by the CC&Rs, restrict or prohibit the rental of an internal accessory dwelling unit, as defined in Section 10-9a-530, constructed within an owner's residential lot, if the internal accessory dwelling unit complies with all applicable land use ordinances, building codes, health codes, and fire codes.

See Utah Code Subsections 57-8a-218 and 209.