HOAs in Utah may adopt restrictions on rentals or prohibit rentals altogether under Sections 57-8a-209 or 57-8-10.1.
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" under the Condo Act and Community Association Act 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.
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 of rentals (such as , or to prohibit rentals altogether:
- The restriction must be in the association's declaration (CC&Rs) itself (not merely in the rules).
- Certain exceptions are required, namely the following must be exempted from restrictions on the number or term of rentals:
- an owner in the military for the period of the owner's deployment,
- a unit occupied by the owner's parent, child, or sibling,
- an owner whose employer has relocated the owner for two years or less,
- 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.
- 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:
- the unit owner occupies the unit,
- 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
- the unit is transferred.
FN 1. The definition of "rental" is contrasted with the definition of "lease" in the Community Association Act ("lease" is not defined in the Condo Act), which is basically the same as the common usage of the word "rental." Note that a situation where the owner occupies the home and shares the home with a tenant would not be considered a "rental" or a "lease" because the owner lives in the home. Additionally, a situation where an owner rents out their home while the owner goes to Italy for a couple of weeks would not be considered a "rental" as long as the owner doesn't move out and the home is the owner's primary residence.
FN 2. The word "term" means (in relevant part):
2 a: a limited or definite extent of time
especially : the time for which something lasts : DURATION, TENURE
// term of office
// lost money in the short term
b : the whole period for which an estate is granted
also : the estate or interest held by one for a term.
(For reference: 57-8 is the Condo Act, 57-8a is the Community Association Act, 16-6a is the Nonprofit Act)