See also Index, rules.
Utah law does not impose any particular requirements on a condominium association when adopting or changing rules. It's important to note, each board member has a duty to exercise business judgment in its decisions and actions regarding adopting, changing and enforcing rules, as well as in discharging any of the board member's other duties. See Utah Code § 16-6a-822. Additionally, a rule must be reasonable. See § 57-8-8.1(10). See also Index, rules, "Authority to Adopt Rules."
The law authorizes a board to adopt rules, including design criteria, for a community association, subject to the statute and the declaration and subject to the right of the owners to disapprove. See Utah Code § 57-8a-217.
How does a board adopt or change a rule?
The board may only adopt, change or create exceptions to rules if:
(1) done at a meeting,
(2) at least 15 days before the meeting, notice is given to all owners that the board is considering a change to a rule or design criterion,
(3) an open forum is provided at the board meeting giving owners an opportunity to be heard, and
(4) a copy of the change in the rules is given to all owners within 15 days after the board meeting.
What standard applies to a board that adopts or enforces rules?
Any action by the board to adopt, modify, create exceptions to, or enforce rules (including design criteria) is subject to the board's duty to exercise business judgment on behalf of the association and the owners. See § 57-8a-217(1)(b). Additionally, a rule must be reasonable. See § 57-8a-218(18). See also Index, rules, "Authority to Adopt Rules."
Can the owners reject new rules or the enforcement of a rule?
The owners may veto a board's action to adopt, modify, create exceptions to, or enforce rules if:
(1) within 60 days after the board meeting where the action was taken,
(2) at least 51% of all the voting interests in the association vote to veto the action, and
(3) the vote is taken at a special meeting called for that purpose by the owners in accordance with procedures required under the governing documents.
The board has no obligation to call a meeting of the owners to consider a veto unless owners follow the procedure for calling a special meeting in the governing documents and submit a petition. Upon the board receiving such a petition, the effect of the board's action regarding the rules is stayed until after the meeting.
What about while the developer is still in control?
All of the above requirements apply during the declarant control period, unless the CC&Rs for the project specifically exempt the declarant (developer) from the requirements. Additionally, during the control period and for an expandable project, when the declarant has the right to add real estate to the project, the declarant may disapprove a board's action to adopt, modify, create exceptions to, or enforce rules within 60 days of the board meeting where the action was taken.
Statutes and Cases:
(For reference: 57-8 is the Condo Act, 57-8a is the Community Association Act, 16-6a is the Nonprofit Act)