The members of an association have certain remedies if they aren't satisfied with how the association is operating. The primary remedy is the election of board members. If the owners don't like the direction a board member is taking, they can elect a different board member when that current board member's term expires. Beyond that, a key remedy of the owners is to call for a special meeting of the owners to remove one or more board members and elect replacements, to veto a reserve fund line item in the budget, or in community associations, to veto a budget or the adoption, change to, or enforcement of the association’s rules by the board.
Vetoing the Budget, Rule or a Board Action
The law allows owners to disapprove certain board actions by calling for a special meeting where a vote is conducted to disapprove the action.
- Reserve Fund Line Item. The owners may veto the reserve fund line item in the budget. For example, the board adopts a budget with a line item allocating an amount equal to about 1% of the budget to reserves. The association has many common area maintenance items, including amenities, and the owners feel the 1% is not enough. So, the owners call for a special meeting and veto the reserve fund line item causing the board to increase the line item. (The process may continue until the owners are satisfied with the line item amount).
Within 45 days after the day on which an association adopts the association’s annual budget, the lot owners may veto the reserve fund line item by a 51% vote of the allocated voting interests in the association at a special meeting called by the lot owners for the purpose of voting whether to veto a reserve fund line item. If the lot owners veto a reserve fund line item and a reserve fund line item exists in a previously approved annual budget of the association that was not vetoed, the association shall fund the reserve account in accordance with that prior reserve fund line item. See Utah Code §§ 57-8-7.5(7)(a) (condos) or 57-8a-211(7)(a) (community associations).
- Removal of Board Members. The owners may call for a special meeting to remove one or more board members from the board by a vote of a majority of the owners, and elect replacements. See Utah Code § 16-6a-808(1).
Additionally, in community associations (but not condo associations), the owners may disapprove the following.
- A Board's Adoption, Change to, or Enforcement of the Rules. A board’s adoption, amendment or enforcement of the rules of an association is disapproved “if within 60 days after the date of the board meeting where the action was taken: (a)(i) there is a vote of disapproval by at least 51% of all the allocated voting interests of the lot owners in the association; and (ii) the vote is taken at a special meeting called for that purpose by the lot owners under the declaration, articles, or bylaws.”See Utah Code § 57-8a-217(4).
- The Budget. A budget is disapproved if within 45 days after the date of the meeting at which the board presents the adopted budget to the owners: (1) there is a vote of disapproval by at least 51% of all the allocated voting interests of the lot owners in the association; and (2) the vote is taken at a special meeting called for that purpose by lot owners under the declaration, articles, or bylaws. If a budget is disapproved, the budget that the board last adopted that was not disapproved by members continues as the budget until and unless the board presents another budget to members and that budget is not disapproved. See Utah Code § 57-8a-215(3), (4).
Removing Board Members
A board member may be removed if a majority of the voting members votes to remove the board member. A board member may be removed by the voting members at a meeting called for the purpose of removing that board member, and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the board member. See Utah Code § 16-6a-808(1).
Calling for a Special Meeting of the Owners
An association's governing documents typically provide a process for the owners to call for a special meeting of the owners, which usually involves a certain percentage of owners (such as 30%) signing a petition asking the board to call the special meeting. If the governing documents do not provide a process, the Nonprofit Act provides that, unless otherwise provided in the bylaws, a nonprofit corporation must hold a special meeting of its members if the nonprofit corporation receives a written demand for the meeting that: (1) states the purpose of the meeting, and (2) is signed and dated by members holding at least 10% of all voting interests. Note that if there's a conflict, an association's governing documents take precedence over the statute. So, if the governing documents require the written demand to be signed by, for instance, 30% of the owners, then 30% of the owners must sign the written demand (rather than 10%).
If the board does not call a special meeting within 30 days of when the owners gave the board the demand or petition, one of the owners that signed the petition may call the meeting by sending notice to all owners of the date, time, place and purpose of the meeting.
(For reference: 57-8 is the Condo Act, 57-8a is the Community Association Act, 16-6a is the Nonprofit Act)