Archive for the ‘Legislative News’ Category

Article by John Morris, LAC member and attorney at Morris Sperry Law.

In a time when we are dealing with rampant construction defects in Utah, Utah Developers including Daybreak, asked for and the Utah legislature and the Governor delivered more legal protection for Utah developers and builders. HB157 was the mechanism to deliver that protection and it was sponsored by Representative John Knotwell and Senator Curtis Bramble. Somewhat amazingly, this legislation was presented as a way to “protect” Utah homeowners from the pain of construction defect litigation. Apparently, it is better for Utah homeowners to suffer the debilitating financial effects of construction defects with no recourse to anyone, rather than being involved in a lawsuit to try to get compensation for those defects. The developers involved in pushing this bill actually made that argument, and the Utah legislature didn’t laugh. Not surprisingly, not a single Utah homeowner with a construction defect supported the developers in their effort.

Fortunately, the Utah CAI Legislative Action Committee and other HOA lawyers jumped into action in opposing the bill. After serious negotiation and a tremendous effort by these people, the bill was modified to remove some of the more offensive and restrictive provisions, some of which would have probably been unconstitutional anyway. The bill as passed is still terrible for Utah community associations, but it is far less terrible than as it was originally proposed.

As passed, the bill is focused on making it harder for HOAs to file lawsuits against developers and their employees, although it has a wide reach based on its wording. Lawyers dealing with the language are encouraged to carefully review the legislative history, particularly the comments made by the bill sponsor at legislative hearings, when attempting to rein in the scope of the bill in actual practice. The Bill accomplishes its goal primarily by imposing hurdles that an HOA must jump through to initiate a lawsuit. The hurdles include: (1) requiring votes of the owners before filing, (2) giving the developer or builder a reasonable opportunity cure any defects, (3) requiring written notices and legal assessments to the owners, and (4) requiring an HOA to set up a “trust” that requires the deposit of money in an account prior to commencing a lawsuit. Read the bill carefully for the details.

This law is another example of why it is extremely difficult for Utah homeowners to bring a lawsuit against any developer or builder who sells them a defective home. It is part of a constant stream of legislation over the last twenty years from Utah builders and developers that unfortunately encourages and protects shoddy and defective construction. One has to wonder when the pendulum on this issue will start to swing back the other direction toward protecting Utah home buyers. With hundreds of homeowners facing financial devastation in Daybreak communities and other communities around the state because of construction defects, sooner or later the Utah legislature must deal with this issue in a way that protects homeowners, not developers.

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HB75: Board Action Without a Meeting

Monday, June 26, 2017 posted by Mindy Knudsen 3:40 PM

Article by David Houston, LAC Vice Chair/Public and Legislative Relations Chair and Coral Canyon Community Manager.

In 2015 I wrote an article detailing the provisions in HB 99 (Open Meetings Law). Now, I would like to address the exception to that law as defined in HB 75. Title 57, Chapter 8 Section 57 is where the exception is provided for “Board Action without a Meeting”.

There can be strong opinions on both sides of this discussion. If you are on a board or part of the management and are trying to get work done posthaste waiting for a board meeting can be frustrating and you can lose momentum. Likewise, if you are a homeowner and want to ensure the board is following due diligence and not having access to the decision process can be equally concerning.

Title 16, Chapter 6a, Part 8, Section 813 sets the conditions for “Action without a Meeting” as follows:

  1. a. Unless otherwise provided in the bylaws, any action required or permitted by the chapter to be taken at a board of directors meeting may be taken without a meeting if all members of the board consent to the action in writing.
  2. Action is taken at the time the last director signs a writing describing the action taken, unless, before that time, any director revokes a consent by writing signed by the director and received by the secretary or any other person authorized by the bylaws or the board of directors.
  3. Action is effective at the time it is taken unless the board of directors establishes a different effective date.
  4. a. Unless otherwise provided in the bylaws, any action required or permitted by this chapter to be taken at a board of directors’ meeting may be taken without a meeting if notice is transmitted in writing to each member of the board and each member of the board by the time stated in the notice:

(i) Signs a writing for such action; or

(ii) Signs a writing against such action, abstains in writing from voting, or fails to respond or vote;

(iii) Fails to demand in writing that action not be taken without a meeting.

  1. The notice required by subsection (2)(a) shall state:

(i) The action to be taken;

(ii) The time by which a director must respond to the notice;

(iii) That the failure to respond by the time stated in the notice will have the same effect as;

  1. Abstaining in writing by the time stated in the notice; and
  2. Failing to demand in writing by the time stated in the notice that action not be taken without a meeting; and

(iv) Any other matters the nonprofit corporation determines to include.

  1. Action is taken under the subsection (2) only if at the end of the time stated in the notice transmitted pursuant to subsection (2)(a):

(i) The affirmative votes in writing for the action received by the nonprofit corporation and not revoked pursuant to subsection (2)(e) equal or exceed the minimum number of votes that would be necessary to take such action at a meeting at which all the directors then in office were present and voted; and

(ii) The nonprofit corporation has not received a written demand by a director that the action not be taken without a meeting other than a demand that has been revoked pursuant to subsection (2)(e).

  1. A director’s right to demand that action not be taken without a meeting shall be considered to have been waived unless the nonprofit corporation receives such demand from the director in writing by the time stated in the notice transmitted pursuant to subsection (2)(a) and the demand has not been revoked pursuant to subsection (2)(e).
  2. A director who in writing has voted, abstained, or demanded action not be taken without a meeting pursuant to this subsection (2) may revoke the vote, abstention, or demand in writing received by the nonprofit corporation by the time stated in the notice transmitted pursuant to subsection (2)(a).
  3. Unless the notice transmitted pursuant to subsection (2)(a) states a different effective date, action taken pursuant to this subsection (2) is effective at the end of the time stated in the notice transmitted pursuant to subsection (2)(a).
  4. a. Unless otherwise provided by the bylaws, a communication under this section may be delivered by an electronic transmission.
  5. An electronic transmission communicating a vote, abstention, demand, or revocation under subsection (2) is considered to be written, signed and dated for the purposes of this section if the electronic transmission is delivered with the information from which the nonprofit corporation can determine:

(i) That the electronic transmission is transmitted by the director; and

(ii) The date on which the electronic transmission is transmitted.

  1. The date on which an electronic transmission is transmitted is considered the date on which the vote, abstention, demand, or revocation is signed.
  2. For purposes of this section, communications to the nonprofit corporation are not effective until received.
  3. Action taken pursuant to this section:
  4. Has the same effect as action taken at a meeting of the directors; and
  5. May be described as an action taken at a meeting of the directors in any document.

As you can clearly see there is nothing simple about this policy but our goal is to help keep our members informed and to encourage all concerned to act on behalf of their communities. Both the Utah Chapter of the Community Association Institute (UCCAI) and the Utah Legislative Action Committee (ULAC) are here to help reach that goal. Please visit our websites: www.uccai.com and www.utahlac.com and stay engaged.

 

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Solar legislation

Tuesday, July 12, 2016 posted by Mindy Knudsen 12:55 PM

Article by LAC member and manager at Advantage Management, Jason Sucher. Solar panels and future legislation that will affect Utah homeowners is a hot topic. Read this article on the UCCAI site.

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SB 40 – Board Action without Meeting

Monday, June 6, 2016 posted by Mindy Knudsen 3:25 PM

Article by LAC member and attorney Miller Harrison, Michael Miller:

While SB 99 from the 2015 legislative session required Board meetings to be open to all Association members, the Utah legislature, effective May 10, 2016, has provided 2 ways by which a Board can take action without a meeting. Read this article on the UCCAI site.

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Governor Gary Herbert signed H.B. 304 into law. H.B. 304 contains important new homeowners association laws and condo laws that will help associations minimize damage from flooding and freezing pipes. In short, the bill now allows community associations to give notice the electric and gas companies, stating that the association wants notice before the utility shuts off either electrical or natural gas service. Upon receiving notice from the gas or electric company, the condominium association or HOA can take action to winterize the unit or pay the utilities so that the pipes don’t freeze. The LAC successfully introduced this bill in an effort to help with this destructive problem.

Read HB 304

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