Community Association Act
Utah Code Title 57, Chapter 8a
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The below is not updated with new changes to the law after 2018!
Historical Version of Section.
Effective May 12, 2015.
Superseded May 8, 2018.
57-8a-211. Reserve analysis -- Reserve fund.
(1) As used in this section:
(a) "Reserve analysis" means an
analysis to determine:
(i) the need for a reserve
fund to accumulate reserve funds; and
(ii) the appropriate amount of
any reserve fund.
(b) "Reserve fund line
item" means the line item in an association's annual budget that
identifies the amount to be placed into a reserve fund.
(c) "Reserve funds" means
money to cover the cost of repairing, replacing, or restoring common areas and
facilities that have a useful life of three years or more and a remaining
useful life of less than 30 years, if the cost cannot reasonably be funded from
the general budget or other funds of the association.
(2) Except as otherwise provided in the governing documents,
a board shall:
(a) cause a reserve analysis to be
conducted no less frequently than every six years; and
(b) review and, if necessary, update
a previously conducted reserve analysis no less frequently than every three
years.
(3) The board may conduct a reserve analysis itself or may
engage a reliable person or organization, as determined by the board, to
conduct the reserve analysis.
(4) A reserve fund analysis shall include:
(a) a list of the components
identified in the reserve analysis that will reasonably require reserve funds;
(b) a statement of the probable
remaining useful life, as of the date of the reserve analysis, of each
component identified in the reserve analysis;
(c) an estimate of the cost to
repair, replace, or restore each component identified in the reserve analysis;
(d) an estimate of the total annual
contribution to a reserve fund necessary to meet the cost to repair, replace,
or restore each component identified in the reserve analysis during the
component's useful life and at the end of the component's useful life; and
(e) a reserve funding plan that
recommends how the association may fund the annual contribution described in
Subsection (4)(d).
(5) An association shall:
(a) annually provide lot owners a
summary of the most recent reserve analysis or update; and
(b) provide a copy of the complete
reserve analysis or update to a lot owner who requests a copy.
(6) In formulating its budget each year, an association
shall include a reserve fund line item in:
(a) an amount the board determines, based
on the reserve analysis, to be prudent; or
(b) an amount required by the
governing documents, if the governing documents require an amount higher than
the amount determined under Subsection (6)(a).
(7) (a) Within 45 days after the day on which an association
adopts its 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.
(b) If the lot owners veto a reserve
fund line item under Subsection (7)(a) 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.
(8) (a) Subject to Subsection (8)(b), if an association does
not comply with the requirements described in Subsection (5), (6), or (7) and
fails to remedy the noncompliance within the time specified in Subsection
(8)(c), a lot owner may file an action in state court for:
(i) injunctive relief
requiring the association to comply with the requirements of Subsection (5),
(6), or (7);
(ii) $500 or the lot owner's
actual damages, whichever is greater;
(iii) any other remedy
provided by law; and
(iv) reasonable costs and
attorney fees.
(b) No fewer than 90 days before the
day on which a lot owner files a complaint under Subsection (8)(a), the lot
owner shall deliver written notice described in Subsection (8)(c) to the
association.
(c) A notice under Subsection (8)(b)
shall state:
(i) the requirement in
Subsection (5), (6), or (7) with which the association has failed to comply;
(ii) a demand that the
association come into compliance with the requirements; and
(iii) a date, no fewer than 90
days after the day on which the lot owner delivers the notice, by which the
association shall remedy its noncompliance.
(d) In a case filed under Subsection
(8)(a), a court may order an association to produce the summary of the reserve
analysis or the complete reserve analysis on an expedited basis and at the
association's expense.
(9) (a) A board may not use money in a reserve fund:
(i) for daily maintenance
expenses, unless a majority of association members vote to approve the use of
reserve fund money for that purpose; or
(ii) for any purpose other
than the purpose for which the reserve fund was established.
(b) A board shall maintain a reserve
fund separate from other association funds.
(c) This Subsection (9) may not be
construed to limit a board from prudently investing money in a reserve fund,
subject to any investment constraints imposed by the governing documents.
(10) Subsections (2) through (9) do not apply to an
association during the period of administrative control.
(11) For a project whose initial declaration of covenants,
conditions, and restrictions is recorded on or after May 12, 2015, during the
period of administrative control, for any property that the declarant sells to
a third party, the declarant shall give the third party:
(a) a copy of the association's
governing documents; and
(b) a copy of the association's most
recent financial statement that includes any reserve funds held by the
association or by a subsidiary of the association.
(12) Except as otherwise provided in this section, this
section applies to each association, regardless of when the association was
created.
Enacted 2010, ch. 46, eff. May 11, 2010. Amended 2011, ch. 134, eff. May 10, 2011; 2012, ch. 83, ch. 369, eff. May 8, 2012;