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Condominium Ownership Act

Utah Code Title 57, Chapter 8

57-8-58.  Liability of declarant or management committee -- Period of declarant control. 

(1) An association may not, after the period of declarant control, bring a legal action against a declarant, a management committee, or an employee, an independent contractor, or an agent of the declarant or the management committee related to the period of declarant control unless:
     (a) the legal action is approved in advance at a meeting where owners of at least 51% in aggregate in interest of the undivided ownership of the common areas and facilities are:
     (i) present; or
     (ii) represented by a proxy specifically assigned for the purpose of voting to approve or deny the legal action at the meeting;
     (b) the legal action is approved by vote in person or by proxy of owners of the lesser of:
     (i) more than 75% in aggregate in interest of the total aggregate interest of the undivided ownership of the common areas and facilities represented by those owners present at the meeting or represented by a proxy as described in Subsection (1)(a); or
     (ii) more than 51% in aggregate in interest of the undivided ownership of the common areas and facilities;
     (c) the association provides each unit owner with the items described in Subsection (2);
     (d) the association establishes the trust described in Subsection (3); and
     (e) the association first:
     (i) notifies the person subject to the proposed action of the action and the basis of the association's claim; and
     (ii) gives the person subject to the proposed action a reasonable opportunity to resolve the dispute that is the basis of the action.

(2) Before unit owners in an association may vote to approve an action described in Subsection (1), the association shall provide each unit owner:
     (a) a written notice that the association is contemplating legal action; and
     (b) after the association consults with an attorney licensed to practice in the state, a written assessment of:
     (i) the likelihood that the legal action will succeed;
     (ii) the likely amount in controversy in the legal action;
     (iii) the likely cost of resolving the legal action to the association's satisfaction; and
     (iv) the likely effect the legal action will have on a unit owner's or prospective unit buyer's ability to obtain financing for a unit while the legal action is pending.

(3) Before the association commences a legal action described in Subsection (1), the association shall:
     (a) allocate an amount equal to 10% of the cost estimated to resolve the legal action, not including attorney fees; and 
     (b) place the amount described in Subsection (3)(a) in a trust that the association may only use to pay the costs to resolve the legal action.

(4) This section does not apply to an association that brings a legal action that has an amount in controversy of less than $75,000.

Enacted 2017, ch. 284, eff. May 9, 2017.