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SALT LAKE CITY -- During its 2011 general session, the Utah Legislature passed several bills that will impact community associations (condominiums, HOAs and PUDs) and their residents. Two of those bills take effect on July 1, impacting collection practices and insurance coverages for all associations and their members.
Community associations, which include condominiums and planned developments often referred to as HOAs or PUDs, are established with the legal right to collect assessments from their owners through lien collection procedures. A lien is an interest in real property, which allows one party (in this case the association) to collect a monetary obligation through the foreclosure of another's property.
House Bill 104 requires all community associations to register with the Utah Department of Commerce before they can enforce lien-based assessments. By July 1, all existing associations — regardless of size — must register contact information for the associations' president, management committee and for a person who can provide lien payoff information in connection with the sale of condominiums and homes in community associations. An association's failure to register this information would complicate its collection proceedings against delinquent owners.
The Utah Department of Commerce announced on June 16 that the community association registry is available online at https://secure.utah.gov /hoa. Thus associations have two weeks to get the information posted.
Another bill that was passed in the 2011 session, Senate Bill 167, significantly amends associations' and owners' insurance obligations by establishing that individual owners will be responsible for the payment of the applicable insurance deductibles when an association's and unit owner's insurance coverages both provide coverage for a loss. The association's carrier will be responsible for all damages above the amount of the deductible. In the event that several units are involved, the damages will be assessed among the association's carrier and the carriers for the affected unit owners.
Under the new law, associations can opt to purchase insurance with high deductibles, thereby shifting more responsibility to unit owners. While the new law doesn't mandate that unit owners obtain coverage, it establishes their liability for the amount of the deductible, whether or not the owner actually obtains insurance.
Unit owners who are responsible for the deductible and who do not have coverage could have a lien filed against their unit and face collection proceedings from the association. The act also requires that associations keep their owners apprised of the amount of the deductible and the owners' responsibility for that amount.
Lincoln W. Hobbs is a trial lawyer, practicing primarily property and employment law in the states of Utah, Idaho and Wyoming. He regularly posts articles on community association law issues at www.utahcondolaw.com.
