What Can My HOA Regulate by Rule?

The following are some general guidelines for Boards/Management Committees to consider when adopting use restrictions by RULE (as opposed to what may already be in your CCRs or Bylaws).  The following is for general educational purposes only and is not a comprehensive list or discussion of what may be done by Rule.

THE BASICS.  Remember, that “rules and regulations” are distinct from “CCRs” and “Bylaws.”  If you have adopted a rule that conflicts with your CCRs or Bylaws, then the rule will likely be invalid.

Also note that a “Resolution” is the formal name of the procedure/policy that embodies your “rules and regulations.”

Finally, always keep in mind that an Association’s ability to regulate “use” or “behavior” within or on a private “lot” or “unit” is different from its ability to regulate activities within the “common area.”

Nevertheless, Utah law DOES grant Associations a wide degree of rule making power.  Rules are critical, especially if certain important restrictions and HOA “powers” are not expressly stated in your CCRs or Bylaws.

The key is to make sure that your Board/Committee has expressly adopted specific rules so that your HOA can utilize certain governance and enforcement actions allowed by Utah’s Community Association Act and Utah’s Condominium Act.  Extremely important issues ranging from collection remedies, regulating rentals to providing electronic notice of HOA meetings can be implemented by HOA Rule.

The following is only a sampling of what your Board/Management Committee can (and cannot) adopt by Rule.

ACTIONS BOARDS MAY TAKE BY RULE

(NON-CONDOMINUM COMMUNITIES)

57-8a-106. Fee for providing payoff information needed at closing.

IF specifically authorized by Rule, an Association may charge a fee for providing payoff information. However, per code, the Association cannot require that this fee be paid before closing or exceed $50.

57-8a-208. Fines

Your HOA may assess fines for violations but the behavior that constitutes a violation must first be contained in a written Rule (or CCRs or Bylaw) and the fines associated with such violations must also be contained in a “Schedule of Fines.”

57-8a-209. Rental Restrictions.

Associations may by Rule, create procedures to determine and track the number of rentals and lots in the Association.

57-8a-214. Fair and reasonable notice.

If you want to utilize electronic means for notice of HOA actions, then a Rule needs to be created to outlining the procedure of providing notice via electronic means, including text messages, email or the Association’s website.

57-8a-217. Association rules, including design criteria – Requirements and limitations relating to board’s action on rules and design criteria – Vote of disapproval.

By Rule, Associations may adopt, amend, modify, cancel, limit, create exceptions to, expand, or enforce the rules and design criterial of the Association.

57-8a-218. Equal treatment by rules required – Limits on association rules and design criteria.

A Rule may vary according to level and type of service the association provides to lot owners and differ between residential and nonresidential uses.

A Rule may not treat lot owner differently because lot owner rents BUT a rule may (with exceptions):

  • Limit or prohibit a rental lot owner from using common areas for other than attending meetings and managing their rental lot.
  • Charge a rental lot owner a fee to use the common areas
  • Require tenants to abide by terms of the governing documents and hold tenant and lot owner jointly and severally liable for a violation of governing documents.

A Rule may not limit rights of owner to display religious and holiday signs and decorations inside a dwelling BUT may adopt restrictions regarding displays visible from outside the lot.

A Rule may not regulate content of political signs, BUT a rule may regulate the time, place and manner of posting political signs.

A Rule may not interfere with the freedom of owner to determine the composition of the household, BUT a Rule may require that all occupants be members of a single housekeeping unit or limit the number of occupants permitted in each dwelling based on the dwelling’s size and facilities and fair use of the common areas.

A Rule may not interfere with legal activities within the dwelling, BUT MAY prohibit an activity within the dwelling if:

  • It is not normally associated with residential use
  • Or creates monetary costs for the association or other lot owners; creates a danger, generates excessive noise or traffic; creates unsightly conditions visible from outside the dwelling; creates an unreasonable source of annoyance to others or creates the potential for smoke to enter another’s dwelling or common areas.

A Rule may not alter the allocation of financial burdens among various lots BUT MAY (a) change common areas available to lot owner, (b) deny the use of common areas or deny use priviledges to a lot owner if the lot owners is delinquent in paying  assessments or abuses the common areas or violates the governing documents.

A Rule may require a minimum lease term unless contrary to declaration.

Also, a Rule MAY:

  • Regulate the use of common areas
  • Impose and receive payment of fee for use of common areas (except limited common areas) and a service provided to a lot owner;
  • Impose a charge for a late payment of an assessment;
  • Provide for the indemnification of the officers and Board consistent with nonprofit Act; (this will be the topic of a separate blog entry);

Always remember that a Rule must be reasonable and consistent with the HOA’s governing documents.

57-8a-221. Reincorporation of terminated or dissolved association.

A Rule is needed to  reincorporate a dissolved Association and to readopt the bylaws in existence at the time of termination or dissolution.

57-8a-225. Association’s right to pay delinquent utilities.

The Board may, if permitted in its Rules (or CCRs or Bylaws)  and after reasonable notice to owner: enter and winterize the lot.

57-8a-309. Termination of a delinquent owner’s right – Notice – Informal hearing.

If not contained in the CCRs or Bylaws, a Rule is needed to allow a Board to terminate a delinquent lot owner’s right to receive utility service for which the lot owner pays as a common expense or to access and use of recreational facilities. Boards must give notice before terminating utility service or access to facilities.

It is important to note that before your HOA levies a fine, the Board must conduct an informal hearing if requested.  The procedure for the hearing must be spelled out in your CCRs or RULES.

57-8a-310. Requiring tenant in residential lot to pay rent to association if owner fails to pay assessment.

Rules may require that a tenant under lease with a lot owner pay the association all future lease payments due to the owner if the owner is more than 60 days late.

ACTIONS MANGEMENT COMMITTEES MAY TAKE BY RULE

 (CONDOMINIUM COMMNITIES)

57-8-10.1 Rental Restrictions.

If your Association has rental restrictions, it is required to create by rule, procedures to determine and track the number of rentals in the project and to ensure enforcement of the rental restrictions.

57-8-37 Fines

See the same discussion above – Associations may assess fines against owner for violation of governing documents (with certain conditions) but the behavior that constitutes a violation must be first adopted in the form of a Rule.

57-8-42 Fair and Reasonable Notice

Just as in non-condominium associations, a condominium association can provide notice to unit owners by methods not mentioned in Nonprofit act if, considering all the circumstances, the notice is fair and reasonable and a Rule has been adopted allowing notice by electronic means, including text message, email or website of the association.

57-8-43 Insurance

By Rule, an Association may obtain an additional type of insurance other than required; or a policy with greater coverage than otherwise required.

57-8-52 Termination of delinquent owner’s rights – Notice – Informal Hearing.

Also as discussed above, a management committee of a condominium community may terminate a delinquent owner’s right to: 1) receive a utility service for which unit owner pays as a common expense; or 2) access and use recreational facilities.

Before terminating rights, association shall give notice in a manner provided in declaration, bylaws or RULES that they will terminate rights within a certain time provided by governing documents or rule, amount due, right to request hearing, time provided and estimate cost to reinstate if service is terminated.

57-8-53 Requiring tenant in residential condo unit to pay rent to association of unit owners if owner fails to pay assessments

Management committees may require a tenant under a lease with a unit owner to pay the association all future lease payments do to the unit owner if unit owner fails to pay assessment for more than 60 days.  BUT THERE MUST BE A CCR PROVISION OR A RULE IN PLACE TO UTILIZE THIS REMEDY.

** Remember, the real benefit of a rule is to supplement deficiencies in your CCRs and Bylaws.  Rules are an invaluable tool for effective community governance.  The above reflects only a few statutory examples of rule making power.  Never hesitate to contact us to discuss this issue further.

THANKS FOR READING!  More to come.

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