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Reserve Specialists

Salt Lake City

OFFICE ADDRESS
222 South Main St,
Suite 500,
Salt Lake City UT 84101

Phone 888.315.2843
Fax 888.316.4587
Email mail@reservestudygroup.com

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Legislation

Salt Lake Reserve Study Requirements

Sections 57-8-7.5 and 57-8a-211 of the Utah Code introduced changes to how homeowners associations and communities in Utah manage their common property. Both sections focus on the need for communities to regularly review and update a reserve study. New requirements call for associations to review a reserve study at least once every third year and conduct a new study no less that once every six years. The legislation also sets requirements for how to present the outcomes of your reserve study and the type of information that should be included within each report or study. Changes to the Condominium Ownership Act (Chapter 8) and the Community Association Act (Chapter 8a) have renewed the focus on reserve funds and common area responsibilities.

Providing reserve studies throughout UTAH, COLORADO & ARIZONA.

Reserve Study Legislation

CONDOMINIUM OWNERSHIP ACT | SECTION 7.5

SECTION 57-8-7.5 (1)

(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 of unit owners’ 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 of unit owners.

SECTION 57-8-7.5 (2)

(2) Except as otherwise provided in the declaration, a management committee 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.

SECTION 57-8-7.5 (3)

(3) The management committee may conduct a reserve analysis itself or may engage a reliable person or organization, as determined by the management committee, to conduct the reserve analysis.

SECTION 57-8-7.5 (4)

(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 of unit owners may fund the annual contribution described in Subsection (4)(d).

SECTION 57-8-7.5 (5)

(5) An association of unit owners shall:

(a) annually provide unit 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 unit owner who requests a copy.

SECTION 57-8-7.5 (6)

(6) In formulating its budget each year, an association of unit owners shall include a reserve fund line item in:

(a) an amount the management committee determines, based on the reserve analysis, to be prudent; or

(b) an amount required by the declaration, if the declaration requires an amount higher than the amount determined under Subsection (6)(a).

SECTION 57-8-7.5 (7)

(7)

(a) Within 45 days after the day on which an association of unit owners adopts its annual budget, the unit owners may veto the reserve fund line item by a 51% vote of the allocated voting interests in the association of unit owners at a special meeting called by the unit owners for the purpose of voting whether to veto a reserve fund line item.

(b) If the unit 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 of unit owners that was not vetoed, the association of unit owners shall fund the reserve account in accordance with that prior reserve fund line item.

SECTION 57-8-7.5 (8)

(8)

(a) Subject to Subsection (8)(b), if an association of unit owners does not comply with the requirements of Subsection (5), (6), or (7) and fails to remedy the noncompliance within the time specified in Subsection (8)(c), a unit owner may file an action in state court for:

(i) injunctive relief requiring the association of unit owners to comply with the requirements of Subsection (5), (6), or (7);

(ii) $500 or 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 unit owner files a complaint under Subsection (8)(a), the unit owner shall deliver written notice described in Subsection (8)(c) to the association of unit owners.

(c) A notice under Subsection (8)(b) shall state:

(i) the requirement in Subsection (5), (6), or (7) with which the association of unit owners has failed to comply;

(ii) a demand that the association of unit owners come into compliance with the requirements; and

(iii) a date, no fewer than 90 days after the day on which the unit owner delivers the notice, by which the association of unit owners shall remedy its noncompliance.

(d) In a case filed under Subsection (8)(a), a court may order an association of unit owners to produce the summary of the reserve analysis or the complete reserve analysis on an expedited basis and at the association of unit owners’ expense.

SECTION 57-8-7.5 (9)

(9)

(a) A management committee may not use money in a reserve fund:

(i) for daily maintenance expenses, unless a majority of the members of the association of unit owners 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 management committee shall maintain a reserve fund separate from other funds of the association of unit owners.

(c) This Subsection (9) may not be construed to limit a management committee from prudently investing money in a reserve fund, subject to any investment constraints imposed by the declaration.

SECTION 57-8-7.5 (10)

(10) Subsections (2) through (9) do not apply to an association of unit owners during the period of administrative control.

SECTION 57-8-7.5 (11)

(11) For a condominium project whose initial declaration 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 of unit owners’ governing documents; and

(b) a copy of the association of unit owners’ most recent financial statement that includes any reserve funds held by the association of unit owners or by a subsidiary of the association of unit owners.

SECTION 57-8-7.5 (12)

(12) Except as otherwise provided in this section, this section applies to each association of unit owners, regardless of when the association of unit owners was created.

COMMUNITY ASSOCIATION ACT | CHAPTER 8A PART 2 SECTION 211

SECTION 57-8A-211 (1)

(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.

SECTION 57-8A-211 (2)

(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.

SECTION 57-8A-211 (3)

(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.

SECTION 57-8A-211 (4)

(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).

SECTION 57-8A-211 (5)

(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.

SECTION 57-8A-211 (6)

(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).

SECTION 57-8A-211 (7)

(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.

SECTION 57-8A-211 (8)

(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.

SECTION 57-8A-211 (9)

(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.

SECTION 57-8A-211 (10)

(10) Subsections (2) through (9) do not apply to an association during the period of administrative control.

SECTION 57-8A-211 (11)

(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.

SECTION 57-8A-211 (12)

(12) Except as otherwise provided in this section, this section applies to each association, regardless of when the association was created.

Utah State Reserve Study Professionals

Our team of reserve study professionals work with
associations throughout Utah State.

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