S.B. 122 HOA Amendments: transcript

Thank you. Um, house Bill 1 22 is a bill that I worked on with a number of stakeholders dealing with. Uh, we put in the office of the, uh, HOYA ombudsman. Uh, that office has been up. It's, uh, started to go pretty good. As we, as I talked with, uh, that office and with other stakeholders. They identified, uh, some things that they thought would be very good, uh, to go through and clarify. Those include the office must publish, the advisor provision, uh, additional items on the website, um, frequently asked questions. Uh, office provided, uh, simple, easy to understand policy guidelines, including rights and responsibilities, and how HR are formed and dissolved and go through and have a lot of other clarifying things. Since that time, uh, uh, there's been additional discussions and, uh, representative Walters and, and some others have talked about additional changes that could happen with the HOA bill. Therefore, there's a substitute bill under, uh, represent Walter's name that I think he wants to move that we'll go through and add additional clarifying.

Thank you, Mr. Chair. I move that we adopt the second substitute to House Bill 1 22. Motion is to adopt second substitute House Senate bill 1 22 HOA amendments. We'd like to speak to your sub. Yes. Um, I appreciate, uh, the opportunity. Um, one of the things we've been counseled to do and advised to do particularly in this session, is to try and work together on issues where there's, uh, common, uh, language and common, uh, uh, common, uh, topics. And so it turned out that I also had a bill that dealt specifically with the, uh, office, the ombudsman, and the, um, uh, making some of the same updates that Senator Harper had. I recognized that, uh, fairly early in the session. Mine was house Bill four oh, uh, 4 0 6. And so I began working with the, uh, um, sponsor and a number of and, and stakeholders to, to essentially merge, uh, the, the two bills. So we didn't have two parallel bills that had to have a coordinating clause. So, uh, Senate Bill 1 22, the second substitute, um, in addition to making some of the clarifications around the Ombudsman Office, um, addresses a number of other items. I've tried to give the, uh, committee a heads up, but let me, let me walk through them so that, uh, we're, uh, on the same page. And I'll just note that, um, just even in, since we, uh, had the bill on the agenda earlier this week and then took it off, um, we've been working closely with, uh, the Community Association Institute to resolve some of the most difficult issues that, uh, um, we were having some challenges with. So let me just walk through what we've, what we've done. Um, we've changed the name of association, um, uh, uh, association. The, the, the, the fee that's paid to the management company at the time that, uh, association is, uh, sorry, the real property is transferred to administrative setup fee. It is a setup fee. That's what's happening. That's at the request of the, uh, uh, uh, community Association Institute for Clarification. And so we've, we've changed that name and provided some clarification there. We've also added a provision that there would be some transparency for the, um, association. Now there'd be some transparency for the, uh, association board. Um, and they would have some insight as to how much, uh, how much had been collected over the, um, uh, period over a course of a year in those administrative setup fees. Um, we made it clear last year that there was, uh, we, we, we passed a bill that, uh, intended to make it clear that regulation of public streets, political signs, and a number of other things, uh, those were prohibited by the, the, the, um, regulation of those things were, was prohibited by HOA, by the HOA, technically, the language said rule. Um, many of us felt like the intent was, uh, uh, clear that it should also inc include the declaration. And so there is a provision that makes sure that, um, those provisions that were excluded by rule, um, not all of them, but most of them were also included, um, that where the de declaration could not, uh, regulate them. Um, one of the really important provisions we found out that udot, um, is in the process of trying to go through, uh, condemnation proceedings. But right now, they can't go through that process unless the entire community votes. And so we worked with UDOT to put in a provision related to, uh, those that have condemnation authority, which would be a, uh, udot. It could be a city, um, it could be a county. But, but the idea is that if there needed to be a negotiation for a governmental entity to make, uh, to make those, uh, appropriate adjustments that they can negotiate with the board. And that, and, and the board could help make those, uh, could make those decisions without having to go to the members or go through a full condemnation proceeding. Um, I'll just note that in an, um, earlier version of the fiscal note, we're still waiting for the final update. Um, UDOT had assigned a positive $25 million fiscal note to that particular provision. It was a tremendous savings, uh, to udot. Um, and then there's a couple of other, uh, minor things here that, um, uh, that we've got that, uh, we, we wanted to make sure that, uh, there was clarity about which provision a code applies the condominium Act or the Community Association Act. And, um, there was a, in some cases, some ambiguity and, and I had to learn this, but technically, the declaration should state which act should apply. Um, but what we also did, but, but in some cases it's noted you, you have to go to the plat to actually know. So we created a process where we said, look, if the, if the declaration is silent, please refer to the plat. If the declaration and the plat are silent, then it would be the Community Association Act. So we know which act to apply in the event that the declaration is silent. Um, so those are the key. Um, uh, those are some of the key elements. We clarified that if there's not a budget, that the, that the last budget that was passed would be the budget until a new budget was, uh, was put in place. Um, but those are, those are the key items that, uh, we addressed, um, in trying to work through this over a number of months. And, um, and I'm, I'm, and I'm, uh, proposing that the committee adopt as a second substitute.

Um, may I ask a question to the maker of the motion? Um, one of the things we got a number of, uh, messages about as committee members rules related to the setup fee. Could you just tell us where all that landed?

Yeah, thank you. So, um, originally, uh, my house Bill 4 0 6 had a limit on the setup fee. The setup fee, uh, this, uh, would've been capped at $200. Um, there was a long discussion about that. Ultimately, that was a really important issue for Community Association Institute. And so, what, uh, we ended up in the bill with, in lieu of the setup fee cap, is a disclosure to the association board for how much money would be collected from members in those setup fees. But no setup, no cap.

Just a follow up question along that line. So, um, the members of the association board will know what that fee is going to be. If someone purchasing, um, a, a unit within that association, will they know upfront what that setup fee's going to be?

So, yes. It's not super simple, but yes. Let me explain. So last year in our bill, um, we passed a provision that says that for any fee to be assessed, it has to be noticed, um, and noticed to the members and adopted by the board. So every HOA that is assessing a fee, which would include this fee, um, has to have a fee schedule, and it has to be, um, adopted by the board and noticed to the members. So, in your disclosures, if you're a seller and you're proposing, uh, you're proposing to sell your property, that's in an HOA, there's a number of things that a buyer would want to know. They'd want to have a copy of the declaration and the bylaws, and they might want the budget and, and the rules. Um, the, the answer to your question is if they obtain a copy of the fee schedule, they'll know all the fees that they might, uh, be subject to as a member of the association. And then does the board have any ability to push back if they think those fees are too high? The technically the board has, is the one that sets those fees. They have to authorize them. So, so, yes, uh, the boards do have the ability to push back. They could say, yes, this is an appropriate fee, or No, it is not an appropriate fee. It's their responsibility to adopt those fees and and to determine if they're appropriate for their association.

Okay. I, I appreciate you, uh, addressing that issue. Um, I was interested in the limit too. We just bought a condo and paid over $3,000 in a transfer fee. Um, so that's an issue. Thank you.

Uh, Representative Walter for summation on your motion. I Appreciate the committee's consideration. I recognize that we've been on the agenda multiple times, Mr. Chair. And, uh, um, we're, I'm grateful that we're able to be here today. I'm grateful for the, um, uh, uh, willingness of, uh, the Good Senator Harper to, uh, allow me to work with him on what I think is an important issue for our, um, homeowners and for our residents. And, uh, appreciate the, uh, diligence and the efforts of Community Association Institute to stay at the, at the table and continue to engage throughout the process. So, Thank you, Mr. Chairman. Thank you, Representative

Thank you, Mr. Speaker. I'd like to move, uh, house Amendment number one in my name. Did I say Mr. Speaker Amendment? Mr. Chair?

Yeah. Um, I saw the, the substitute today and went through, it looked like, um, one of the things that we worked on last year was, um, putting together appropriate guardrails for the ways that, uh, HOAs can regulate certain private property. One of those things was the regulation of basketball standards. And for whatever reason in the substitute that was, that section was not moved and copied into the declaration section. So this just adds that in the declarations that ensure that, uh, an HOA cannot regulate the use of a basketball standard under the exact same provisions that the statute already reads for an HOA rule.

Yeah, I didn't know about that till I came in here. Yes, it has been discussed before, not just in this session, but in others. I think it would be something that the CAI institute probably be, eh, but I think if the ca if the board wants to adopt or the committee wants to adopt it, that can be okay.

For summation, I'll waive submission is waived.

Um, president Ivory Holmes. Also speaking on behalf of the Property Rights Coalition. Um, there is, uh, uh, been a lot of work, um, and appreciate, uh, being at the table. Um, I have the dubious distinction of probably creating about 400 HOAs. So it's great that they are coming to the political subdivisions committee 'cause they're just slightly more petty, uh, local governance, um, than other local governance. Um, but there, there's has been a lot of work. I'm speaking in favor of it because I think that, uh, there's a lot of good clarifying, I don't want to mention the specifically relating to the condemnation language. Um, in, uh, last year there were several HOA bills that came before you. And one of those, uh, was, uh, uh, representative, uh, uh, Wal Brooks that prohibited the sale of common areas and, um, uh, by the declarant. And we did not oppose that. Um, we understood the issues, but then, um, over the summer, we were contacted by our association, and Lehi was contacted by udot wanting to take a section of common area so that they could complete their design of Redwood Road near 2100 North. And because it was common area, and this community has a couple thousand occupied homes, we would've needed this threshold of like 1300 people, not only to respond, but to respond favorably. So we said, you probably ought, the fastest thing would be for you to condemn. And instead of that, they redesigned the Redwood Road. We were tr we wanted to be, uh, uh, accommodating to udot so that they could design it. And it was a traffic thing. Um, so that it's a real thing. Um, and, uh, it, it, uh, we don't think it's gonna be abused. I mean, we're talking about the threat of condemnation from legitimate government entities like udot and cities and so forth. Um, but that, that did come up because of one of ours. Um, and, uh, I, uh, have been involved in the conversations with Representative Walter and, and Senator Harper over the years on these. And, um, I appreciate the, uh, the time that they're putting in.

Representative Walter, I recommend that, uh, I move that we recommend favorably, uh, Senate Bill 1 22. Second substitute is amended Motion is to recommend favorably second substitute Senate Bill 1 22. We'd like to speak to your motion. Uh, I appreciate, uh, the committee's patience. I appreciate the, uh, willing ability to work with the, the Senator. Appreciate the opportunity to work with the, uh, um, industry. It's, it's been challenging to get here, but I appreciate everybody's efforts, uh, to come to this point. So thank

Thank you, Mr. Chair. I want to read the entire, um, the, the, the entire sub. I have not made the time yet to do that, so until then, I will be a no for now.

You, Mr. Chair and committee. Appreciate your time and patience on this. I think we've got something that I, that is better than what either my original bill and Representative Walters were. And my sincere thanks to the CAI and the other people who were involved with this on the negotiations. They were truly stellar in what they did. And I think this bill goes through and creates more clarity for condo and, and homeowner homeowners in the HOAs. So thank you for your support of this bill.

Motion To adjourn Rep Sam Peterson. Motion to adjourn. Motion is to adjourn.

Thank you. Um, I'm not gonna apologize for the fact that I'm bringing a simple HOA bill this year. I don't have all the controversies. The last three years on these, um, we created, very fortunately, the, uh, office of Homeowners Association Ombudsman and our ombudsman in our office are, are present today. Um, there was so much confusion about what was going on. I had people contact me saying, Hey, where's the HOA association rules? Where the HOA Bill of Rights and all this type of stuff, they're in code already. Um, what this bill simply does is provides a little bit more guidance after this office has been up for almost a year, as to things that they need to post, how they need to respond in order to facilitate transparency and make sure that the what is out there, you know, when there's a complaint or something, they're pointed to, you know, what's on the website or what's in code, or they can file for an opinion. And that opinion will be, you know, that that's a paid for service, but those opinions are posted online afterwards, therefore benefiting everybody else. So this just goes through and kind of clarifies some of the, the processes and I believe enhances the office in transparency.

Thank you Madam Chair. I move that we favorably, uh, recommend sb uh, 1 22 to the full body of the Senate.

Thank you. Um, we created a couple years or last year the, uh, office of um, o of uh, HO Ombudsman. Uh, they've had, uh, nearly a year to operate. This bill goes through and clarifies the, uh, information that they collect and how they make it transparent and more available. And, uh, basically it's a, it is a transparency and a posting and a notification bill of how they operate and how they share the information with requesters.

Yes, I'd move that. Uh, Senate Bill 1 22. Be read for a third time.

This bill goes through and clarifies the, uh, some of the duties, the, uh, HOA ombudsman on how they, uh, maintain, release, share, and assist, uh, people in HOA associations who have questions. It's a good transparency Bill and it also, uh, clarifies one fee.

I'd move that, uh, Senate bill 1 22 pass.

Baldry Lewin Aye. Brammer Bus Comore Escamilla Fillmore Grover Harper Aye. Hankins Aye. Ipson Johnson Quan McKay Mikel Milner Musselman Owens Pitcher Plum Rebi Sandal Stevenson Stratton Vickers Weiler Wilson Win Winterton

Second substitute Senate bill 1 22 HOA amendments by Senator Harper. This bill was heard in political subdivisions with the vote. Ten one one. The House sponsors Representative Maloy.

Thank you Mr. Speaker. Pro Tem. Like just like the, uh, last bill and the la last, uh, good colleague. Uh, I've got a very complex bill here, so I'm going to ask that we adopt the third substitute.

Yeah, just briefly. Uh, the, uh, the bill is very, very complex. So we had a lot of people involved in this bill and so there was some need to make some last minute, uh, clarifications just to make sure it was all straight.

Thank you Mr. Speaker ProAm. Uh, what I was saying earlier is, uh, just like the last representative in the last bill, I have a very complex bill here, so I'm gonna rely heavily on my notes, but I'm trying not to read it. Okay. So, uh, SV 1 22 strengthens HOA and condominium governance by improving transparent transparency in the ombudsman's process. It clarifies the advisory opinion procedures, protecting homeowner rights, and clarifies common area authority and establishes a clear annual condo budget process. So the bill, uh, I'm gonna give you a whole list of things that it does, but it makes the Ombudsman advisory opinions public for transparency. It requires publication of plain language, HOA resources and FAQs to better educate homeowners and associations. It clarifies that OMB Ombudsman attorneys do not create an attorney-client relationship with either party requires advisory opinion requests to be filed before court or binding arbitration establishes clear filing standards. Uh, prevents HOAs from requiring binding arbitration before someone may seek an advisory opinion replaces the prior per day civil penalty structure with a capped penalty for proportional enforcement. Clarifies when common areas may be conveyed and general generally requires 67% owner approval allows conven conve convenience of common area under threat of condemnation without individual owner approval and properly authorized. Expands clarity in what HOAs may regulate in driveways. Reinforces limits on what declarations may prohibit requires condominium associations to present an annual budget to members. Budget is budgets need to be ratified unless disapproved within 45 days, and that is pretty much the bill. I did want to address one area of interest to, uh, the good representative from Saratoga Springs who asked me some questions about this bill. If the, uh, administrative setup fee in lines, uh, 99 through 1 0 3 is change, that what those lines do is it changes the old term transfer to, uh, uh, to, uh, it changes from transfer to administration to administration setup fee. And basically it's a clearer, clearer indication of what it really is, which is a setup fee for someone who is entering into a contract in an HOA to, uh, get access to keys and security areas and all the amenities that come with, uh, joining an HOA. So that concludes my presentation.

Motion to circle Motion is to circle.

I would. So there's no physical note right now on the third substitute, so just wanted to wait till we get that in front of us.

Just a a note, if you have a Senate bill and you're substituting, make sure that the fiscal note is approved. House bills doesn't matter 'cause they'll go over to the Senate and they can be held there. Senate bill has to have the fiscal note before we can vote on it.

I'm sorry. I'm good with that.

Yeah, just briefly. Uh, the, uh, the bill is very, very complex. So we had a lot of people involved in this bill and so there was some need to make some last minute, uh, clarifications just to make sure it was all straight.

Thank you Mr. Speaker ProAm. Uh, what I was saying earlier is, uh, just like the last representative in the last bill, I have a very complex bill here, so I'm gonna rely heavily on my notes, but I'm trying not to read it. Okay. So, uh, SV 1 22 strengthens HOA and condominium governance by improving transparent transparency in the ombudsman's process. It clarifies the advisory opinion procedures, protecting homeowner rights, and clarifies common area authority and establishes a clear annual condo budget process. So the bill, uh, I'm gonna give you a whole list of things that it does, but it makes the Ombudsman advisory opinions public for transparency. It requires publication of plain language, HOA resources and FAQs to better educate homeowners and associations. It clarifies that OMB Ombudsman attorneys do not create an attorney-client relationship with either party requires advisory opinion requests to be filed before court or binding arbitration establishes clear filing standards. Uh, prevents HOAs from requiring binding arbitration before someone may seek an advisory opinion replaces the prior per day civil penalty structure with a capped penalty for proportional enforcement. Clarifies when common areas may be conveyed and general generally requires 67% owner approval allows conven conve convenience of common area under threat of condemnation without individual owner approval and properly authorized. Expands clarity in what HOAs may regulate in driveways. Reinforces limits on what declarations may prohibit requires condominium associations to present an annual budget to members. Budget is budgets need to be ratified unless disapproved within 45 days, and that is pretty much the bill. I did want to address one area of interest to, uh, the good representative from Saratoga Springs who asked me some questions about this bill. If the, uh, administrative setup fee in lines, uh, 99 through 1 0 3 is change, that what those lines do is it changes the old term transfer to, uh, uh, to, uh, it changes from transfer to administration to administration setup fee. And basically it's a clearer, clearer indication of what it really is, which is a setup fee for someone who is entering into a contract in an HOA to, uh, get access to keys and security areas and all the amenities that come with, uh, joining an HOA. So that concludes my presentation.

I would. So there's no physical note right now on the third substitute, so just wanted to wait till we get that in front of us.

Just a a note, if you have a Senate bill and you're substituting, make sure that the fiscal note is approved. House bills doesn't matter 'cause they'll go over to the Senate and they can be held there. Senate bill has to have the fiscal note before we can vote on it.

I'm sorry. I'm good with that.

Thank you Mr. Speaker. Sb uh, 1 22, uh, is a big bill. Uh, there's a lot to unpackage in it and I went through all of it, uh, last time. I presented this last week sometime. So I'm just gonna give you the highlights. Uh, it strengthens HOA and Condominium Governance by improving transparency in the ombudsman process. It clarifies advisory opinion procedures, protects homeowner rights and clarifies common area authority and establishes a clear annual condo condo budget process. Is that me doing that? Sorry. I didn't think it was me. Uh, anyway, that concludes my presentation. Mr. Speaker.

Thank you, Mr. Speaker. Uh, appreciate the good sponsor's, uh, work on this particular policy and also the, uh, Senate sponsor. Um, I've worked really hard in this, uh, particular policy issue. Um, I was, uh, very involved in the substitute that was inv, uh, adopted. We spent a lot of time negotiating with, um, uh, both, uh, the HOA, uh, addressing concerns from HOA residents and also, uh, HOA, uh, community Association Institute. Um, this was a heavily negotiated bill and, uh, we got to a really good place where we could protect some of the, uh, uh, property rights, uh, uh, some of the property rights issues that we were concerned about last year. Uh, this bill clarified some of them and added additional protections for homeowners, which, uh, protects quiet enjoyment and property rights for individuals living in a homeowner's association. So appreciate, uh, the body's support for this, this policy today.

Thank you Mr. Speaker. Will the sponsor yield Representative Maloy, will you yield?

Yes. Yes. Yes.

Thank you. Mr. Speaker. I am wondering what types of homeowners association disputes would be referred to the Ombudsman's office and what that process looks like Currently.

Uh, my understanding is, uh, the Ombudsman is available for, uh, just almost any kind of dispute happens in an HOA.

As long as the Questions, As long as the questions don't get harder,

Thank you Mr. Speaker. After my, the last time I spoke on the floor, I'm not interested in hard questions either. Um, I, I guess I'm wondering is would these types of disputes be like if I wanted to put a shed in my backyard or if my grass was too long or if they're more limited in scope to add-ons to my house or what color to paint my garage? I'm just trying to figure out what types of disputes these typically are. And then after an ombudsman makes a decision, what does the enforcement look like?

Uh, Mr. Speaker? Uh, I really didn't think she'd get asked harder questions, but here's my understanding. Uh, those kind of disputes, you'd first probably take 'em to your HOA board to, uh, try and work those out. And if it needs to be escalated, then it could go to the ombudsman. And the ombudsman would also be a place for, uh, people in an HOA to, uh, file complaints if they feel like there's anything going on that it's not fair. Thank you, Mr. Speaker.

Um, if an HOA ignores an ombudsman's ruling, does it go to the court or what would happen after that?

I, I'm not sure I have the answer to that. Great. Thank you. Thank you.

Thank you, uh, Mr. Speaker. It's good, bill.

There was just one little change in there as to the transition on administrative control. When you go from master development to the normal board on an HOA. So the motion is to concur.

Senator Vickers Baldy Lewin Bremmer Bus. Aye. Bill Lamore. Escamia Fillmore Aye. Grover Harper. Aye. Hankins Ipson Johnson. Grover a Johnson Quan McKay Mikel Milner Musman Owens pitcher Aye. Some re sandal Stevenson Stratton Bickers, apparently filer Wilson Winterton Stratton President Adams