The Utah Legislature introduced a bill (H.B. 157) that will create unreasonable challenges for homeowners associations and condominiums to bring legitimate legal action against a developer for any reason; including, construction deficiencies.
The bill is a special interest bill that could strip homeowners of their rights to justice. The bill passed the House Business and Labor Committee, but not without concerns being expressed by some committee members. The bill, however, is headed to the full House of Representatives for a vote.
We need your help! Please contact your legislator TODAY and urge them to:
Please send this to others who may be impacted by this bad legislation and encourage them to contact their legislator.
If this bill passes, an association will be unreasonably shackled when trying to file a legitimate lawsuit against a developer and his unidentified agents.
An association may not bring a legal action against a developer or his agents, (whoever that is) unless all of these requirements are met:
1. The legal action is approved, by written vote, by more than 51% of the owners in the community. The Non-Profit Act already sets the standard for business of the members at a majority vote of those present in person, by proxy or by ballot once a quorum is established. The only exceptions to this are where an HOA is amending its Governing Documents (constitution) and selling off property (because an HOA is not selling property in the ordinary course of business). Perhaps there may be room to compromise by setting a quorum requirement at 51% and then a majority vote of that heightened quorum requirement. In its current form, this kind of vote is unreasonable and unprecedented.
2. Imposes an assessment on all owners of 10% of the estimated cost, including experts, etc., of resolving the legal action, estimated by an attorney. (The HOA is already strapped with having to make repairs to mitigate damages. Why is the victim, not the perpetrator of the problem, required to establish a trust fund?).
3. Provides each resident with written notice of the contemplated legal action and a legal opinion related to the legal action regarding the likelihood of success, the estimated cost of the legal action and a written assessment of the likely impact of the unit owners ability to obtain financing. This type of opinion letter impinges on the confidential nature of client communications (the attorney/client privilege) and will be provided to the defendant developer. This intentional violation of the attorney/client privilege is unacceptable.
4. The association first must give a reasonable time to cure. What is that reasonable time – 6 months, 1 year, etc? To what standard must the repair be made to? Must the HOA accept a subpar repair? Must the cure be to building codes and standards in the industry? What if the association believes the developer cure was insufficient to correct the problem – can the association still bring a claim? The unintended consequences of this overly simplified restriction are unacceptable!
5. What happens to the statute of limitations/repose during this period before an association can bring suit? We were told this substitute bill would include a staying of the statute of limitations/repose, it does not. This may kill a claim simply because the above hurdles cannot be met prior to the running of the period of limitations.
6. The CAI-LAC has always vetted proposed legislation for months, if not years, in advance of introduction as a bill with realtors, developers, contractors and others. More vetting is needed on this bill that substantially limits an association's access to the courts.
7. Does a developer owning lots or units get to self-servingly vote against bringing suit? This should be a simple NO, but the bill does not address this glaring conflict.
8. The bill protects undisclosed agents! Who is that? Agency is typically determined by the courts on a fact-by-fact, case-by-case, basis. An association will have no way of knowing who may or may not fall under the umbrella of "agency" without being forced to also litigate this agency issue, all before it can bring a claim against the agent.
Thank you for your support.