Salt Lake City, UT asked in Real Estate Law for Utah

Q: In Utah, does an HOA legally have to follow a reserve study?

My HOA claims that we need to double our monthly dues to match the reserve study we just had completed, and when questioned with why it needs to happen so fast, as opposed to a more gradual change, we are only told it's the law with no further answers. I attempted to look up the law, and due to my lack of knowledge on legal jargon I couldn't find a clear answer. The HOA has not voted on this.

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1 Lawyer Answer
Lincoln W. Hobbs
Lincoln W. Hobbs
  • Salt Lake City, UT
  • Licensed in Utah

A: There's no easy answer to this question. Association Boards have discretion to determine a reasonable reserve policy. Although it depends upon what the Association's governing documents say, it is usually the Board's right and duty to determine how reserves should be funded. Your association should discuss the amount and level of reserve funding at the Association's annual meeting, and should listen to Owners' input, but if your Association has inadequate reserves, the Board would be acting reasonably to aggressively increase the dues significantly. That is a much better option than to face the need for a special assessment.

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