Estimated read time: 5-6 minutes
SALT LAKE CITY — One Utah lawmaker wants to establish an ombudsman office to issue advisory opinions for homeowner association disagreements when a dispute arises between the association and its members, while another lawmaker seeks education requirements for HOA board members.
Why is there interest this legislative session?
Some of the members' horror stories are the kind where you sit back, grab a bag of popcorn and find yourself either spitting it out or choking on it in disbelief at the drama you wouldn't expect from an expected idyllic living situation. Your lawn is mowed and snow is shoveled by someone else. There is a community common grounds for children to play and often a swimming pool to cool the heat of summer.
HOAs are intended to erase the stress of residential repairs; a monthly fee helps tamp down those costs. Some Utah residents, however, are finding the dream they signed up for has morphed into a nightmare.
Robert Tee Spjute, a founding partner of Robertson Alger & Spjute, said he has HOAs as clients but also represents residents caught up in an endless onslaught of fees, assessments, collection agencies and litigation.
"I would say that some associations, some that I represent, are actually fantastic at taking care of issues, and the management company is fantastic," Spjute said. "Some that I can think are great, but oftentimes, especially when we get kind of these midsized or even smaller associations, oftentimes the association is paying a management company, right? There are a lot of different management companies, and they're great and others are not so great."
Often, when a member gets in arrears (often due to a fine or fee for a purported broken rule) the HOA board ceases communications with the resident and bounces all communications to a management company, where the amount of money escalates. It then goes to a law firm, where communications can drag on and drag on for months — with costs continuing to compile.
In the case of Lon Galloway, his online portal to pay membership dues was cut off.
His problems started with the HOA in 2016 when he received approval to rent his unit as an Airbnb. He said he was given the OK to proceed because using the unit in that manner was not disallowed. Two years later, he received notice that he needed to evict his tenant. Attached was a $50 fine. Galloway said he would pay it. He did not hear back but evicted the tenant.
About a month later, he received a fine for more than $2,000.
"I feel like during that time, I was just going nowhere. They just dug in their heels and just wouldn't respond. They wouldn't do anything, waiting for that exact moment where they can finally basically fine me for whatever they wanted at that point. And that's exactly what they did," Galloway said. "So they as soon as that 60-day mark hit, they put a lien on my property."
The money he owed began to accumulate, reaching $3,000 and eventually $13,000.
He had to hire an attorney, because even though he was paying the monthly fee in full, he found out half of that was going to a collection company.
He was making payments through an online portal, but that option was shut down for him because he was in arrears.
"So I had a lien for about $1,800, but then less than a month later, I had about $6,000 negative in my account. And then I think a few weeks later than that, I received a letter from a collections law firm saying that they're on collections to demand it double again."
Galloway found an attorney and took it to court. By then, his bill was upward of $30,000. The case remains unresolved.
Galloway and others say what is needed is an HOA property ombudsman to put a break on this runaway train.
Rep. Neil Walter, R-St. George, is running a bill to establish such an office. HB217 would set limits on the amount of fees that can be assessed by a homeowners association. It also would establish and invoke the power of the office to issue an advisory opinion.
Rep. Cheryl Acton is running HB262. The GOP representative from West Jordan wants to establish some minimum education requirements for board members for ethics and leadership, roles as a fiduciary, rule and creation of enforcement, as well conflict resolution and duty to community.
Consider this from IHOA Property Management, especially as it relates to the state's goal of providing more affordable housing:
- There are 3,650 HOAs in Utah.
- 644,000 people in Utah live in HOA communities (about 18.8% of the population).
- The average Utah HOA has 176 residents living in 57 homes.
- For every HOA home in Utah, 3.9 homes are unaffiliated.
- HOA households in Utah average 3.08 residents, and the statewide average is 2.95; HOA households are 4.55% larger.
- The homeownership rate in Utah is 70.3%, down 0.42% since 2020.
In addition according to the U.S. Census Bureau, 84% of new construction of single family homes sold in the United States in 2022 were in an HOA, with reporting from CNBC.
Spjute, the attorney, argues that alternative dispute resolution has been built in as a component to other states that have an office of an HOA ombudsman to avert the financial burdens often inflicted on socially and economic disadvantaged people who end up in HOAs and in trouble. Nevada and some other states have that provision on the books.
Such a measure may have helped St. George resident Rolland Brown, who found himself with leak after leak on the roof of his 30-year-old unit.
He called the HOA board and eventually they sent a roofer out to fix the problem.
Then, seven days later, the fixed roof sprung another leak.
