Don’t Forget That “Opportunity” to Discuss Reserves at Your Annual Meeting!

As many associations are in the process of planning for and having their annual meetings, it’s a good time for a reminder that a new Utah law requires that community associations provide an opportunity at the annual meeting for owners to “discuss reserves and vote on whether to fund a reserve fund…”

As I’ve stated before, every association with common elements should have a report and needs to be setting aside reserves. And this is a decision which should be made by the board, and not the owners.

But, the Utah legislature seems to think the owners should decide, or at least have a say in the matter. The new statute on condominium reserves, Utah Code Ann. 57-8-7.5, requires that:

(6) An association of unit owners shall:

(a) annually, at the annual meeting of unit owners or at a special meeting of unit owners:

(i) present the reserve study; and

(ii) provide an opportunity for unit owners to discuss reserves and to vote on whether to fund a reserve fund and, if so, how to fund it and in what amount;

(b) prepare and keep minutes of each meeting held under Subsection (6)(a) and indicate in the minutes any decision relating to funding a reserve fund.

While the statute isn’t exactly clear, I think you would be in compliance if you have a copy (or maybe a couple of copies) available for review, summarize its recommendations, present the board’s opinion as to funding and intentions, and then ask if there are any questions or motions respecting the study or the board’s recommendation. I think the response will likely be silence. Assuming there is silence, I think the minutes can and should reflect the board’s recommendation, the opportunity for a discussion and vote, and that no motions were made.

Assuming there’s discussion, someone should be prepared to defend the board’s decision, to encourage a vote to approve a motion, to be made on behalf of the board, to ratify the funding as recommended by the board.

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