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Committee backs HB 86 substitute tightening rules on developer control of HOAs
Summary
The committee unanimously recommended favorably the fifth substitute to House Bill 86, which clarifies declarant control rules for homeowners associations, codifies fiduciary duties, limits use of HOA funds to defend declarants, creates a seven‑year control trigger, and adds an attorney-fees provision for residents.
A Utah legislative committee on Wednesday recommended favorably the fifth substitute to House Bill 86, a measure that revises homeowners association (HOA) statutes to clarify when declarant control ends, strengthen fiduciary requirements, and limit the use of HOA funds in litigation involving the declarant.
Representative Brooks presented the substitute and said the bill narrows ambiguity about the dates and conditions when a declarant is no longer an owner of lots or development rights and when control should transfer away from the declarant. The bill includes language reflecting recent case law to set expectations for courts and homeowners.
Supporters including Mike Austin Miller told the committee the redraft came after stakeholder negotiation and addressed many previous concerns. The substitute adds several enforcement tools: codified fiduciary duties giving homeowners a clearer cause of action; a provision that prevents HOAs from using association funds to defend a declarant sued by residents; an "attorney's-fees kicker" that permits residents who sue to recoup attorney fees; and a seven‑year provision that can trigger transfer of control if the declarant has not made commercially reasonable efforts to sell lots and has not sold any in seven years.
Committee members discussed remaining risks from bad actors and whether the bill fully closes all enforcement gaps; sponsors acknowledged some situations may require further work but said the substitute materially improves homeowners’ legal options. Representative Ward moved that the committee recommend the fifth substitute favorably; the motion passed unanimously.
Why it matters: Committee members and supporters said the bill addresses situations where declarants maintain control after development activity has effectively ended and, in some cases, have used association funds in ways homeowners said benefitted declarants. The bill seeks to provide clearer legal remedies for homeowners and make litigation more feasible by allowing fee recovery.
