HB 306

Enrolled Copy  H.B. 306
1Reinvestment Fee Amendments
                                      2026 GENERAL SESSION
                                           STATE OF UTAH
                                     Chief Sponsor: Ariel Defay
                                 Senate Sponsor: Kirk A. Cullimore
2
3  LONG TITLE
4  General Description:
5      This bill amends provisions relating to reinvestment fees in homeowners' associations.
6  Highlighted Provisions:
7      This bill:
8      ▸ defines terms;
9      ▸ amends the expenses for which a homeowners' association may use a reinvestment fee;
10      ▸ amends the amount of a reinvestment fee that a homeowners' association may impose;
11      ▸ requires that a homeowners' association deposit 50% of a reinvestment fee into reserve
12  funds;
13      ▸ provides that when a homeowners' association registers with the Department of
14  Commerce, the homeowners' association shall state whether or not the homeowners'
15  association imposes a reinvestment fee or a transfer fee; and
16      ▸ makes technical changes.
17  Money Appropriated in this Bill:
18      None
19  Other Special Clauses:
20      None
21  Utah Code Sections Affected:
22  AMENDS:
23      57-1-46, as last amended by Laws of Utah 2025, Chapter 226
24      57-8-13.1, as last amended by Laws of Utah 2025, Chapter 226
25      57-8a-105, as last amended by Laws of Utah 2025, Chapter 226
26
27  Be it enacted by the Legislature of the state of Utah:
H.B. 306  Enrolled Copy
28Section 1. Section 57-1-46 is amended to read:
2957-1-46 . Transfer fee and reinvestment fee covenants.
30   (1) As used in this section:
31(a) "Association expenses" means expenses incurred by a common interest association
32for:
33(i) the purchase, ownership, leasing, construction, operation, use, administration,
34maintenance, improvement, repair, or replacement of association facilities,
35including expenses for taxes, insurance, operating reserves, capital reserves, and
36emergency funds;
37(ii) providing, establishing, creating, or managing a facility, activity, service, or
38program for the benefit of property owners, tenants, common areas, the burdened
39property, or property governed by the common interest association; or
40(iii) other facilities, activities, services, or programs that are required or permitted
41under the common interest association's organizational documents.
42(b) "Association facilities" means any real property, improvements on real property, or
43personal property owned, leased, constructed, developed, managed, or used by a
44common interest association, including common areas.
45(c) "Association transfer fee" means a fee, charge, or payment that is:
46(i) related to the sale of real property; and
47(ii) as a result of a transfer of the real property, is imposed on a buyer or seller by:
48(A) a common interest association; or
49(B) a person acting on behalf of the common interest association.
50(d) "Burdened property" means the real property that is subject to a reinvestment fee
51covenant or transfer fee covenant.
52(e)(i) "Capital-intensive infrastructure maintenance" means maintenance of
53infrastructure or facilities that a common interest association owns, operates, or
54maintains that:
55(A) have a projected useful life exceeding five years after the day on which
56construction on the infrastructure or facilities finishes;
57(B) require periodic replacement, reconstruction, or major rehabilitation; and
58(C) reasonably require advance funding through capital reserves, replacement
59reserves, or special assessments.
60(ii) "Capital-intensive infrastructure maintenance" does not include the following
61activities done to infrastructure or facilities that a common interest association
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62owns, operates, or maintains:
63(A) performing routine maintenance;
64(B) landscaping;
65(C) installing signage; or
66(D) installing perimeter fencing.
67      [(e)] (f) "Common areas" means areas described within:
68(i) the definition of "common areas and facilities" under Section 57-8-3; and
69(ii) the definition of "common areas" under Section 57-8a-102.
70      [(f)] (g)(i) "Common interest association" means:
71(A) an association, as defined in Section 57-8a-102;
72(B) an association of unit owners, as defined in Section 57-8-3; or
73(C) a nonprofit association.
74(ii) "Common interest association" includes a person authorized by an association,
75association of unit owners, or nonprofit association.
76      [(g)] (h) "Large master planned development" means an approved development:
77(i) of at least 500 acres or 500 units; and
78(ii) that includes a commitment to fund, construct, develop, or maintain:
79(A) common infrastructure;
80(B) association facilities;
81(C) community programming;
82(D) resort facilities;
83(E) open space; or
84(F) recreation amenities.
85      (i) "Low-amenity association" means a common interest association that:
86(i) is comprised of only detached single-family homes; and
87(ii) does not provide capital intensive infrastructure maintenance services to the
88members of the association.
89      [(h)] (j) "Nonprofit association" means a nonprofit corporation organized under Title 16,
90Chapter 6a, Utah Revised Nonprofit Corporation Act, to benefit, enhance, preserve,
91govern, manage, or maintain burdened property.
92      [(i)] (k) "Organizational documents" means:
93(i) for an association, as that term is defined in Section 57-8a-102, governing
94documents as that term is defined in Section 57-8a-102;
95(ii) for an association of unit owners, as that term is defined in Section 57-8-3, a
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96declaration as that term is defined in Section 57-8-3; and
97(iii) for a nonprofit association:
98(A) a written instrument by which the nonprofit association exercises powers or
99manages, maintains, or otherwise affects the property under the jurisdiction of
100the nonprofit association; and
101(B) articles of incorporation, bylaws, plats, charters, the nonprofit association's
102rules, and declarations of covenants, conditions, and restrictions.
103      [(j)] (l) "Reinvestment fee" means a fee imposed, directly or indirectly, by a common
104interest association:
105(i) upon a buyer or seller of real property;
106(ii) upon and as a result of a transfer of the real property; and
107(iii) that is dedicated to benefiting the common areas, including payment for:
108(A) common planning, facilities, and infrastructure;
109(B) obligations arising from an environmental covenant;
110(C) community programming;
111(D) resort facilities;
112(E) open space;
113(F) recreation amenities;
114(G) charitable purposes;[ or]
115(H) association expenses[.] ; or
116(I) capital intensive infrastructure maintenance.
117      [(k)] (m) "Reinvestment fee covenant" means a covenant, restriction, or agreement that:
118(i) affects real property; and
119(ii) obligates a future buyer or seller of the real property to pay to a common interest
120association, upon and as a result of a transfer of the real property, a fee that is
121dedicated to benefitting the burdened property, including payment for:
122(A) common planning, facilities, and infrastructure;
123(B) obligations arising from an environmental covenant;
124(C) community programming;
125(D) resort facilities;
126(E) open space;
127(F) recreation amenities;
128(G) charitable purposes;[ or]
129(H) association expenses[.] ; or
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130(I) capital intensive infrastructure maintenance.
131      (n) "Reserve funds" means:
132(i) for an association, as that term is defined in Section 57-8a-102, reserve funds as
133that term is defined in Section 57-8a-211; and
134(ii) for an association of unit owners, as that term is defined in Section 57-8-3,
135reserve funds as that term is defined in Section 57-8-7.5.
136      [(l)] (o)(i) "Transfer fee covenant"[:]
137[(i)] means an obligation, however denominated, expressed in a covenant, restriction,
138agreement, or other instrument or document:
139(A) that affects real property;
140(B) that is imposed on a future buyer or seller of real property, other than a person
141who is a party to the covenant, restriction, agreement, or other instrument or
142document; and
143(C) to pay a fee upon and as a result of a transfer of the real property[; and] .
144(ii) "Transfer fee covenant" does not include:
145(A) an obligation imposed by a court judgment, order, or decree;
146(B) an obligation imposed by the federal government or a state or local
147government entity; or
148(C) a reinvestment fee covenant.
149  (2) A transfer fee covenant recorded on or after March 16, 2010, is void and unenforceable.
150  (3)(a) Except as provided in Subsection (3)(b), a reinvestment fee covenant may not be
151      sold, assigned, or conveyed unless the sale, assignment, or conveyance is to a
152      common interest association that was formed to benefit the burdened property.
153      (b) A common interest association may assign or pledge to a lender the right to receive
154payment under a reinvestment fee covenant if:
155(i) the assignment or pledge is as collateral for a credit facility; and
156(ii) the lender releases the collateral interest upon payment in full of all amounts that
157the common interest association owes to the lender under the credit facility.
158  (4) A reinvestment fee covenant recorded on or after March 16, 2010, is not enforceable if
159      the reinvestment fee covenant is intended to affect property that is the subject of a
160      previously recorded transfer fee covenant or reinvestment fee covenant.
161  (5) [A] Unless the burdened property is part of a large master planned development, a
162      reinvestment fee covenant recorded on or after [March 16, 2010] May 6, 2026, may not
163      obligate the payment of a fee that exceeds:
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164(a) [ ].5% of the value of the burdened property[, unless the burdened property is part of
165a large master planned development.] if the burdened property is located in a
166common interest association that is not a low-amenity association; or
167(b) .25% of the value of the burdened property, if the burdened property is located in a
168low-amenity association.
169   (6)(a) A reinvestment fee covenant recorded on or after March 16, 2010, is void and
170unenforceable unless a notice of reinvestment fee covenant, separate from the
171reinvestment fee covenant, is recorded in the office of the recorder of each county in
172which any of the burdened property is located.
173(b) A notice under Subsection (6)(a) shall:
174(i) state the name and address of the common interest association to which the fee
175under the reinvestment fee covenant is required to be paid;
176(ii) include the notarized signature of the common interest association's authorized
177representative;
178(iii) state that the burden of the reinvestment fee covenant is intended to run with the
179land and to bind successors in interest and assigns;
180(iv) state that the existence of the reinvestment fee covenant precludes the imposition
181of an additional reinvestment fee covenant on the burdened property;
182(v) state the duration of the reinvestment fee covenant;
183(vi) state the purpose of the fee required to be paid under the reinvestment fee
184covenant; and
185(vii) state that the fee required to be paid under the reinvestment fee covenant is
186required to benefit the burdened property.
187(c) A recorded notice of reinvestment fee covenant that substantially complies with the
188requirements of Subsection (6)(b) is valid and effective.
189   (7)(a) A reinvestment fee covenant or transfer fee covenant recorded before March 16,
1902010, is not enforceable after May 31, 2010, unless:
191(i) a notice that is consistent with the notice described in Subsection (6) is recorded in
192the office of the recorder of each county in which any of the burdened property is
193located; or
194(ii) a notice of reinvestment fee covenant or transfer fee covenant, as described in
195Subsection (7)(b), is recorded in the office of the recorder of each county in which
196any of the burdened property is located.
197(b) A notice under Subsection (7)(a)(ii) shall:
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198(i) include the notarized signature of the beneficiary of the reinvestment fee covenant
199or transfer fee covenant, or the beneficiary's authorized representative;
200(ii) state the name and current address of the beneficiary under the reinvestment fee
201covenant or transfer fee covenant;
202(iii) state that the burden of the reinvestment fee covenant or transfer fee covenant is
203intended to run with the land and to bind successors in interest and assigns; and
204(iv) state the duration of the reinvestment fee covenant or transfer fee covenant.
205      (c) A recorded notice of reinvestment fee covenant or transfer fee covenant that
206substantially complies with the requirements of Subsection (7)(b) is valid and
207effective.
208      (d) A notice under Subsection (7)(b):
209(i) that is recorded after May 31, 2010, is not enforceable; and
210(ii) shall comply with the requirements of Section 57-1-47.
211      (e) An amendment to a notice under Subsection (7)(b) recorded after May 31, 2010,
212seeking to amend a notice under Subsection (7)(b) recorded before May 31, 2010, is
213not an enforceable amendment.
214  (8) A reinvestment fee covenant recorded on or after March 16, 2010, may not be enforced
215      upon:
216      (a) an involuntary transfer;
217      (b) a transfer that results from a court order;
218      (c) a bona fide transfer to a family member of the seller within three degrees of
219consanguinity who, before the transfer, provides adequate proof of consanguinity;
220      (d) a transfer or change of interest due to death, whether provided in a will, trust, or
221decree of distribution; or
222      (e) the transfer of burdened property by a financial institution, except to the extent that
223the reinvestment fee covenant requires the payment of a common interest
224association's costs directly related to the transfer of the burdened property, not to
225exceed $250.
226  (9) An association transfer fee imposed on or after May 7, 2025, is void and unenforceable
227      unless the association uses the fee only to pay expenses related to the transfer.
228  (10) On or after [May 7, 2025] May 6, 2026, an association may not impose a reinvestment
229      fee unless:
230      (a) imposing the reinvestment fee is authorized in the declaration or a reinvestment fee
231covenant;[ and]
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232(b) a majority of voting interests in the association, or a higher percentage if required in
233the organizational documents, approves the reinvestment fee[.] ; and
234(c) if the association is not a large master planned development, the association deposits
235at least 50% of the reinvestment fee into reserve funds.
236   (11) After a vote approving the reinvestment fee described in Subsection (10)(b), an
237association may set the amount of a reinvestment fee only:
238(a) in accordance with the terms of the declaration or a reinvestment fee covenant; and
239(b) upon providing notice in accordance with Section 57-8a-214.
240   (12) Members of the association may remove or amend a reinvestment fee by holding a
241vote at a special meeting:
242(a) called by the members for the purpose of removing or amending the reinvestment
243fee; and
244(b) at which:
245(i) at least 51% of the voting interests attend and vote; and
246(ii) a majority of the voting interests that attend vote to remove or amend the
247reinvestment fee.
248Section 2. Section 57-8-13.1 is amended to read:
24957-8-13.1 . Registration with Department of Commerce -- Department
250   publication of educational materials.
251   (1) As used in this section[,] :
252(a) [ "department"] "Department" means the Department of Commerce created in Section
25313-1-2.
254(b) "Office" means the Office of the Homeowners' Association Ombudsman created in
255Section 13-79-102.
256   (2) No later than 90 days after the recording of a declaration, an association of unit owners
257shall register with the department in the manner established by the department.
258   (3) The department shall require an association of unit owners registering as required in this
259section to provide with each registration:
260(a) the name and address of the association of unit owners;
261(b) the name, address, telephone number, and, if applicable, email address of the
262president of the association of unit owners;
263(c) the name and address of each manager or management committee member;
264(d) the name, address, telephone number, and, if the contact person wishes to use email
265or facsimile transmission for communicating payoff information, the email address or
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266facsimile number, as applicable, of a primary contact person who has association
267payoff information that a closing agent needs in connection with the closing of a unit
268owner's financing, refinancing, or sale of the owner's unit;[ and]
269      (e) a registration fee [set by ] that the department sets in accordance with Section
27063J-1-504[.] ; and
271      (f) a statement of whether or not the association of unit owners imposes a reinvestment
272fee or a transfer fee in accordance with Section 57-1-46.
273  (4)(a) An association of unit owners shall annually renew the registration of the
274      association of unit owners described in Subsection (2).
275      (b) The department may impose and set the amount of a renewal registration fee in
276accordance with Section 63J-1-504.
277  (5) An association of unit owners that has registered under Subsection (2) shall submit to
278      the department an update to the association of unit owners' registration information, in
279      the manner established by the department, within 90 days after a change in any of the
280      information provided under Subsection (3).
281  (6)(a) During any period of noncompliance with the registration requirement described
282      in Subsection (2) or the requirement for an updated registration described in
283      Subsection (5):
284(i) a lien may not arise under Section 57-8-44; and
285(ii) an association of unit owners may not enforce an existing lien that arose under
286Section 57-8-44.
287      (b) A period of noncompliance with the registration requirement of Subsection (2) or
288with the updated registration requirement of Subsection (5) does not begin until after
289the expiration of the 90-day period specified in Subsection (2) or (5), respectively.
290      (c) An association of unit owners that is not in compliance with the registration
291requirement described in Subsection (2) may end the period of noncompliance by
292registering with the department in the manner established by the department under
293Subsection (2).
294      (d) An association of unit owners that is not in compliance with the updated registration
295requirement described in Subsection (5) may end the period of noncompliance by
296submitting to the department an updated registration in the manner established by the
297department under Subsection (5).
298      (e) Except as described in Subsection (6)(f), beginning on the date an association of unit
299owners ends a period of noncompliance:
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300(i) a lien may arise under Section 57-8-44 for any event that:
301(A) occurred during the period of noncompliance; and
302(B) would have given rise to a lien under Section 57-8-44 had the association of
303unit owners been in compliance with the registration requirements described in
304this section; and
305(ii) an association of unit owners may enforce a lien described in Subsection (6)(c) or
306a lien that existed before the period of noncompliance.
307(f) If an owner's unit is conveyed to an independent third party during a period of
308noncompliance described in this Subsection (6):
309(i) a lien that arose under Section 57-8-44 before the conveyance of the unit became
310final is extinguished when the conveyance of the unit becomes final; and
311(ii) an event that occurred before the conveyance of the unit became final, and that
312would have given rise to a lien under Section 57-8-44 had the association of unit
313owners been in compliance with the registration requirements of this section, may
314not give rise to a lien under Section 57-8-44 if the conveyance of the unit becomes
315final before the association of unit owners ends the period of noncompliance.
316   (7) The department shall publish educational materials on the department's website
317providing, in simple and easy to understand language, a brief overview of state law
318governing associations of unit owners, including:
319(a) a description of the rights and responsibilities provided in this chapter to any party
320under the jurisdiction of an association of unit owners; and
321(b) instructions regarding how an association of unit owners may be organized and
322dismantled in accordance with this chapter.
323   (8) On the office's website, the office shall provide a disclaimer that states that a person
324may not rely upon the disclosure of a reinvestment fee or transfer fee that an association
325of unit owners makes in accordance with Subsection (3)(f) when creating a document
326associated with the purchase of real property burdened by the reinvestment fee or
327transfer fee.
328Section 3. Section 57-8a-105 is amended to read:
32957-8a-105 . Registration with Department of Commerce -- Department
330   publication of educational materials.
331   (1) As used in this section[,] :
332(a) [ "department"] "Department" means the Department of Commerce created in Section
33313-1-2.
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334      (b) "Office" means the Office of the Homeowners' Association Ombudsman created in
335Section 13-79-102.
336  (2)(a) No later than 90 days after the recording of a declaration of covenants, conditions,
337      and restrictions establishing an association, the association shall register with the
338      department in the manner established by the department.
339      (b) An association existing under a declaration of covenants, conditions, and restrictions
340recorded before May 10, 2011, shall, no later than July 1, 2011, register with the
341department in the manner established by the department.
342  (3) The department shall require an association registering as required in this section to
343      provide with each registration:
344      (a) the name and address of the association;
345      (b) the name, address, telephone number, and, if applicable, email address of the chair of
346the association board;
347      (c) contact information for the manager;
348      (d) the name, address, telephone number, and, if the contact person wishes to use email
349or facsimile transmission for communicating payoff information, the email address or
350facsimile number, as applicable, of a primary contact person who has association
351payoff information that a closing agent needs in connection with the closing of a lot
352owner's financing, refinancing, or sale of the owner's lot;[ and]
353      (e) a registration fee [set by] that the department sets in accordance with Section
35463J-1-504[.] ; and
355      (f) a statement of whether or not the association imposes a reinvestment fee or a transfer
356fee in accordance with Section 57-1-46.
357  (4)(a) An association shall annually renew the association's registration described in
358      Subsection (2).
359      (b) The department may impose and set the amount of a renewal registration fee in
360accordance with Section 63J-1-504.
361  (5) An association that has registered under Subsection (2) shall submit to the department
362      an update to the association's registration information, in the manner established by the
363      department, within 90 days after a change in any of the information provided under
364      Subsection (3).
365  (6)(a) During any period of noncompliance with the registration requirement described
366      in Subsection (2) or the requirement for an updated registration described in
367      Subsection (5):
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368(i) a lien may not arise under Section 57-8a-301; and
369(ii) an association may not enforce an existing lien that arose under Section 57-8a-301.
370(b) A period of noncompliance with the registration requirement of Subsection (2) or
371with the updated registration requirement of Subsection (5) does not begin until after
372the expiration of the 90-day period specified in Subsection (2) or (5), respectively.
373(c) An association that is not in compliance with the registration requirement described
374in Subsection (2) may end the period of noncompliance by registering with the
375department in the manner established by the department under Subsection (2).
376(d) An association that is not in compliance with the updated registration requirement
377described in Subsection (5) may end the period of noncompliance by submitting to
378the department an updated registration in the manner established by the department
379under Subsection (5).
380(e) Except as described in Subsection (6)(f), beginning on the date an association ends a
381period of noncompliance:
382(i) a lien may arise under Section 57-8a-301 for any event that:
383(A) occurred during the period of noncompliance; and
384(B) would have given rise to a lien under Section 57-8a-301 had the association
385been in compliance with the registration requirements described in this section;
386and
387(ii) an association may enforce a lien described in this Subsection (6)(e) or a lien that
388existed before the period of noncompliance.
389(f) If an owner's residential lot is conveyed to an independent third party during a period
390of noncompliance described in this Subsection (6):
391(i) a lien that arose under Section 57-8a-301 before the conveyance of the residential
392lot became final is extinguished when the conveyance of the residential lot
393becomes final; and
394(ii) an event that occurred before the conveyance of the residential lot became final,
395and that would have given rise to a lien under Section 57-8a-301 had the
396association been in compliance with the registration requirements of this section,
397may not give rise to a lien under Section 57-8a-301 if the conveyance of the
398residential lot becomes final before the association ends the period of
399noncompliance.
400   (7) The department shall publish educational materials on the department's website
401providing, in simple and easy to understand language, a brief overview of state law
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402      governing associations, including:
403      (a) a description of the rights and responsibilities provided in this chapter to any party
404under the jurisdiction of an association; and
405      (b) instructions regarding how an association may be organized and dismantled in
406accordance with this chapter.
407  (8)(a) Unless otherwise expressly exempted, this chapter applies to an association that
408      registers, or renews or updates the association's registration, with the department
409      under this section.
410      (b) This section applies to an association regardless of when the association is created.
411  (9) On the office's website, the office shall provide a disclaimer that states that a person
412      may not rely upon the disclosure of a reinvestment fee or transfer fee that an association
413      makes in accordance with Subsection (3)(f) when creating a document associated with
414      the purchase of real property burdened by the reinvestment fee or transfer fee.
415Section 4. Effective Date.
416  This bill takes effect on May 6, 2026.
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