Reinvestment Fee Amendments

6
57-1-46
57-8-13.1
57-8a-105
57-1-46
57-8-13.1
57-8a-105
6
Reinvestment Fee Amendments
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Ariel Defay
Senate Sponsor: Kirk A. Cullimore
LONG TITLE
General Description:
This bill amends provisions relating to reinvestment fees in homeowners' associations.
Highlighted Provisions:
This bill:
defines terms;
amends the expenses for which a homeowners' association may use a reinvestment fee;
amends the amount of a reinvestment fee that a homeowners' association may impose;
requires that a homeowners' association deposit 50% of a reinvestment fee into reserve
funds;
provides that when a homeowners' association registers with the Department of
Commerce, the homeowners' association shall state whether or not the homeowners'
association imposes a reinvestment fee or a transfer fee; and
makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
57-1-46
, as last amended by Laws of Utah 2025, Chapter 226
57-8-13.1
, as last amended by Laws of Utah 2025, Chapter 226
57-8a-105
, as last amended by Laws of Utah 2025, Chapter 226
Be it enacted by the Legislature of the state of Utah:
Section 1. Section
57-1-46
is amended to read:
57-1-46
. Transfer fee and reinvestment fee covenants.
(1)
As used in this section:
(a)
"Association expenses" means expenses incurred by a common interest association
for:
(i)
the purchase, ownership, leasing, construction, operation, use, administration,
maintenance, improvement, repair, or replacement of association facilities,
including expenses for taxes, insurance, operating reserves, capital reserves, and
emergency funds;
(ii)
providing, establishing, creating, or managing a facility, activity, service, or
program for the benefit of property owners, tenants, common areas, the burdened
property, or property governed by the common interest association; or
(iii)
other facilities, activities, services, or programs that are required or permitted
under the common interest association's organizational documents.
(b)
"Association facilities" means any real property, improvements on real property, or
personal property owned, leased, constructed, developed, managed, or used by a
common interest association, including common areas.
(c)
"Association transfer fee" means a fee, charge, or payment that is:
(i)
related to the sale of real property; and
(ii)
as a result of a transfer of the real property, is imposed on a buyer or seller by:
(A)
a common interest association; or
(B)
a person acting on behalf of the common interest association.
(d)
"Burdened property" means the real property that is subject to a reinvestment fee
covenant or transfer fee covenant.
(e)
(i)
"Capital-intensive infrastructure maintenance" means maintenance of
infrastructure or facilities that a common interest association owns, operates, or
maintains that:
(A)
have a projected useful life exceeding five years after the day on which
construction on the infrastructure or facilities finishes;
(B)
require periodic replacement, reconstruction, or major rehabilitation; and
(C)
reasonably require advance funding through capital reserves, replacement
reserves, or special assessments.
(ii)
"Capital-intensive infrastructure maintenance" does not include the following
activities done to infrastructure or facilities that a common interest association
owns, operates, or maintains:
(A)
performing routine maintenance;
(B)
landscaping;
(C)
installing signage; or
(D)
installing perimeter fencing.
(e)
(f)
"Common areas" means areas described within:
(i)
the definition of "common areas and facilities" under Section
57-8-3
; and
(ii)
the definition of "common areas" under Section
57-8a-102
.
(f)
(g)
(i)
"Common interest association" means:
(A)
an association, as defined in Section
57-8a-102
;
(B)
an association of unit owners, as defined in Section
57-8-3
; or
(C)
a nonprofit association.
(ii)
"Common interest association" includes a person authorized by an association,
association of unit owners, or nonprofit association.
(g)
(h)
"Large master planned development" means an approved development:
(i)
of at least 500 acres or 500 units; and
(ii)
that includes a commitment to fund, construct, develop, or maintain:
(A)
common infrastructure;
(B)
association facilities;
(C)
community programming;
(D)
resort facilities;
(E)
open space; or
(F)
recreation amenities.
(i)
"Low-amenity association" means a common interest association that:
(i)
is comprised of only detached single-family homes; and
(ii)
does not provide capital intensive infrastructure maintenance services to the
members of the association.
(h)
(j)
"Nonprofit association" means a nonprofit corporation organized under Title 16,
Chapter 6a, Utah Revised Nonprofit Corporation Act, to benefit, enhance, preserve,
govern, manage, or maintain burdened property.
(i)
(k)
"Organizational documents" means:
(i)
for an association, as
that term is
defined in Section
57-8a-102
, governing
documents as
that term is
defined in Section
57-8a-102
;
(ii)
for an association of unit owners, as
that term is
defined in Section
57-8-3
, a
declaration as
that term is
defined in Section
57-8-3
; and
(iii)
for a nonprofit association:
(A)
a written instrument by which the nonprofit association exercises powers or
manages, maintains, or otherwise affects the property under the jurisdiction of
the nonprofit association; and
(B)
articles of incorporation, bylaws, plats, charters, the nonprofit association's
rules, and declarations of covenants, conditions, and restrictions.
(j)
(l)
"Reinvestment fee" means a fee imposed, directly or indirectly, by a common
interest association:
(i)
upon a buyer or seller of real property;
(ii)
upon and as a result of a transfer of the real property; and
(iii)
that is dedicated to benefiting the common areas, including payment for:
(A)
common planning, facilities, and infrastructure;
(B)
obligations arising from an environmental covenant;
(C)
community programming;
(D)
resort facilities;
(E)
open space;
(F)
recreation amenities;
(G)
charitable purposes;
or
(H)
association expenses
.
; or
(I)
capital intensive infrastructure maintenance.
(k)
(m)
"Reinvestment fee covenant" means a covenant, restriction, or agreement that:
(i)
affects real property; and
(ii)
obligates a future buyer or seller of the real property to pay to a common interest
association, upon and as a result of a transfer of the real property, a fee that is
dedicated to benefitting the burdened property, including payment for:
(A)
common planning, facilities, and infrastructure;
(B)
obligations arising from an environmental covenant;
(C)
community programming;
(D)
resort facilities;
(E)
open space;
(F)
recreation amenities;
(G)
charitable purposes;
or
(H)
association expenses
.
; or
(I)
capital intensive infrastructure maintenance.
(n)
"Reserve funds" means:
(i)
for an association, as that term is defined in Section
57-8a-102
, reserve funds as
that term is defined in Section
57-8a-211
; and
(ii)
for an association of unit owners, as that term is defined in Section
57-8-3
,
reserve funds as that term is defined in Section
57-8-7.5
.
(l)
(o)
(i)
"Transfer fee covenant"
:

(i)
means an obligation, however denominated, expressed in a covenant, restriction,
agreement, or other instrument or document:
(A)
that affects real property;
(B)
that is imposed on a future buyer or seller of real property, other than a person
who is a party to the covenant, restriction, agreement, or other instrument or
document; and
(C)
to pay a fee upon and as a result of a transfer of the real property
; and
.
(ii)
"Transfer fee covenant"
does not include:
(A)
an obligation imposed by a court judgment, order, or decree;
(B)
an obligation imposed by the federal government or a state or local
government entity; or
(C)
a reinvestment fee covenant.
(2)
A transfer fee covenant recorded on or after March 16, 2010, is void and unenforceable.
(3)
(a)
Except as provided in Subsection
(3)(b)
, a reinvestment fee covenant may not be
sold, assigned, or conveyed unless the sale, assignment, or conveyance is to a
common interest association that was formed to benefit the burdened property.
(b)
A common interest association may assign or pledge to a lender the right to receive
payment under a reinvestment fee covenant if:
(i)
the assignment or pledge is as collateral for a credit facility; and
(ii)
the lender releases the collateral interest upon payment in full of all amounts that
the common interest association owes to the lender under the credit facility.
(4)
A reinvestment fee covenant recorded on or after March 16, 2010, is not enforceable if
the reinvestment fee covenant is intended to affect property that is the subject of a
previously recorded transfer fee covenant or reinvestment fee covenant.
(5)
A
Unless the burdened property is part of a large master planned development, a

reinvestment fee covenant recorded on or after
March 16, 2010
May 6, 2026
, may not
obligate the payment of a fee that exceeds
:
(a)

.5% of the value of the burdened property
, unless the burdened property is part of
a large master planned development.
if the burdened property is located in a
common interest association that is not a low-amenity association; or
(b)
.25% of the value of the burdened property, if the burdened property is located in a
low-amenity association.
(6)
(a)
A reinvestment fee covenant recorded on or after March 16, 2010, is void and
unenforceable unless a notice of reinvestment fee covenant, separate from the
reinvestment fee covenant, is recorded in the office of the recorder of each county in
which any of the burdened property is located.
(b)
A notice under Subsection
(6)(a)
shall:
(i)
state the name and address of the common interest association to which the fee
under the reinvestment fee covenant is required to be paid;
(ii)
include the notarized signature of the common interest association's authorized
representative;
(iii)
state that the burden of the reinvestment fee covenant is intended to run with the
land and to bind successors in interest and assigns;
(iv)
state that the existence of the reinvestment fee covenant precludes the imposition
of an additional reinvestment fee covenant on the burdened property;
(v)
state the duration of the reinvestment fee covenant;
(vi)
state the purpose of the fee required to be paid under the reinvestment fee
covenant; and
(vii)
state that the fee required to be paid under the reinvestment fee covenant is
required to benefit the burdened property.
(c)
A recorded notice of reinvestment fee covenant that substantially complies with the
requirements of Subsection
(6)(b)
is valid and effective.
(7)
(a)
A reinvestment fee covenant or transfer fee covenant recorded before March 16,
2010, is not enforceable after May 31, 2010, unless:
(i)
a notice that is consistent with the notice described in Subsection
(6)
is recorded in
the office of the recorder of each county in which any of the burdened property is
located; or
(ii)
a notice of reinvestment fee covenant or transfer fee covenant, as described in
Subsection
(7)(b)
, is recorded in the office of the recorder of each county in which
any of the burdened property is located.
(b)
A notice under Subsection
(7)(a)(ii)
shall:
(i)
include the notarized signature of the beneficiary of the reinvestment fee covenant
or transfer fee covenant, or the beneficiary's authorized representative;
(ii)
state the name and current address of the beneficiary under the reinvestment fee
covenant or transfer fee covenant;
(iii)
state that the burden of the reinvestment fee covenant or transfer fee covenant is
intended to run with the land and to bind successors in interest and assigns; and
(iv)
state the duration of the reinvestment fee covenant or transfer fee covenant.
(c)
A recorded notice of reinvestment fee covenant or transfer fee covenant that
substantially complies with the requirements of Subsection
(7)(b)
is valid and
effective.
(d)
A notice under Subsection
(7)(b)
:
(i)
that is recorded after May 31, 2010, is not enforceable; and
(ii)
shall comply with the requirements of Section
57-1-47
.
(e)
An amendment to a notice under Subsection
(7)(b)
recorded after May 31, 2010,
seeking to amend a notice under Subsection
(7)(b)
recorded before May 31, 2010, is
not an enforceable amendment.
(8)
A reinvestment fee covenant recorded on or after March 16, 2010, may not be enforced
upon:
(a)
an involuntary transfer;
(b)
a transfer that results from a court order;
(c)
a bona fide transfer to a family member of the seller within three degrees of
consanguinity who, before the transfer, provides adequate proof of consanguinity;
(d)
a transfer or change of interest due to death, whether provided in a will, trust, or
decree of distribution; or
(e)
the transfer of burdened property by a financial institution, except to the extent that
the reinvestment fee covenant requires the payment of a common interest
association's costs directly related to the transfer of the burdened property, not to
exceed $250.
(9)
An association transfer fee imposed on or after May 7, 2025, is void and unenforceable
unless the association uses the fee only to pay expenses related to the transfer.
(10)
On or after
May 7, 2025
May 6, 2026
, an association may not impose a reinvestment
fee unless:
(a)
imposing the reinvestment fee is authorized in the declaration or a reinvestment fee
covenant;
and
(b)
a majority of voting interests in the association, or a higher percentage if required in
the organizational documents, approves the reinvestment fee
.
; and
(c)
if the association is not a large master planned development, the association deposits
at least 50% of the reinvestment fee into reserve funds.
(11)
After a vote approving the reinvestment fee described in Subsection
(10)(b)
, an
association may set the amount of a reinvestment fee only:
(a)
in accordance with the terms of the declaration or a reinvestment fee covenant; and
(b)
upon providing notice in accordance with Section
57-8a-214
.
(12)
Members of the association may remove or amend a reinvestment fee by holding a
vote at a special meeting:
(a)
called by the members for the purpose of removing or amending the reinvestment
fee; and
(b)
at which:
(i)
at least 51% of the voting interests attend and vote; and
(ii)
a majority of the voting interests that attend vote to remove or amend the
reinvestment fee.
Section 2. Section
57-8-13.1
is amended to read:
57-8-13.1
. Registration with Department of Commerce -- Department
publication of educational materials.
(1)
As used in this section
,
:
(a)
"department"
"Department"
means the Department of Commerce created in Section
13-1-2
.
(b)
"Office" means the Office of the Homeowners' Association Ombudsman created in
Section
13-79-102
.
(2)
No later than 90 days after the recording of a declaration, an association of unit owners
shall register with the department in the manner established by the department.
(3)
The department shall require an association of unit owners registering as required in this
section to provide with each registration:
(a)
the name and address of the association of unit owners;
(b)
the name, address, telephone number, and, if applicable, email address of the
president of the association of unit owners;
(c)
the name and address of each manager or management committee member;
(d)
the name, address, telephone number, and, if the contact person wishes to use email
or facsimile transmission for communicating payoff information, the email address or
facsimile number, as applicable, of a primary contact person who has association
payoff information that a closing agent needs in connection with the closing of a unit
owner's financing, refinancing, or sale of the owner's unit;
and
(e)
a registration fee
set by
that
the department
sets
in accordance with Section
63J-1-504
.
; and
(f)
a statement of whether or not the association of unit owners imposes a reinvestment
fee or a transfer fee in accordance with Section
57-1-46
.
(4)
(a)
An association of unit owners shall annually renew the registration of the
association of unit owners described in Subsection
(2)
.
(b)
The department may impose and set the amount of a renewal registration fee in
accordance with Section
63J-1-504
.
(5)
An association of unit owners that has registered under Subsection
(2)
shall submit to
the department an update to the association of unit owners' registration information, in
the manner established by the department, within 90 days after a change in any of the
information provided under Subsection
(3)
.
(6)
(a)
During any period of noncompliance with the registration requirement described
in Subsection
(2)
or the requirement for an updated registration described in
Subsection
(5)
:
(i)
a lien may not arise under Section
57-8-44
; and
(ii)
an association of unit owners may not enforce an existing lien that arose under
Section
57-8-44
.
(b)
A period of noncompliance with the registration requirement of Subsection
(2)
or
with the updated registration requirement of Subsection
(5)
does not begin until after
the expiration of the 90-day period specified in Subsection
(2)
or (5), respectively.
(c)
An association of unit owners that is not in compliance with the registration
requirement described in Subsection
(2)
may end the period of noncompliance by
registering with the department in the manner established by the department under
Subsection
(2)
.
(d)
An association of unit owners that is not in compliance with the updated registration
requirement described in Subsection
(5)
may end the period of noncompliance by
submitting to the department an updated registration in the manner established by the
department under Subsection
(5)
.
(e)
Except as described in Subsection
(6)(f)
, beginning on the date an association of unit
owners ends a period of noncompliance:
(i)
a lien may arise under Section
57-8-44
for any event that:
(A)
occurred during the period of noncompliance; and
(B)
would have given rise to a lien under Section
57-8-44
had the association of
unit owners been in compliance with the registration requirements described in
this section; and
(ii)
an association of unit owners may enforce a lien described in Subsection
(6)(c)
or
a lien that existed before the period of noncompliance.
(f)
If an owner's unit is conveyed to an independent third party during a period of
noncompliance described in this Subsection
(6)
:
(i)
a lien that arose under Section
57-8-44
before the conveyance of the unit became
final is extinguished when the conveyance of the unit becomes final; and
(ii)
an event that occurred before the conveyance of the unit became final, and that
would have given rise to a lien under Section
57-8-44
had the association of unit
owners been in compliance with the registration requirements of this section, may
not give rise to a lien under Section
57-8-44
if the conveyance of the unit becomes
final before the association of unit owners ends the period of noncompliance.
(7)
The department shall publish educational materials on the department's website
providing, in simple and easy to understand language, a brief overview of state law
governing associations of unit owners, including:
(a)
a description of the rights and responsibilities provided in this chapter to any party
under the jurisdiction of an association of unit owners; and
(b)
instructions regarding how an association of unit owners may be organized and
dismantled in accordance with this chapter.
(8)
On the office's website, the office shall provide a disclaimer that states that a person
may not rely upon the disclosure of a reinvestment fee or transfer fee that an association
of unit owners makes in accordance with Subsection
(3)(f)
when creating a document
associated with the purchase of real property burdened by the reinvestment fee or
transfer fee.
Section 3. Section
57-8a-105
is amended to read:
57-8a-105
. Registration with Department of Commerce -- Department
publication of educational materials.
(1)
As used in this section
,
:
(a)
"department"
"Department"
means the Department of Commerce created in Section
13-1-2
.
(b)
"Office" means the Office of the Homeowners' Association Ombudsman created in
Section
13-79-102
.
(2)
(a)
No later than 90 days after the recording of a declaration of covenants, conditions,
and restrictions establishing an association, the association shall register with the
department in the manner established by the department.
(b)
An association existing under a declaration of covenants, conditions, and restrictions
recorded before May 10, 2011, shall, no later than July 1, 2011, register with the
department in the manner established by the department.
(3)
The department shall require an association registering as required in this section to
provide with each registration:
(a)
the name and address of the association;
(b)
the name, address, telephone number, and, if applicable, email address of the chair of
the association board;
(c)
contact information for the manager;
(d)
the name, address, telephone number, and, if the contact person wishes to use email
or facsimile transmission for communicating payoff information, the email address or
facsimile number, as applicable, of a primary contact person who has association
payoff information that a closing agent needs in connection with the closing of a lot
owner's financing, refinancing, or sale of the owner's lot;
and
(e)
a registration fee
set by
that
the department
sets
in accordance with Section
63J-1-504
.
; and
(f)
a statement of whether or not the association imposes a reinvestment fee or a transfer
fee in accordance with Section
57-1-46
.
(4)
(a)
An association shall annually renew the association's registration described in
Subsection
(2)
.
(b)
The department may impose and set the amount of a renewal registration fee in
accordance with Section
63J-1-504
.
(5)
An association that has registered under Subsection
(2)
shall submit to the department
an update to the association's registration information, in the manner established by the
department, within 90 days after a change in any of the information provided under
Subsection
(3)
.
(6)
(a)
During any period of noncompliance with the registration requirement described
in Subsection
(2)
or the requirement for an updated registration described in
Subsection
(5)
:
(i)
a lien may not arise under Section
57-8a-301
; and
(ii)
an association may not enforce an existing lien that arose under Section
57-8a-301
.
(b)
A period of noncompliance with the registration requirement of Subsection
(2)
or
with the updated registration requirement of Subsection
(5)
does not begin until after
the expiration of the 90-day period specified in Subsection
(2)
or (5), respectively.
(c)
An association that is not in compliance with the registration requirement described
in Subsection
(2)
may end the period of noncompliance by registering with the
department in the manner established by the department under Subsection
(2)
.
(d)
An association that is not in compliance with the updated registration requirement
described in Subsection
(5)
may end the period of noncompliance by submitting to
the department an updated registration in the manner established by the department
under Subsection
(5)
.
(e)
Except as described in Subsection
(6)(f)
, beginning on the date an association ends a
period of noncompliance:
(i)
a lien may arise under Section
57-8a-301
for any event that:
(A)
occurred during the period of noncompliance; and
(B)
would have given rise to a lien under Section
57-8a-301
had the association
been in compliance with the registration requirements described in this section;
and
(ii)
an association may enforce a lien described in this Subsection
(6)(e)
or a lien that
existed before the period of noncompliance.
(f)
If an owner's residential lot is conveyed to an independent third party during a period
of noncompliance described in this Subsection
(6)
:
(i)
a lien that arose under Section
57-8a-301
before the conveyance of the residential
lot became final is extinguished when the conveyance of the residential lot
becomes final; and
(ii)
an event that occurred before the conveyance of the residential lot became final,
and that would have given rise to a lien under Section
57-8a-301
had the
association been in compliance with the registration requirements of this section,
may not give rise to a lien under Section
57-8a-301
if the conveyance of the
residential lot becomes final before the association ends the period of
noncompliance.
(7)
The department shall publish educational materials on the department's website
providing, in simple and easy to understand language, a brief overview of state law
governing associations, including:
(a)
a description of the rights and responsibilities provided in this chapter to any party
under the jurisdiction of an association; and
(b)
instructions regarding how an association may be organized and dismantled in
accordance with this chapter.
(8)
(a)
Unless otherwise expressly exempted, this chapter applies to an association that
registers, or renews or updates the association's registration, with the department
under this section.
(b)
This section applies to an association regardless of when the association is created.
(9)
On the office's website, the office shall provide a disclaimer that states that a person
may not rely upon the disclosure of a reinvestment fee or transfer fee that an association
makes in accordance with Subsection
(3)(f)
when creating a document associated with
the purchase of real property burdened by the reinvestment fee or transfer fee.
Section 4.
Effective Date.
This bill takes effect on
May 6, 2026
.
3-12-26 11:20 AM