By Quinn Sperry, Attorney, Morris Sperry

SB183 impacts the future of foreclosures for unpaid assessments in Utah’s homeowners associations, condominium projects, and planned unit developments (collectively referred to herein as an “HOA”).  The initial version of the bill proposed to eliminate an HOA’s ability to conduct a nonjudicial foreclosure for unpaid assessments.  In other words, if SB183’s original language had been adopted then HOAs in Utah wanting to enforce their lien rights against the properties of delinquent owners would have been limited to the judicial foreclosure (lawsuit) process, which is a more expensive process to the HOA and ultimately to the delinquent homeowner since the HOA seeks to recover its fees and expenses for the foreclosure from the homeowner or the owner’s property. However, after members of our Legislative Action Committee spoke with legislators and negotiated with the bill’s sponsor, two substitute versions were introduced with the second substitute being approved by the legislature and signed by Governor Herbert.   

SB183 initially introduces definitions for “judicial foreclosure” and “nonjudicial foreclosure” to Utah’s Condominium Ownership Act, which definitions essentially mirror these defined terms that previously existed in Utah’s Community Association Act.  The more substantive changes are to the form of the “Notice of Nonjudicial Foreclosure and Right to Demand Judicial Foreclosure” (the “Notice”) and its importance on the foreclosure process.  (The language for the revised Notice is set forth below.)  An HOA must now “deliver” the Notice at least 30 days before a notice of default is recorded against the delinquent owner’s property. Previously, the statute only required that the HOA, or its agent, mail the Notice but now the HOA must show that the Notice was delivered.  If the HOA cannot show that the Notice was delivered to the owner, then the HOA may not foreclose on its lien nonjudicially. 

SB183 further states that an HOA may not pursue a nonjudicial foreclosure to enforce its lien against the delinquent owner’s real property until an assessment is at least 180 days delinquent or if the HOA is seeking to recover any fine as part of the lien. These are two significant changes. 

First, many HOAs may now need to wait longer before commencing the nonjudicial foreclosure process because they have been starting the process once an account became 120 or 150 days delinquent. An HOA may still record a notice of lien or pursue other actions prior to the 180-day mark, but an assessment that makes up part of the lien must be at least 180 days past due before a notice of default may be recorded against the delinquent owner’s real property. 

Second, HOAs are now required to pursue judicial means to recover fines. When fines have been levied against a delinquent owner and the requisite amount of time required by statute has expired so that the fines are included in the lien amount, the HOA’s governing body will need to decide whether to (i)  pursue the lien amount exclusive of the fines through a nonjudicial foreclosure process and pursue the fine separately in a judicial process, or (ii) pursue the entire lien amount, including the fines, through the judicial foreclosure process.

The revised Notice requires that the owner be notified that the HOA is precluded from pursuing a nonjudicial foreclosure process to recover fines that the HOA levied, but it also informs the owner that if a judicial foreclosure is demanded then the HOA may include a claim for the unpaid fines in the lawsuit. In addition, the Notice now provides an owner 30 days, rather than 15 days, to notify the HOA that the owner is demanding a judicial foreclosure process in lieu of the nonjudicial foreclosure process. 

The full language of the revised Notice for a condominium project is below.  The underlined language is the new language added to the Notice by SB183 and the language with the line through it, or “strikethrough,” is the deleted language.  The bracketed language is what would be included in the Notice for a non-condominium project.


The (insert the name of the association of unit owners), the association for the project in
which your unit [lot] is located, intends to foreclose upon your unit [lot] and allocated interest in the common areas and facilities for delinquent assessments using a procedure that will not require it to file a lawsuit or involve a court. This procedure is governed by Utah Code, Sections
57-8-46 and 57-8-47 [57-8a-303 and 57-8a-304], and is being followed in order to enforce the association’s lien against your unit [lot] and to collect the amount of an unpaid assessment against your unit [lot], together with any applicable late fees and the costs, including attorney fees, associated with the foreclosure proceeding. This procedure cannot and will not be used to foreclose upon your unit [lot] for delinquent fines for a violation of the association of unit owners’ [association’s] governing documents. Alternatively, you have the right to demand that a foreclosure of your property for delinquent assessments be conducted in a lawsuit with the oversight of a judge. If you make this demand, the association of unit owners [association] may also include a claim for delinquent fines for a violation of the association of unit owners’ [association’s] governing documents. Additionally, if you make this demand
and the association prevails in the lawsuit, the costs and attorney fees associated with the lawsuit will likely be significantly higher than if a lawsuit were not required, and you may be
responsible for paying those costs and attorney fees. If you want to make this demand, you
must state in writing that “I demand a judicial foreclosure proceeding upon my unit [lot],” or words substantially to that effect. You must send this written demand by first class and certified U.S. mail, return receipt requested, within [15] 30 days after the [date of the postmark on the
envelope in which] day on which this notice was [mailed] delivered to you. The address to

which you must mail your demand is (insert the address of the association of unit owners for
receipt of a demand).