Under present law, except as provided in the declaration, the bylaws, or other provisions of law, the board of directors for a unit owners' association may act in all instances on behalf of the association. In the performance of their duties, the officers and members of the board of directors are required to exercise the following:
(1) If appointed by the declarant, the care required of fiduciaries of the unit owners; or
(2) If elected by the unit owners, ordinary and reasonable care.
RESERVE STUDIES
This bill requires a board of directors that has not had a reserve study conducted on or after January 1, 2023, to have such a study conducted on or before January 1, 2024. This bill defines a "reserve study" as an analysis by one or more independent engineering, architectural, or construction contractors or another qualified person, performed or updated within the last five years, of the remaining useful life and the estimated cost to replace each separate system and component of common elements, the purpose of which is to inform association members and the board of the amount that should be maintained from year to year in a fully funded repair and replacement reserve to minimize the need for a special assessment.
This bill requires the study to be updated every five years for purposes of assessing the condition of and planning for repair and maintenance of the common elements critical to structural integrity and safety, including the following:
(1) The roof;
(2) Load-bearing walls or other primary structural members;
(3) The floor;
(4) The foundation;
(5) Fireproofing and fire protection systems;
(6) Plumbing;
(7) Electrical systems;
(8) Waterproofing and exterior painting;
(9) A balcony;
(10) An elevator; or
(11) Another item with a deferred maintenance expense or replacement cost that exceeds $10,000, and for which the failure to replace or maintain the item negatively affects another listed item, as determined by an independent engineering, architectural, or construction contractor, or another qualified person, performing the visual inspection portion of a reserve study.
ON APRIL 3, 2023, THE SENATE ADOPTED AMENDMENT #1 AND PASSED SENATE BILL 863, AS AMENDED.
AMENDMENT #1 redefines, for purposes of this bill, "reserve study" to mean an analysis, prepared in conformity with the latest edition of the Reserve Study Standards published by the Community Associations Institute, or similar standards by another nationally recognized organization, by a reserve specialist who is credentialed through the Community Associations Institute or a similarly recognized organization, or a licensed engineer or architect, performed or updated within the last five years, of the remaining useful life and the estimated cost to replace each separate system and component of the common elements, the purpose of which is to inform association members and the association's board of the amount that should be maintained from year to year in a fully funded repair and replacement reserve to minimize the need for special assessments.
This amendment revises this bill's requirements concerning when a reserve study is required. Under this amendment, a board of directors that oversees common elements with an aggregate replacement cost exceeding $10,000 that has had a reserve study conducted on or after January 1, 2020, must have an updated reserve study conducted within five years after the date the reserve study was conducted, and at least every five years thereafter If the board of directors oversees common elements with an aggregate replacement cost exceeding $10,000 and has not had a reserve study conducted on or after January 1, 2020, then the board must require that a reserve study be conducted on or before January 1, 2025, and update the study every five years for purposes of assessing the condition of and planning for repair and maintenance of the common elements. This amendment requires the board to make a copy of the reserve study available to all common interest owners through electronic mail or by posting it on the community website.
This amendment deletes the list of common elements critical to the structural integrity and safety from this bill.
This amendment exempts the following from the requirements concerning reserve studies:
(1) A board of directors controlled by a declarant;
(2) A condominium titled to a single owner; or
(3) A husband and wife who own a condominium as a tenancy by the entirety.
This amendment also requires the board to review the reserve funding annually for adequacy.

Statutes affected:
Introduced: 66-27-203, 66-27-403
Amended with SA0296 -- 04/03/2023: 66-27-203, 66-27-403