Washington Court of Appeals Affirms HOA's Covenant Amendment

The Washington Court of Appeals recently affirmed a trial court's decision that a homeowners association had the authority to adopt an amendment to the covenants governing the property without a unanimous vote of the owners. The Court noted that an express reservation of power authorizing less than 100 percent of property owners within a subdivision to adopt new restrictions (as opposed to changing existing covenants) respecting the use of privately owned property is valid if such power is exercised in a reasonable manner consistent with the general plan of the development. After reviewing the association's covenants, the Court ruled that the plaintiffs failed to show that any portion of the amendment at issue was inconsistent with the general development plan, imposed unreasonable disparate impacts on their property, or were otherwise invalid.      

COVID Proclamation Affecting Community Associations Extended Indefinitely

The Governor of Washington state issued a Proclamation yesterday that permits owners and directors in condominium and homeowners associations to continue to vote by mail, electronic transmission, and proxy and to attend meetings by conference telephone and similar electronic services until the termination of the COVID-19 state of emergency or the rescinding of the Proclamation, whichever occurs first.  This Proclamation also extends a previous prohibition on condominium and homeowners associations charging late fees for delinquent assessments until the termination of the COVID-19 state of emergency or the rescinding of the Proclamation, whichever occurs first.

Washington Court of Appeals Rules Tennis Court Removal Vote Complied With CC&Rs

Most of the owners in the Pickle Point neighborhood of Bellevue, Washington voted to remove a tennis court in the neighborhood's common area. An owner in the neighborhood then filed a lawsuit challenging the validity of that vote. The Washington Court of Appeals recently affirmed the lower court's summary dismissal of that lawsuit. The Court ruled that the removal vote complied with the applicable protective covenants, conditions, and restrictions ("CC&Rs"). The Court noted that the Architectural Control Committee ("ACC") established by the CC&Rs weighed all reasonable options and specifically considered whether to leave the tennis court as is, covert it to a grassy area, or reallocate ownership.  The Court concluded that the ACC properly exercised its authority to remove the tennis court.          

Washington Court of Appeals: Business Judgment Rule Only Protects Directors

The Washington Court of Appeals recently decided in a published opinion that the business judgment rule protects the directors of a condominium or homeowners association from personal liability but does not immunize the association itself.  The business judgment rule limits the liability of corporate management where (1) the decision to undertake a transaction is within the power of the corporation and the authority of its management; and (2) there is a reasonable basis to indicate that the transaction was made in good faith.  If that rule applies, then a plaintiff may only challenge a decision if made through fraud, dishonesty, or incompetence.  It is based on the notion that directors of a corporation are not liable for mere mistakes or errors of judgment.  The Court's opinion pointed out that directors are required to exercise reasonable care even under the business judgment rule and that directors' failure to adequately investigate a matter removes them from the rule's insulating effect.   

Governor Allows Community Associations to Keep Meeting and Voting Remotely

A new COVID proclamation issued by Governor Inslee permits owners and directors in condominium and homeowners associations to continue to vote by mail, electronic mail, and proxy and to attend association meetings by conference telephone and similar electronic services until 11:59 p.m. on January 19, 2021. This proclamation also extends the prohibition on community associations charging late fees for delinquent assessments until that date.

Washington Condos and HOAs Face Difficult Budget Decisions

It's annual budget season for Washington condominium and homeowners associations, and many of them are dealing with the unfortunate reality of smaller revenues this year and next year. Many owners' accounts have become delinquent, and associations are understandably reluctant to begin collection actions against them right away. As a result, many associations must reduce expenses and/or use reserve funds to pay for some expenses in their next budget. Associations should consider deferring scheduled maintenance and repair projects for a year if possible. They should also evaluate whether they can obtain regular services like property management, accounting, and landscaping at a lower price from a different provider. 

Washington community association boards should keep in mind that they are required to comply with the budget procedures contained in state law as amended in 2018 by WUCIOA. The text of the applicable law can be found in my previous post about that subject.

Washington Supreme Court Reinstates Verdict in Favor of Injured Guest

After a night of drinking with friends, a woman fell from the second-story balcony of her boyfriend's apartment when its decayed balcony railing gave way. She sued the owner of the apartments, arguing that its failure to maintain and repair that railing caused her fall and violated its duties to tenants and their guests. A jury agreed. The Washington Court of Appeals overturned the jury's verdict. The Washington Supreme Court reversed that ruling and reinstated the jury's verdict in favor of the injured woman. 

The Court decided that the owner of the apartments was negligent because its breach of its common law duty to provide each of its tenants and their guests with a habitable residence was a proximate cause of the woman's injury. As the Court stated in a previous opinion: "When American city dwellers, both rich and poor, seek 'shelter' today, they seek a well known package of goods and services: a package which includes not merely walls and ceilings, but adequate heat, light, and ventilation, serviceable plumbing facilities, secure windows and doors, proper sanitation, and proper maintenance." 

Washington condominium and homeowners associations are legally obligated to ensure that the common areas for which they are responsible are maintained, repaired, and replaced in a timely manner and in accordance with professional guidance.