May 31, 2013

Washington Court Invalidates Restriction on Dues Increases in Association's Bylaws

In late 2011, the board of directors of the Sudden Valley Community Association approved a budget that increased the membership dues by thirty percent.  A short time later, a newly elected board of directors rescinded that dues increase because a provision in the Association’s bylaws required dues increases to be approved by at least sixty percent of the owners.  The former board members then filed a lawsuit seeking to establish that the bylaws provision requiring owner approval of dues increases was unenforceable.  On April 17, a Whatcom County Superior Court judge agreed with those former board members, ruling that the bylaws provision at issue could not be enforced because it conflicted with the state law governing homeowners association budgets.       

The Washington Homeowners’ Associations Act requires the boards of such associations to provide owners with summaries of proposed budgets and to schedule association meetings to consider the ratification of those budgets.  Unless owners holding a majority of the voting power or any larger percentage specified in the covenants reject a proposed budget, it is ratified (even if a quorum is not present at the meeting).  In other words, it takes a vote of at least a majority of the owners to prevent a board-approved budget from taking effect.

The Sudden Valley ruling serves as a reminder that declarations and covenants are not always the last word in community association disputes.  State and federal laws can also come into play, which is an important reason to establish a relationship with an attorney who is familiar with those laws and how they are typically applied.