A License Is Required to Pursue Collection of Delinquent Assessments in Washington

Washington law requires individuals and entities who pursue the collection of delinquent condominium assessments to obtain a collection agency license and to maintain a $5,000 surety bond. The activities of collection agencies are subject to state regulation and oversight. Your association should ensure that any individual or entity that it uses to collect delinquent assessments is a properly licensed and bonded collection agency.    

New Law Regulates Abandoned, Mid-Foreclosure, and Nuisance Properties

The Washington Legislature approved a new law earlier this year regulating residential properties that are abandoned, mid-foreclosure, or nuisances.  The new law authorizes counties, cities, and towns to take possession of such properties and abate nuisances associated with them if mortgage holders fail to do so after being notified. If Washington community associations encounter problems from abandoned, mid-foreclosure, or nuisance properties, then they can now ask their counties, cities, and towns to address those problems pursuant to this new law.  

WA Court: HOAs May Record Liens Without Providing Owners With Notice and Hearing

Happy Halloween!  Collecting past due assessments can certainly be scary sometimes. After one homeowners association recorded a lien on a delinquent property and obtained a judgment against its owners, they appealed to the Washington Court of Appeals.  The court ruled that the association was permitted to record the lien without providing the owners with notice and an opportunity to be heard.  

The court first pointed out that Washington law only requires homeowners associations to provide owners with notice and an opportunity to be heard before they impose fines for violating the governing documents and otherwise grants those associations discretion to establish their procedures within their governing documents. Since the governing documents of the association allow it to record a lien for delinquent assessments without notice and an opportunity to be heard, the court ruled that it may do so. The court concluded by noting that the owners were not deprived of their right to due process because the lien was based on a binding contractual agreement between them and the association (the recorded covenants).

Condominium and Homeowners Association Budgets Must be Ratified

It's community association budget season!  Due to the recent adoption of the Washington Uniform Common Interest Ownership Act ("WUCIOA") (see my previous post about it here), all Washington condominium and homeowners associations' budgets must now be ratified by their owners in order to take legal effect.  In order to comply with this new requirement, those associations must provide each proposed budget to their owners and schedule a meeting to consider ratification of that budget.  The budget is considered ratified unless the owners of units to which a majority of the votes in the association are allocated reject it.

If your board has questions or concerns about compliance with Washington law or the association's governing documents, then my office is here to help!  

Appeals Court Rules Owners Entitled to Attorney Fees in Dispute with Neighbors

Matthew and Rachel Milcic sued John and Anne Estes for damages and other relief after the Estes cut branches off their trees, built an encroaching fence, painted the words "PULL YOUR WEEDS!" on the Milcics' side of the fence, and placed unwanted fill dirt on the Milcics' property. The trial court granted partial summary judgment for the Milcics on their causes of action (nuisance, timber trespass, spite fence, and damage to land or property). Following a trial on damages, the court awarded the Milcics some, but not all, of their requested damages and denied their request for an award of attorney fees. The Milcics appealed the court's damages award and attorney fee denial. In a recent unpublished opinion, the Washington Court of Appeals ruled that the Milcics were entitled to an award of some of their attorney fees and costs.

Damages for trespassing and nuisance may include lost enjoyment of the use of property, but the trial court declined to award the Milcics damages relating to those claims because it decided that any damage to their land and property was minimal. However, RCW 4.24.630 states that "[e]very person who goes onto the land of another and who removes timber ... from the land, or wrongfully causes waste or injury to the land, or wrongfully injures personal property or improvements to the real estate on the land, is liable to the injured party for treble the amount of the damages caused by the removal, waste, or injury .... In addition, the party is liable for reimbursing the injured party for the party's reasonable costs, including but not limited to investigative costs and reasonable attorneys' fees and other litigation-related costs." The appellate court concluded that the Milcics were entitled to some of their attorney fees and costs under this statute due to the fence encroachments committed by the Estes.         

Legal Advice Is Sometimes A Legal Duty

Washington condominium and homeowners association boards are legally required to exercise ordinary and reasonable care while performing their duties.  Those boards should therefore seek legal advice if they are called upon to enforce their associations' governing documents in unfamiliar situations or if their authority to enforce the governing documents is challenged by one or more owners.  Washington courts have ruled that obtaining legal advice provides community associations and their board members with protection from civil liability related to governing document enforcement.  My office is available to assist Washington condominium and homeowners association boards that need such legal advice.                

Washington Uniform Common Interest Ownership Act (WUCIOA) Effective July 1

The Washington Uniform Common Interest Ownership Act (WUCIOA) takes effect on July 1.  This new law applies to all condominium and homeowners associations created in Washington on or after that date.  The following section of WUCIOA applies to condominium and homeowners associations created in Washington before that date as well:

Section 326 Adoption of Budgets - Assessments and Special Assessments

(1)(a) Within thirty days after adopting of any proposed budget for the common interest community, the board must provide a copy of the budget to all the unit owners and set a date for a meeting of the unit owners to consider ratification of the budget not less than fourteen nor more than fifty days after providing the budget.  Unless at that meeting the unit owners of units to which a majority of the votes in the association are allocated or any larger percentage specified in the declaration reject the budget, the budget and the assessments against the units included in the budget are ratified, whether or not a quorum is present.  

(b) If the proposed budget is rejected or the required notice is not given, the periodic budget last ratified by the unit owners continues until the unit owners ratify a subsequent budget proposed by the board.

(2) The budget must include:

(a) The projected income to the association by category;

(b) The projected common expenses and those specially allocated expenses that are subjected to being budgeted, both by category;

(c) The amount of the assessments per unit and the date the assessments are due;

(d) The current amount of regular assessments budgeted for contribution to the reserve account;

(e) A statement of whether the association has a reserve study that meets the requirements of WUCIOA and, if so, the extent to which the budget meets or deviates from the recommendations of that reserve study; and

(f) The current deficiency or surplus in reserve funding expressed on a per unit basis.

(3) The board, at any time, may propose a special assessment.  The assessment is effective only if the board follows the procedures for ratification of a budget described in subsection (1) and the unit owners do not reject the proposed assessment.  The board may provide that the special assessment may be due and payable in installments over any period it determines and may provide a discount for early payment. 

Starting next month, all Washington condominium and homeowners associations must comply with these procedures when adopting their budgets.

Washington Court Upholds Homeowners Association's View Enforcement Decision

A Snohomish County homeowner recently proposed to increase the height of his roof by seven feet, which obstructed the view of Puget Sound from at least one neighboring house.  After the Picnic Point Homeowners Association denied his proposal, the homeowner sued.  The Court of Appeals ruled in a published opinion last month that the plain language of the covenants and the relevant extrinsic evidence supported the Association's enforcement decision.

The Association’s covenants state that “no structures, including fences, hedges or boundary walls, may be constructed or modified on any parcel to a height which would … obstruct the Puget Sound or park view of any other parcel.”  The appellate court held that this plainly prohibits any view obstruction, no matter how minimal.  The Court pointed out that permitting marginal obstructions would result in the gradual elimination of the views that the covenants are attempting to protect.

Well, Yes - Washington Court Affirms Authority of Homeowners Association

Two Washington homeowners recently challenged the authority of their homeowners association to manage well water services in their housing development.  In an opinion published earlier this month, the Washington Court of Appeals affirmed that the homeowners association’s exercise of authority was consistent with Washington law and the homeowners’ deed.

RCW 64.38.010(11) states that a homeowners’ association must be: (1) a corporation, unincorporated association, or other legal entity, each member of which (2) is an owner of residential real property located within the association’s jurisdiction, as described in the governing documents, and (3) by virtue of membership or ownership of property is obligated to pay real property taxes, insurance premiums, maintenance costs, or for improvement of real property other than that which is owned by the member.  Since the lot owners in this case were obligated to pay maintenance and insurance costs regarding wells and this obligation arose from joint ownership of the wells, the homeowners association in this case was held to constitute a valid homeowner’s association entitled to exercise the powers described in RCW 64.38 and its CC&Rs.

The appellate court went on to rule that the challenging homeowners did not have the legal right to challenge the homeowners association’s authority because they had ratified its existence and actions.  Ratification occurs when a homeowner either (1) voluntarily accepts the benefits and obligations of the association’s actions with full knowledge of the facts warranting rescission, or (2) accepts the benefits and obligations imposed by the association without inquiry.  The second form of ratification - action without inquiry - was held to apply in this case.  All of the pertinent facts were contained in the title documents, and “a party to a real estate contract will not be heard to declare that he did not read it, or was ignorant of its contents.” 

Legal Blogs Are Not A Substitute for Legal Advice

Washington condominium and homeowners association boards face the constant temptation to rely on legal blog posts rather than paid advice from attorneys. They should resist that pernicious pull.  

Attorneys' blog posts are not legal advice, nor are they intended to be.  They provide (at most) a general overview of a subject or issue, and this almost always fails to reflect the complexities encountered when applying legal rules and their many exceptions in specific situations.  Without additional guidance from attorneys, relying on information contained in blog posts often leads to boards misinterpreting that information and reaching incorrect conclusions.  Subsequent events can also render blog posts obsolete in some or all respects.  

As the adage goes, those who represent themselves in legal matters have fools for clients. Washington community association boards should establish relationships with attorneys who focus their practices on community association law and who diligently stay abreast of current developments in that area.  Such attorneys can help them comply with their legal obligations and minimize legal problems when they arise.  As Benjamin Franklin advised about fire safety, an ounce of prevention is worth a pound of cure.          

Pheasant Island - The 359-Year-Old Condominium Between Spain and France

Pheasant Island is a tiny (about 3,200 square feet) wooded island in the middle of the Bidassoa River between Spain and France.  In 1659, those two countries negotiated the end to a long war there.  The Treaty of the Pyrenees, which established the border between Spain and France and swapped territory between those two countries, was signed on that island.  The treaty states that Spain and France will share that island by each ruling it for a six-month period each year.  This type of joint sovereignty is called a condominium, and Pheasant Island is one of the oldest in existence.  

Spain and France now meet a few times each year to discuss issues of common interest and disputes relating to Pheasant Island.  For example, Spanish fishermen have recently argued that French pleasure boating near the island has a negative effect on their business.  Each country cuts the grass and prunes the trees on the island during its period of rule. Since the river's tides sometimes allow Spanish pedestrians to reach the island, Spanish police also remove illegal campers on the island from time to time.  May the spirit of cooperation allow this 359-year-old condominium to continue for many more years!  

Washington Condo Associations Do Not Have Lien Priority Over Existing HOAs

The Washington Court of Appeals affirmed last month that a condominium association's lien for assessments was not entitled to statutory priority over similar assessments made pursuant to the covenants of an existing homeowners association within which the condominium was organized.  It based that decision on an exception to lien priority found in RCW 64.34.364(2)(a) for encumbrances on property before the recording of the declaration.  The appellate court concluded that the homeowners association's covenants are encumbrances because they consist of "restrictions that diminish the value of the condominium."  It affirmed the trial court's award of attorney fees to the homeowners association and awarded it appellate attorney fees as well.