December 3, 2020

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.          

November 16, 2020

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.   

October 6, 2020

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.

September 17, 2020

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.

August 31, 2020

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. 

July 31, 2020

COVID-19 Proclamation Governing WA Community Associations Is Amended

Governor Inslee amended a COVID-19 emergency proclamation pertaining to Washington community associations today. This proclamation restores associations' power to levy fines against owners who violate the association's governing documents. This power to fine was suspended by a previous proclamation. Owners must be given notice and an opportunity to be heard before fines are levied.   

The Governor's proclamation amendment extends a previous proclamation permitting owners and directors to vote on association matters by mail, electronic mail, and proxy and to attend association meetings by conference telephone and similar electronic services until 11:59 p.m. on October 1.  It also extends a prohibition on community associations charging late fees for delinquent assessments until that date.

July 21, 2020

Washington Court of Appeals Affirms Dismissal of Defamation Claims

A small group of homeowners expressed very negative views about another homeowner in their neighborhood on social media.  For example, they asserted that she was a "problem board member," "insane," and "a plague." She sued them for defamation.  The Washington Court of Appeals recently affirmed the summary dismissal of her lawsuit.

The Court initially noted that the plaintiff was required to show that the defendants' statements were "provably false" in order to prevail.  It next observed that the medium and context in which the statements were published and the audience to whom they were published must be taken into account.  The Court went on to rule that the defendant's statements were "opinions, substantially true, or not shown to be provably false" and that a social media audience "expects the speaker to use exaggeration, rhetoric, or hyperbole" and is "likely to view such representations with an awareness of the subjective biases of the speaker."

Later in its opinion, the Court concluded that the association's board of directors had the authority to adopt a fine and fee schedule pursuant to state law even though the applicable covenants did not explicitly grant the board that power and only described enforcement as being "by proceedings at law or in equity."  The Court interpreted those covenants in that manner in order to "protect the homeowners' collective interest in having covenants enforced."

June 15, 2020

San Juan Island HOA Dispute Results in Epic Appellate Court Opinion

Twenty homeowners in a San Juan Island development spent the better part of a decade fighting (literally and figuratively) over the meaning of a set of restrictive covenants governing the use of their land and a waterfront parcel, the boundaries between their lots and the waterfront parcel, the erection of a spite fence, and the management of their homeowners association. The Washington Court of Appeals began its ninety-six page unpublished opinion regarding this "saga" by noting that "the record reveals a level of animosity between Stevens and his neighbors and incivility between some of the parties and the attorneys that surpasses anything this court has ever seen." The parties probably incurred a huge amount of attorney fees during the course of this litigation. The Court's entire opinion is available here.      
One portion of the Court's analysis merits emphasis. The Court ruled that an amendment to the homeowners association's Covenants, Conditions, and Restrictions ("CC&Rs") approved by sixty percent of the owners (stating that "tenants" are not "guests in the household" and therefore do not have the right to use common waterfront land) did not impose a new restriction on tenants' access to that land.  As a result, an owner's argument that this amendment required unanimous owner approval because the CC&Rs permit only changes to existing covenants and do not authorize the enactment of new restrictions was rejected by the Court. It instead ruled that the amendment constituted a clarification of a pre-existing prohibition that could be adopted with the approval of sixty percent of the owners. 

If a homeowners association's CC&Rs only permit that document to be "amended", then it may not amend that document to add new restrictions unrelated to any existing covenant without unanimous owner approval. Since it is not always clear whether proposed amendments contain such new restrictions, association boards should consult attorneys with experience in this area when they are considering CC&R amendments. 

May 18, 2020

Washington Court of Appeals Rules in Favor of Tree Nuisance Claim

A property owner brought a nuisance action against her neighbors because the branches of a cedar tree on their property extended over her property, dropped leaves and needles on it, and threatened to damage her home.  The Court of Appeals ruled that the owner presented enough evidence in support of her claim to defeat her neighbors' motion to summarily dismiss it without a trial.  

RCW 7.48.010 defines an actionable nuisance as "whatever is injurious to health or indecent or offensive to the senses, or an obstruction to the free use of property, so as to essentially interfere with the comfortable enjoyment of the life and property." The Court noted that tree branches extending over adjoining land can constitute a nuisance, but it pointed out that damages must be proved in order to support a legal claim. In this case, the plaintiff presented evidence that the tree branches shed profusely on her yard and interfered with her use and enjoyment of the property. She also presented evidence that the size and location of the tree's branches posed an increasing danger to her home. As a result, the Court ruled that her nuisance claim must be allowed to proceed to trial.

May 8, 2020

Community Association Presentation for Washington Secretary of State's Office

I will be leading an electronic presentation concerning community associations for the Washington Secretary of State's Office on June 15 at 10:00 a.m.  I will provide an overview of the legal issues that affect those associations, including the scope of the Washington Uniform Common Interest Ownership Act ("WUCIOA") and coronavirus-related concerns.

May 4, 2020

Washington Court of Appeals Prevents Covenant Enforcement Due to Delay

The Washington Court of Appeals recently decided in an unpublished opinion that the legal doctrine of laches prevented an owner of real property from obtaining relief based on a claim that the owner of neighboring property violated covenants governing both properties.  Laches is an implied waiver arising from knowledge of existing conditions and acquiescence in them. It is in effect neglect for an unreasonable length of time under circumstances permitting diligence to do what in law should have been done.  

The legal elements of laches are inexcusable delay and prejudice to the other party from such delay. The plaintiff in this case waited twenty years after his neighbor's home and barn were built before asserting that they violated protective covenants. The Court ruled that this delay and the resulting harm to his neighbor if his claim were allowed to prevail mandated dismissal.

April 21, 2020

Governor Amends COVID-19 Proclamation to Address Community Association Issues

On April 17, the Governor of Washington state amended his COVID-19 emergency proclamation to address several issues related to community associations.  This proclamation amendment first permits owners and directors in community associations to vote on association matters by mail, electronic mail, and proxy even if their associations' governing documents do not permit them to do so.  It next permits owners and directors in community associations to attend meetings by conference telephone and other types of similar communications equipment that allows all participants to hear each other at the same time even if their associations' governing documents do not permit them to do so.   It finally prohibits community associations from charging owners late fees and interest on delinquent assessments and from imposing fines on owners for violating their governing documents.  This proclamation amendment is currently scheduled to expire at 11:59 p.m. on August 1, but it may be extended beyond that date.    

If your association's governing documents do not specifically authorize voting by mail, electronic mail, and proxy and attending meetings by conference telephone and similar communications equipment, then you should consider taking this opportunity to schedule a meeting to vote on an amendment to those documents that contains such authorizations.

April 8, 2020

Washington Legislature Approves New Law Regarding Low-Water Landscaping

The Washington Legislature recently approved a new law regulating the ability of community associations and their governing documents to restrict low-water landscaping practices.  The law first states that an association's governing documents may not prohibit the installation of drought resistant landscaping or wildfire ignition resistant landscaping.  It next states that an association's governing documents may include reasonable rules regarding the placement and aesthetic appearance of such landscaping as long as those rules do not render the use of such landscaping unreasonably costly or otherwise effectively infeasible.  The new law finally states that an association may not sanction or impose a fine or assessment against an owner or resident for reducing or eliminating the watering of vegetation or lawns for the duration of a drought condition order issued by the department of ecology that is applicable to the property.  This new law takes effect on June 11, 2020.

March 12, 2020

How Will Coronavirus Affect Your Community Association?

The coronavirus pandemic is likely to have serious consequences for many Washington condominium and homeowners associations.  Those associations' financial, maintenance, enforcement, and meeting policies may be significantly impacted by this crisis.  Prudent boards will anticipate virus-related problems and prepare for them.

A large number of owners may soon lose a substantial amount of income in the near future due to severe illness, lengthy school closures, and fewer hours at their jobs.  If the economy slips into recession, then some owners will become unemployed for lengthy periods.  Those events are likely to result in more unpaid assessments in the short to medium term.  Association boards should consider temporary adjustments to their policies concerning payment plans for unpaid assessments (for example, smaller payments over longer terms) and referral of delinquent accounts to attorneys for collection.  Boards should also anticipate an increased need to incur attorney fees in order to pursue legal action against seriously delinquent accounts.  As a result, they should consider increasing the amount provided for legal expenses in the association's budget.  

Given the probable increase in delinquencies in the near future, boards should consider delaying non-urgent maintenance and repair work for at least the next several months.  This will give them an opportunity to evaluate the effect of the virus on their associations' finances and to reschedule projects and reallocate funds if necessary.  However, boards should also consider arranging for commonly used items and surfaces in their associations' common areas to be cleaned and disinfected more frequently and thoroughly over the next several months in order to reduce the number of transmissions that occur in those areas.  

The difficulties that many owners will soon face due to sickness, child care, and loss of income may result in more antisocial behavior and covenant violations over in the short to medium term as well.  This may necessitate the imposition of more fines and more referrals to the association's attorney for enforcement action. A community association board in Washington state is not legally permitted to fine an owner until it has adopted a fine schedule, distributed it to all owners, and given the owner notice and an opportunity to be heard.

Given the necessity for a period of social distancing, associations may find it more difficult to hold meetings due to lack of quorums. Boards should consider temporarily allowing owners and directors to attend meetings by telephone or video-conference and to vote by mail or e-mail. Boards should also consider cancelling social gatherings in common areas for at least the next several months.

February 6, 2020

Many Washington Condo Associations and HOAs Must Incorporate or Form LLC

Two Washington laws adopted in 1990 and 2018 require many condominium and homeowners associations to be incorporated entities.  The relevant section of the first law, the Washington Condominium Act, applies to all condominiums created after July 1, 1990.  It states that the associations of such condominiums must be organized as a for-profit or nonprofit corporation.  The relevant section of the second law, the Washington Uniform Common Interest Ownership Act, applies to all condominiums and other common interest communities (such as homeowners associations) created on or after July 1, 2018.  It states that the associations of such communities must be organized as a for-profit or nonprofit corporation or limited liability company.  If your condominium or homeowners association needs assistance to comply with one of those laws, then my office is available to provide that assistance.             

January 14, 2020

WA Courts Rule that HOA Members Must Be Present in Person to Vote on Amendments

The Washington Court of Appeals recently upheld a trial court's ruling that a provision in a homeowners association's bylaws requiring owners to be "present" in order to vote on amendments to that document means that they must be present in person.  An owner argued that owners are also present if they vote by proxy, but the trial and appellate courts disagreed.  The appellate court noted that the word "present" in the bylaws must be given its usual meaning of "being in one place and not elsewhere: being in view or at hand."

This opinion demonstrates that the language in community associations' governing documents can sometimes be subject to different interpretations, which can lead to disputes and litigation.  Attorneys with experience in this area can help associations ensure that the contents of their governing documents are consistent with their desired polices and current practices.