Some condominium and homeowners associations' annual budgets do not include funds for legal expenses that may be necessary during the year. However, most associations' boards have questions about the requirements of their governing documents and state law from time to time. Those requirements are often difficult to understand without legal expertise. If associations do not provide for legal expenses in their budgets, then they will likely rely on the opinions of persons who, despite good intentions and best efforts, will often lead them astray. Such persons include board members (even if they are attorneys) and property managers. Those associations' boards are also likely to rely on free information (including the information on this blog) that is not applicable to their situations or to misinterpret that information. Since failure to comply with governing documents and state law can have serious consequences for associations, board members, and owners, all associations' boards should at least give serious thought to establishing a legal line item in their annual budgets.
As previously discussed on this blog, all condominium and homeowners associations in Washington state are now required by law to provide each proposed budget to the owners and schedule a meeting to consider ratification of that budget. A budget is ratified unless owners to which a majority of the votes in the association are allocated reject it. This ratification process must be followed even if an association's governing documents contain a different procedure.
