Washington Community Associations Are Subject to New Reserve Study Laws

On January 1, 2012, the state laws that govern Washington condominium and homeowners associations (RCW 64.34 and 64.38) were amended in significant respects with regard to reserve studies. For condominium associations, the most important change is a new legal obligation placed upon their boards to disclose the following to the owners when providing the budget summary each year:

(1) The current amount of regular assessments budgeted for contribution to the reserve account, the recommended contribution rate from the reserve study, and the funding plan upon which the recommended contribution rate is based;

(2) If additional regular or special assessments are scheduled to be imposed, the date the assessments are due, the amount of the assessments per each unit per month or year, and the purpose of the assessments;

(3) Based upon the most recent reserve study and other information, whether currently projected reserve account balances will be sufficient at the end of each year to meet the association's obligation for major maintenance, repair, or replacement of reserve components during the next thirty years;

(4) If reserve account balances are not projected to be sufficient, what additional assessments may be necessary to ensure that sufficient reserve account funds will be available each year during the next thirty years, the approximate dates assessments may be due, and the amount of the assessments per unit per month or year;

(5) The estimated amount recommended in the reserve account at the end of the current fiscal year based on the most recent reserve study, the projected reserve account cash balance at the end of the current fiscal year, and the percent funded at the date of the latest reserve study;

(6) The estimated amount recommended in the reserve account based upon the most recent reserve study at the end of each of the next five budget years, the projected reserve account cash balance in each of those years, and the projected percent funded for each of those years; and
 
(7) If the funding plan approved by the association is implemented, the projected reserve account cash balance in each of the next five budget years and the percent funded for each of those years.

For homeowners associations, the 2012 changes are more far-reaching. A legal obligation (subject to exemptions) to obtain a reserve study that meets certain criteria and periodically update it is placed upon those associations for the first time. The annual disclosure obligation placed upon condominium associations discussed above is placed upon homeowners association boards as well.

Washington community associations face an ever-changing and increasingly complex set of federal, state, and local laws that regulate their actions. Boards of such associations should consider establishing a relationship with an attorney to help them comply with those laws.

Washington Court Rules that Condo Association's Insurance Covers Tenant

A Washington appellate court recently decided that a condominium association’s insurance policy covered a unit owner’s tenant as a coinsured party because the lease did not specifically state otherwise. This is significant because associations’ insurers may not attempt to shift the cost of repairing damage caused by a tenant’s negligence or misconduct to that tenant if he or she is covered by the association’s insurance policy. Washington community associations should consider requiring leases to state that the tenant is not covered by the association’s insurance policy. This could help those associations avoid higher insurance premiums in the future.

Community association insurance can be a difficult subject to grasp, but boards must confront it in order to fulfill their legal duties. Identifying and understanding the portions of the governing documents and state law that govern insurance is the first and most important step. An attorney who focuses on representing Washington condominium and homeowners associations can make this complex area more accessible.

My Twitter Account Is Another Source of Useful Information for Condo Boards

It is wonderful to live in a time when information can be shared in so many ways. Given the many personal and professional demands on my time, it can be difficult to find the time to write blog posts that meet my high standards in terms of content and style. However, it is usually possible for me to spend a few minutes each morning reading the day's news in general and what other condominium attorneys around the country have written on their blogs in particular. The best stories and posts are included on my Twitter account.

Some attorneys focus their Twitter accounts exclusively on their practice area. I decided to give my account a broader scope that reflects my interests in a more comprehensive way. News and posts relating to condominium and homeowners associations play a major role, but I also include anything else that I think is interesting and deserving of wider attention. Entries about the real estate market, the economy, science, and technology are plentiful. The last five entries provide a good indication of the account's "flavor":

Money Beagle: The wild-card risk of buying a condominium unit. http://bit.ly/uwCZtu

Seattle Times: Rental-property managers find themselves in a sweet spot. bit.ly/uif3kT

Yahoo: Futuristic Taiwan Tower will borrow its design from a tree. yhoo.it/vwG5cQ

AP: Rabbi to become army chaplain, beard and all. yhoo.it/u9hBgY

Seattle Times: Bellevue's Kindering is oasis for special needs kids. bit.ly/u3cZaG

If you would like access to more news regarding community associations and related topics than is provided on this blog, then following my Twitter account may be just what you are looking for. And, as an added bonus, you'll learn a lot about the continuing exploration of our solar system.

Resident Hero Fights Condominium Fire Caused by Smoking on Deck

On September 22, off-duty firefighter Dan Hess grabbed his gear to battle a blaze on the roof of his north Seattle condominium building. Described as a hero by his neighbors, Hess helped to contain a fire ignited by lit cigarette embers that fell through a deck.

The Washington Condominium Act gives associations the authority to regulate the appearance and use of limited common areas like decks unless their governing documents provide otherwise. Condominium boards can thus usually approve rules regulating or restricting smoking on decks in order to reduce fire and nuisance risks. Consulting with the owners to gauge the level of support for proposed rules affecting smoking on decks is a good initial practice. Boards should also consider asking the association’s attorney to evaluate proposed anti-smoking rules before a vote is taken.