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.

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.             

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.           

Washington Courts Deny Attorney Fee Requests in Lawsuit Over Views and Trees

Two property owners sued their neighbor for interference with a view easement and to enforce the height restrictions associated with that easement.  Their neighbor filed a counterclaim against them for timber trespass because they cut down a cherry tree on her property that they believed was violating the view easement.  The trial court ruled in favor of the two property owners regarding the view easement's height restrictions, but it also ruled that the cherry tree was exempt from the view easement and that the two property owners' willful removal of that tree made them liable to their neighbor for treble damages under the timber trespass statute.  The court denied both parties' requests for attorney fees because neither was the prevailing party in the lawsuit.  The neighbor appealed the denial of her attorney fee request, and the appellate court affirmed that denial.

RCW 4.84.250 through .290 authorize a trial court to award attorney fees and costs to the prevailing party in damage actions where the party seeking relief requests $10,000 or less.  Under RCW 4.84.260, the plaintiff is the prevailing party when their recovery, excluding costs, is as much or more than the amount they offered to accept in settlement.  This encourages out-of-court settlements, penalizes parties who unjustifiably bring or resist small claims, and enables parties to pursue meritorious small claims without seeing the award swallowed up by the expense of paying an attorney.

The two property owners were willing to pay the amount of money that their neighbor demanded for timber trespass, but their neighbor was unwilling to accept that offer unless they would also resolve the remaining non-monetary issues concerning height restrictions in her favor.  The two property owners rejected that counteroffer, and the court concluded that it would contradict the purpose of RCW 4.84.260 for their neighbor to obtain attorney fees and costs where an agreement could have been reached absent her refusal to compromise on an issue on which she ultimately lost.