Washington HOA Bill

2005 August 01
Last update:  2009 Apr 29.  See History for brief descriptions of changes and updates.
Some additional information on status is contained in the comments. 

New Information — 2009 Apr 29

    Mr. David M Friscia has kindly provided some new information which now precedes the original continuation of this post.  My reading of Mr. Friscia's notes suggests that individual members should look carefully at SB 6054, and write to their legislators if they don't agree. 
 

Original Post

    The continuation of this post is a bill introduced in the Legislature of the State of Washington to amend the state's homeowner association law.  Almost all of the provisions restrict the powers of the board of directors.  Provisions include

• clearer definition of fiduciary duty
• elimination of authority to amend certain governing documents
• requirement for members to ratify the budget
• removal of directors by a majority vote of members with quorum
• specific requirements for boards concerning special members' meetings, and open meetings with restrictions on executive sessions. 

    These provisions are part of including democratic principles in POA legislation. 

Don Nordeen
==========
Read the continuation of this post.

• History: 
  • 2009 Apr 29 — updated to include 2009 bill information
  • 2008 Jun 30 — added request for a reader to update the status in a comment.  
  • 2005 Aug 01 — Initial post. 
    
• Links:  Washington HOA Bill.  [http://swagman.typepad.com/poa_governance/2005/08/washington_hoa_.html]
• Key Words:  Legislation, CID & POA;  abuse;  access;  access to records;  accountable;  closed meeting;  closed session;  fiduciary duty;  governing documents;  members' meeting;  open meetings;  POA Act;  POA Board of Directors Issues;  POA Governance  

Read the continuation of this Post and any Comments.
Or Click Show All for the Above Introduction and the Continuation of this Post and any Comments.

---

Washington HOA Bill  (continued)

2009 April 29

    The information below was received from Mr. David M Friscia. 

• SSB 5136 Regulating the use of solar energy panels by members of homeowners' associations.
• SSB 6000 Modifying real estate disclosure requirements regarding homeowners' associations.
• SB 6054 Concerning homeowners' associations.
• SB 6055 Creating a state homeowner's association ombudsman office to help resolve disputes between homeowners' associations and their members.

Washington State SB 6054 digest states: "Provides that an obligation of good faith is imposed in the performance and enforcement of all contracts and duties governed by chapter 64.38 RCW (homeowners' associations) and in all other transactions involving declarants, associations, and their members.

Modifies and implements provisions related to membership, powers, meetings, and governing documents of homeowners' associations.
Authorizes a homeowners' association to levy reasonable fines and to incorporate as a nonprofit organization."

If you read the fine print of SB 6054, it takes away the existing legal requirement that the association budget has to be ratified by the owners, and, that the owners right to remove a board member at any meeting when there is a quorum.

Washington State SSB 6000 passed into law requiring the Seller of unimproved residential real property to report, "9. OTHER FACTS Are there any disagreements, disputes, encroachments, or legal actions concerning the property?" BUT the Seller of  improved residential real property DOES NOT have to disclose whether there are any homeowner association disagreements, disputes, encroachments, or legal actions concerning the property.

In Washington State, all the minority needs to do to impose itself on the majority through the unauthorized assumption of authority is pay $10.00 to renew the Corporate Name, and provide a permanent mailing address as the Registered Agent with the Secretary of State. No proof required and no repercussions if you lie to the Secretary of State, and then lie to your neighbors about what happened at the Annual Meeting and take their money for your personal agenda for the neighborhood.

It seems that the real estate industry doesn't want the consumers of Title 64 RCW Real Property And Conveyances to have any legal recourse about Association Budgets or about what the Association has to disclose to buyers about the Governance of  'Homeowners' Associations.

Sincerely,
David M Friscia
Aequum iudica

======================================================

Below is the original post

Bill to Amend Washington's HOA Law

Update  2008 June 20

    My original post on the Washington HOA bill was current when posted on 2005 August 01, and was posted as an example of what is being considered by one state. If anyone from Washington has an update, please send by email (click on "email me" near the top of left column) with the current status. I will add the update to this post. Thanks.

    The comments below include several requests for an update. 

Don Nordeen
==========

HOUSE BILL 1477

_____________________________________________

State of Washington 59th Legislature 2005 Regular Session

By Representatives Kagi and Chase

Read first time 01/25/2005. Referred to Committee on Judiciary.

AN ACT Relating to homeowners' associations; amending RCW 64.38.025, 64.38.035, and 64.38.040; and adding a new section to chapter 64.38 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1 RCW 64.38.025 and 1995 c 283 s 5 are each amended to read as follows:

(1) Except as provided in the association's governing documents or this chapter, the board of directors shall act in all instances on behalf of the association. In the performance of their duties, the officers and members of the board of directors shall exercise the degree of care and loyalty required of an officer or director of a corporation organized under chapter 24.03 RCW.

(2) The board of directors shall not act on behalf of the association to amend the articles of incorporation, to take any action that requires the vote or approval of the owners, to terminate the association, to elect members of the board of directors, or to determine the qualifications, powers, and duties, or terms of office of members of the board of directors; but the board of directors may fill vacancies in its membership of the unexpired portion of any term.

(3) Within thirty days after adoption by the board of directors of any proposed regular or special budget of the association, the board shall set a date for a meeting of the owners to consider ratification of the budget not less than fourteen nor more than sixty days after mailing of the summary. Except as otherwise provided in the governing documents, the budget is ratified unless at that meeting the owners ((of)) to whom a majority of the votes in the association are allocated ((or any larger percentage specified in the governing documents)) reject the budget, in person or by proxy, ((the budget is ratified,)) whether or not a quorum is present. In the event the proposed budget is rejected or the required notice is not given, the periodic budget last ratified by the owners shall be continued until such time as the owners ratify a subsequent budget proposed by the board of directors.

(4) Cumulative voting, as described in RCW 23B.07.280, may not be used in the election or removal of members of the board of directors.

(5) The owners by a majority vote of the voting power in the association present, in person or by proxy, and entitled to vote at any meeting of the owners at which a quorum is present, may remove any member of the board of directors with or without cause.

Sec. 2 RCW 64.38.035 and 1995 c 283 s 7 are each amended to read as follows:

(1) A meeting of the association must be held at least once each year. Special meetings of the association may be called by the president, a majority of the board of directors, or by owners having ten percent of the votes in the association. If the owners having ten percent of the vote in the association request a special meeting, the board shall take action within a reasonable time, not to exceed fifteen days from receipt of the request, to set the time and place of the special meeting, which must take place within forty-five days after the request for a special meeting. Not less than fourteen nor more than sixty days in advance of any meeting, the secretary or other officers specified in the bylaws shall cause notice to be hand-delivered or sent prepaid by first class United States mail to the mailing address of each owner or to any other mailing address designated in writing by the owner. The notice of any meeting shall state the time and place of the meeting and the business to be placed on the agenda by the board of directors for a vote by the owners, including the general nature of any proposed amendment to the articles of incorporation, bylaws, any budget or changes in the previously approved budget that result in a change in assessment obligation, and any proposal to remove a director.

(2) Except as provided in this subsection, all meetings of the board of directors shall be open for observation by all owners of record and their authorized agents. The board of directors shall not take official action on any matter of business through the use of electronic communications or any other form of communication that does not allow all owners and their authorized agents to observe the action. The board of directors shall keep minutes of all actions taken by the board, which shall be available to all owners. Upon the affirmative vote in open meeting to assemble in closed session, the board of directors may convene in closed executive session to consider personnel matters; consult with legal counsel or consider communications with legal counsel; and discuss likely or pending litigation, matters involving possible violations of the governing documents of the association, and matters involving the possible liability of an owner to the association. The motion shall state specifically the purpose for the closed session. Reference to the motion and the stated purpose for the closed session shall be included in the minutes. The board of directors shall restrict the consideration of matters during the closed portions of meetings only to those purposes specifically exempted and stated in the motion. No motion, or other action adopted, passed, or agreed to in closed session may become effective unless the board of directors, following the closed session, reconvenes in open meeting and votes in the open meeting on such motion, or other action which is reasonably identified. The requirements of this subsection shall not require the disclosure of information in violation of law or which is otherwise exempt from disclosure.

Sec. 3 RCW 64.38.040 and 1995 c 283 s 8 are each amended to read as follows:

((Unless)) A quorum for any meeting of the homeowners' association is determined in accordance with quorum requirements specified in the governing documents. If the governing documents do not specify ((a different percentage)) quorum requirements, a quorum is present throughout any meeting of the association if the owners to which thirty-four percent of the votes of the association are allocated are present in person or by proxy at the beginning of the meeting.

NEW SECTION. Sec. 4 A new section is added to chapter 64.38 RCW to read as follows:

The provisions of this chapter apply to all homeowners' associations, however organized. In the event of a conflict between the provisions of this chapter and the provisions of law under which the homeowners' association is organized, the provisions of this chapter control.

________________________________________________________________________________
Copyright 2005-2009 © Donald L. Nordeen.  All Rights Reserved.  See Copying Posts on This Weblog.
••• End of Post •••

Comments

[Bill Marsh]

2008 Apr 24

Did this bill (HOUSE BILL 1477) ever pass? I see this as long over due when some Boards are out of control.

Bill Marsh

====Reply====
2008 Apr 26

I don't know. I posted the information on the bill because the content seemed right. It appeared to address common problems. Perhaps someone has checked and can add a comment on the status.

Don Nordeen

[Wardell]

2008 May 13

Dear Sir;

I would like to know if our HOA fails to have a quorum at the annual meeting, can they continue to conduct regular meetings without have another annual meeting.

Thanks

Mr. Wardell

Wardell

====Reply====
2008 Jun 14

Likely, the law in your state requires an annual meeting. Without a quorum, there is no meeting.

My understanding is that the board is obligation to notice the annual meeting again ASAP. If your bylaws permit proxies that can be counted against the quorum, the notice should recommend that members use proxies if they can't attend. To avoid abuse of proxies, I recommend that proxies be directed (specific instructions) rather than general (proxy holder decides).

Of course, the business of the association has to continue.

Don Nordeen

[Tom Koecher]

2008 May 13

In response to Bill Marsh's question above, it appears that HB 1477 was passed into law although several parts were amended. For instance, Sec. 2 RCW 64.38.035 (2) above prohibited "electronic communications or any other form of communication that does not allow all owners and their authorized agents to observe the action". This provision is not currently part of the law so it appears that it was stricken before a final vote.

The full text of the current WA HOA law (RCW 64.38)can be found at the following URL:

http://apps.leg.wa.gov/RCW/default.aspx?cite=64.38

I understand the restriction against "electronic meetings" is still being debated.

Tom Koecher

[dianne]

2008 Jun 10

please keep me informed

diane

====Reply====
2008 Jun 16

My original post on the Washington HOA bill was current when posted, and was posted as an example of what is being considered by one state. If anyone from Washington has an update, please send by email (click on "email me" near the top of left column) with the current status. I will add the update to this post. Thanks.

Don Nordeen

[Arlene]

2008 August 09

Does a HOA need to have elections for the Board of Directors (ie: President, VP, Secretary, Treasurer). If they are not elected and just hold the position for several years at a time, is our HOA really abiding by the state laws? I have heard that if they are doing this, they are not abiding by the laws and makes our HOA illegal and no longer an association. Is this true? Do we still need to pay our HOA dues? Any advise will be helpful. Thank you.

Arlene

====Reply====
2008 August 09

Dear Arlene,

You should check the law in your state under which your HOA is incorporated — likely a nonprofit corporation act. It likely requires election of directors but may not specify terms of office and staggering of election of directors. That information is likely in the bylaws for your HOA. I would expect that annual elections are required for staggered terms.

The bylaws specify when the terms of board members expire. If they continue to act as a board member after expiration, the actions of the board could be invalid. In any event, the votes of people who are no longer board members don't count.

The validity of the association depends upon filing the necessary annual report with the state and the application for renewal of incorporation. The "commence" department of your state likely has a website providing status of all corporations.

The requirement to pay dues is probably in the restrictive covenants.

A group of members should make it clear that the elections are required immediately.

Don Nordeen

[Larry Amundson]

2008 Nov 18

The fact that our homeowner's board, which is the Surfside Homeowner's Association or SHOA, can pass all budgets and special assessments by invoking the non vote is a yes vote means we are living in a dictatorship. Shades of Sadam Hussein or other countries. I would urge all member's of all associations to fight this restrictive voting practice.

Larry Amundson

[wanda sherman]

2009 Apr 22

Approval of Fee Schedule

Does the president of homeowners association have the right to pass a fee schedule without introducing it to homeowners first?

wanda sherman

====Reply===
2009 May 03

It depends upon the provisions in the law and the governing documents. Since the board is generally given a blanket authority to manage the affairs of the association, approval of the members is not required unless specifically stated in the law and governing documents.

I doubt that the president would have such authority though the board of directors might.

Don Nordeen

[Anita McKee]

2009 Sep 12

Re: Authority for Fines

Can our HOA board of directors assess fines for non compliance of CC&R's if there are no provisions for fines in the CC&R's? Also, if last year's board of directors makes a decision regarding a dispute between homeowners, does the next year's board of directors have authority to override the previous boards decisions?
A. McKee

====Reply====
2009 Oct 08

Dear Ms. McKee,

I am not an attorney so this is not legal advice. The association's authority is limited to what is authorized in the governing documents. If the CC&Rs do not authorize fines, then the association cannot fine an owner for non-compliance with CC&Rs. The course of action is the circuit court seeking an injunction and possible corrective actions.

Your second question likely depends upon the circumstances. If the dispute involves a violation of the CC&Rs, then the board's action is not relevant since the board has no authority to waive a violation.

Don Nordeen

[Tony Sinclair]

2009 Sep 19

Re: Rights under CC&Rs

My question is what regarding, what are my legal Personal property rights under Washington State Law, as a home owner under control of a Homeowners association.

In one case of reviewing our CC&R it is so iron clad that it states I can’t make any modifications to the interior of my residence with out the expressed approval of the Board or the ACC. “No Owner may make or install any improvements within the Unit, modify the exterior of the House, garage or other improvements within the Unit or change any other portion of a Unit visible from outside the Unit, including the landscaping within the Unit, without the prior written consent of the ACC.”

So if you could please direct me to sources of Washington State Personal property Right Laws, or even Case law regarding my property rights as a home owner under a Homeowners Association in the state of Washington. Thanks

Tony Sinclair

=====Reply====
2009 Oct 08

I am not familiar with Washington laws. See http://www.communityassociations.net/washington_main.html. Also I am not an attorney, so this is not legal advice.

Generally, each owner is obligated to the provisions in the CC&Rs provided that the provisions are clearly stated. Most states require that ambiguities in the provisions be interpreted against the party seeking enforcement. Frequently, courts rule that provisions that are not clearly stated and do not have clear standards are not enforceable. Likely, the State of Washington published the cases of the Court of Appeals and the Supreme Court — also likely with an effective search engine.

For example, the statement, "No Owner may make or install any improvements within the Unit ..." lacks any clear standard and is likely not enforceable. The inside belongs to the owner. However, the exterior of the building in a condo typically is part of the common property with control by the association. Read your documents very carefully.

Don Nordeen