Collection of Assessments

Q:  May an owner legally withhold his or her assessments if they are dissatisfied with the association or feel they have been treated unfairly?

A:  No.  An owner with a grievance against the association may seek formal redress through the courts, but as long as the assessments (including special assessments) have been properly authorized by the board or the membership, following any necessary procedures and acting within the authority given by the declaration, an owner cannot withhold his or her assessments.  If they do so, the association can pursue any legal remedy to collect the unpaid assessments.

Q:  Is there any limit on how much the board can increase assessments?

A:  The board’s authority to set or increase assessments is determined by the declaration.  The only restriction on the amount of assessments or assessment increases is whatever may be contained in the declaration.  Note, however, that all assessments or increases must be properly approved by the board and / or the membership, according to whatever procedures are specified in the declaration.

Q:  Can the Utilities in a unit be cut off if the owner does not pay his or her assessments?

A:  The Horizontal Property Regimes Ace (HPRA) provides authority for condominiums created before July 1, 1990 to terminate utilities if the governing documents allow this.  (See RCW 64.32.200).  There is no similar statutory authority contained in either the Washington Condominium Act or the Homeowners’ Association Statute.  Nor is there any conclusive case law in Washington either authorizing or prohibiting this action.  Therefore properties not covered by the HPRA should proceed with extreme caution.

In any case where utilities are to be terminated, proper notice must be given to the owner and the termination must be made by the association itself, the utility company will not act on the association’s behalf to terminate service as long as the utility bills are paid.  Termination of utilities by the association must not damage or interfere with any utility meter installed by the utility company.

Q:  How often can an association impose special assessments?

 A:  The WCA and HRPA do not distinguish between special and regular assessments.  The only limitation on any form of assessments is whatever is found in the declaration.  Governing documents should always be examines carefully before special assessments are considered, because some declarations do limit special assessments, and special notice and approval procedures are often required.

Board of Directors, Meetings & Records

Q:  Can the board hold closed meetings?

A:  Under the Washington Condominium Act, and Horizontal Property Regimes Act, condominium boards are not required to hold open meetings.  Non-condominium homeowners’ associations, however, are required to hold open meetings.  Closed meetings in homeowners’ associations are allowed only to consider certain sensitive matters such as personal issues or pending litigation (See RCW 64.38.035 (2)).  Of course, any board is subject to the provisions of its governing documents and must comply with any open-meetings provision contained there.

Q:  Does an owner who is not a member of the board have the right to examine the association’s books and records?

A:  Yes.  Both the WCA and the Homeowners’ Association statute provide that all books and records shall be open to inspection and copying by owners.  If the association refuses to comply with this request, an owner has standing in court to obtain a court order directing the custodian of the books and records to open them for inspection.

Q:  Is there a state agency or other place to file complaints about the board or something it has done?

A:  In general, no.  Unless the board’s action specifically violates some criminal law or ordinance, it is not subject to review or regulation by state authorities.

Q:  Can a dissatisfied owner sue the board if they don’t like the way the board operates?

A:  An aggrieved owner can sue either the association itself or the board members personally.  Courts will review the actions of the board to determine if they are authorized by the declarations or by statute, or if they are grossly negligent or taken in bad faith.  Board members have a fiduciary obligation to the association and if they breach this obligation by self-dealing or dishonest actions, they can be held liable.  But courts will generally not second-guess the business judgment of board members, so long as the board has acted within the scope of its authority and in good faith.  In such situations, the dissatisfied owner’s most effective remedy is to work with other owners to elect new board members.

Elections

Q:  Can owners petition to compel the board to call a special meeting or to compel a special election to elect new board members?

A:  Yes.  Both the Washington Condominium Act and the Homeowners Association statute provide that a sufficient number of owners can call al meeting of the association.  The WCA says a meeting can be called by the owners representing 20% of the votes in the association “or any lower percentage specified in the declaration” (RCW 64.34.332).  The HOA Act requires only 10% of the owners and does not mention the possibility of a lower percentage in the declaration (RCW 64.38.035).  The issue is not addressed in the HRPA, so the provisions of the declaration control, in condominiums created before July 1, 1990.

Q:  Can the board itself fill a vacancy on the board without holding an election?

A:  Subject to any contrary provision in the governing documents, the Condominium Act and Homeowner Associations statutes allow a board to fill a vacancy without an election.  The appointed member serves, however, only the remainder of the unexpired term for which they are appointed.  They must then stand for election to a new term in the regular manner.  The Nonprofit Corporation Act and the Miscellaneous and Mutual Corporation Act both provide for the filling of vacancies by the board of incorporated associations unless the articles of incorporation or bylaws provide some other procedure (See RCW 24.03.105 and RCW 24.06.135).

Rules and Rule Enforcement

Q:  Can we impose fines for the violation of association rules?

A:  Both the Washington Condominium Act (See RCW 64.34.304 (k)) and the Homeowners’ Association statute (See RCW 64.38.020 (11)) give associations the power to levy “reasonable” fines for the violation of association rules, bylaws or covenants.  Rules and fines must be properly voted upon by the board or owners and a written schedule of fines distributed to the members of the association.  In the event of a violation, the board must be careful to give violators adequate notice and an opportunity to be heard before any fine is imposed,  any fines that are not paid may be treated as any other unpaid assessment.  The Horizontal Property Regimes Act says only that failure to comply strictly with the covenants, bylaws or rules of an association shall be “ground for an action to recover sums due” (See RCW 64.32.060).

Rental of Units

Q:  Can an association limit the number of rental units?

A:  Yes, but this should be done through an amendment to the declaration of the association and not by a board rule.  While they may be legally effective, some kinds of restrictions on rental of units may have other undesirable consequences, including inhibiting the ability of buyers to obtain mortgage financing.  Any amendment restricting rental of units must be carefully drafted, and the advice of a qualified attorney is absolutely essential.

Q:  What can we do about a tenant who does not obey association rules?

A:  Just as it can restrict the ability of owners to rent their units, an association can modify its Governing Documents to allow the association to terminate the lease of a tenant who fails to obey the rules of the association, levy fines against the tenant or owner, or take other action.  Once again, such provisions can have many pitfalls, and the advice of a qualified attorney is essential.  Moreover, once any such provision is adopted, it is essential that due process procedures be strictly followed in dealing with any owner or renter against whom the provision is to be enforced.

Restrictions on the Use of Units

Q:  Can an association prohibit owners from using their unit to operate a home-based business?

A:  Yes, if this restriction is contained in the governing documents.  Once again, the fact that such a restriction is legally enforceable, does not necessarily make it a good idea.  Broad restrictions against “non-residential use” of units have been held to prohibit such activities as in-home daycare.  See Metzner v. Wojdyla, 125 Wash.2d 445, 886, P.2d 154 ( Wash. 1994).  If there are specific problems that occur in connection with particular types of businesses (the storage of vehicles or business inventory, for example) it is generally better to regulate there specific activities rather than attempt to prohibit all business use.

Q:  Are restrictions that exclude owners below a certain age legal?

A:  They are, under certain very limited circumstances.  A community may impose age restrictions if it qualifies for an exemption from certain anti-discrimination provisions of the federal Fair Housing Amendments act.  The act prohibits discrimination in housing based on familial status, but an exemption from this regulation is possible under certain circumstances detailed in the act.  The exemption is generally reserved for properties dedicated to housing for older individuals, and consequently the restrictions are written into the declaration.

Dispute Resolution

Q:  We have a homeowner who just will not cooperate with the association of the board.  What can be done?

A:  Protracted struggles between the association or the board and a recalcitrant owner are always costly and ultimately damaging to the community if not resolved.  Conventional legal strategies like fines, foreclosure for non-payment of assessments, or litigation are potentially expensive and time-consuming, and may not produce satisfying results.  The intervention of a neutral third party to mediate the dispute could be the best and most expedient solution.  A skilled professional mediator can help to reestablish communication between the association and dissatisfied owners and can often see and propose compromise solutions that are not apparent to the parties to a dispute.

Q:  What is the difference between mediation and arbitration?

A:  A mediator has no authority to impose a settlement on the parties to a dispute.  They can only assist the parties to understand the position of others and encourage them toward a compromise agreement.  An arbitrator, like a judge, makes their own determination if the parties cannon come to a compromise.  Arbitration is only possible where the parties to a dispute have agreed in advance to accept the process, and the outcome in only binding if the parties have agreed to binding arbitration in advance.  Mandatory arbitration provisions can be included in governing documents, but it has not been customary to do so in the past.