Wilkinson v. Chiwawa Communities Association

Wilkinson v. Chiwawa Communities Association, No. 86870-1 (Wash. Apr. 17, 2014)

The Washington State Supreme Court has held that the Chiwawa Communities Association, a planned residential community in Chelan County comprised of permanent and vacation residents, improperly adopted a declaration amendment prohibiting rental of homes for less than 30 days. The majority opinion and two dissents are 49 pages.

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Law Change – HOA Minutes by Brian P. McLean

Kathryn Hedrick, lobbyist for the Washington State CAI Legislative Action Committee, issued this update over the weekend:

Substitute House Bill 2567, prime sponsored by Representative Hans Zeiger (R-Puyallup) has been signed by Governor Inslee and takes effect June 11. The new law requires homeowner associations under RCW 64.38, to make meeting minutes from the previous association meeting available to each owner for examination and copying within sixty days after the meeting. In addition, the legislation also calls for the minutes of the previous association meeting to be approved at the next association meeting in accordance with the association’s governing documents.

The State adopted our suggested revisions to the original bill. The original bill required owner associations to mail meeting minutes to each owner soon after the meeting, although many associations are not allowed to official adopt owner meeting minutes until the next annual meeting. We will be provided specific advice to our association clients before the law becomes effective.

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Who Pays for Windows? For Now We See Through a Glass Darkly… by Brian P. McLean

“But, soft! What light through yonder window breaks?”
-Romeo and Juliet, Act II, scene 2, line 1.

Unless your association is a front for the NSA, your association has exterior windows. A window is a hole in the wall and everything that fills that hole. In an ideal world, windows function, they live long and useful lives, they let in light and other good things, they keep out bad things, they are maintained, repaired, and replaced to professional standards by the association, and the owner who consumes them during their useful life pays the costs of consumption by adequately funding reserves.

By default under current State law exterior windows lie outside unit boundaries. Exterior windows are thus part of the common elements. Because they are part of the common elements an association has a right to replace windows that are either defective or are reaching the end of their useful life.[1]

Statutory defaults may be modified by your condominium declaration. If your condominium declaration permits individual owners to control the repair and replacement of exterior windows, consult with an attorney about changing your declaration.

There are many good reasons why an association should maintain control over window repair and replacement. An association is more likely to abide by and avail itself of code requirements that ensure the installation of energy efficient-windows and window glazing – features that can significantly reduce future costs. When owners are allowed to replace their own windows, some owners will skimp and use contractors who fail to use quality materials and skilled workers. Poor quality work can lead to moisture in the building with predictably bad and very bad results. When the vast majority of windows need replacement toward the end of their useful life it is almost certainly more cost-effective for the association to obtain one bid than for individual owners to obtain their own bids. If one owner fails to pay for work performed on the common elements, the stiffed contractor could lien all of the units.

Replacing broken glass, flashing, caulking, or windowstripping can cause serious damage if not performed by a skilled professional. An association should limit owner maintenance responsibilities to inspecting, cleaning, and finishing interior framing. Limiting owner maintenance responsibilities reduces the risk that an unskilled owner will cause serious damage to other units, property, and the integrity of the building.

What your declaration says about maintenance, repair, replacement, unit boundaries, common expense liability allocation, viable construction defect claims, and insurance should be taken into consideration when determining how much each owner pays. But determining how much each owner pays for window repair and replacement doesn’t need to be complicated. In almost every case an association can avoid a donnybrook over who pays for what by adopting the following Windows Code of Conduct:

Cut here #————————————————————-

 Windows Code of Conduct

  1. The Association controls all aspects of repair and replacement of exterior windows.
  2. Owners must ask for permission from the Association before repairing or replacing windows, before installing new windows, skylights, solar tubes, air holes, or periscopes, or before painting or finishing window exteriors.
  3. Only the Association may penetrate a unit’s perimeter walls, floor, or ceiling.
  4. The Association pays for installation, repair, and replacement of windows and recovers those costs from some or all of the owners.
    1. If window installation, repair, or replacement is an individual unit owner expense, the Association assesses the cost to the benefited owner or owners in a fair and equitable manner.
    2. If window installation, repair, or replacement is a common expense, then the Association assesses all owners for the cost in accordance with the declaration’s common expense liability schedule.
  5. Windows maintenance means inspection, cleaning, and interior finishing. Each owner at least annually inspects the windows for fogging, for water damage on the window wall, for air leaks or missing caulking, or for other damage, and reports any possible damage immediately to the Association.
  6. If a window is installed incorrectly, the Association asks the installer to cure the installation at the installer’s expense.
  7. If a window is damaged as a result of an event covered by insurance, the Association files an insurance claim when doing so is reasonable.
  8. The Association hires a suitably qualified professional such as an architect, reserve specialist or building envelope consultant to estimate remaining useful life (windows don’t last forever) and an appropriate reserve funding model.
  9. The Association follows correct budgeting procedures.
  10. The Association controls all aspects of repair and replacement of exterior windows (yes, this is included twice).

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Who pays for windows? We all do, eventually. But in a world where some answers remain in the dark, perhaps this article and a broken window will let in some light.

[Originally Printed in the WSCAI Community Associations Journal, December 2013, page 22.]

BRIAN P. McLEAN is managing shareholder at the law firm of Leahy McLean Fjelstad and a member of the College of Community Association Lawyers. He concentrates his practice in the area of community association law and speaks and writes frequently about community associations.

Brian served previously as a board member and president of the Washington State Chapter of CAI and as chair of WSCAI’s Legislative Action Committee. Brian is former lead singer, guitarist, and songwriter for the now defunct Pacific Northwest band The Acetones. His wife adores him and his children revere him.


[1] By default, in a condominium created after July 1, 1990, exterior windows are, more specifically, limited common elements.

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Fidelity Insurance & Embezzlement by Brian P. McLean, Leahy McLean Fjelstad

When you agree to join the board of directors of a condominium association, you agree to act in good faith and in the interests of the association.

George Bernard Shaw apparently wrote once that, “Lack of Money is the root of all evil.” It should come as no surprise that lack of money poses one of the more obvious risks to an association. Without money your association can’t repair the property or pay bills incidental to the association’s operation. Although we focus regularly on revenue as we should through budgeting and regrettably enforcement against those owner who fail to pay, we shouldn’t forget the risk that money may also be spent in a way the board neither budgeted nor expected – embezzlement.

Embezzlement is a foreseeable and manageable risk. We should focus first on putting internal controls in place that reduce that risk. Assume as a board member you have a duty to look after the association’s bank account. That duty may be discharged in any number of ways – regularly reviewing original bank statements for irregularities is one way. Setting up a system where original bank statements are mailed to someone other than a check writer is another. Hiring an independent certified public accountant to audit annually your financial records is yet another and may be a requirement of law in your jurisdiction.

If there is a risk, then there probably is insurance that insures against the risk. And that is the case here. Along with managing the risk through adopting internal controls and regularly auditing your books, your association should obtain fidelity insurance to insure against the risk that someone with access to your money may be placing their own financial needs before the needs of the association of owners.

Talk to your insurance broker. Get fidelity insurance.

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Update on Lender Exemptions From Leasing Restrictions, by Brian P. McLean

The FHA announced that associations who give some flexibility to bank-owned properties from transient leasing prohibitions are once again eligible for FHA approval. To be eligible, the association will either have to amend its governing documents or provide a statement on association letterhead that no units are being leased for less than 30 days and tenants are not being treated like hotel clients.

Brian P. McLean

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When Homeowner Association Members Go Wild

When Homeowner Association Members Go Wild

This email thread on an association listserv was brought to my attention by fellow attorney Bennett Taylor. It speaks for itself. Parking. Neighborly consideration. Limitations on board authority. Who’s in charge (not Alexander Haig).

http://deadspin.com/homeowners-email-chain-goes-from-snippy-to-crazy-in-a-804704446

If it disappears I’ll do my best to re-create it.

Brian P. McLean

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E-mail Notice?

E-mail Notice of Owner Meetings by RCW 64.38 Homeowner Associations

by Brian P. McLean 

The State Legislature amended section 2(c) of RCW 64.38.035, permitting notice by e-mail only when certain conditions are met. The Governor signed Substitute House Bill 1370 (2013) into law on May 1, 2013 (Chapter 108, Laws of 2013).

Section (c) says:

1 (c) Electronic transmission to an address, location, or system
2 designated in writing by the owner. Notice to owners by an electronic
3 transmission complies with this section only with respect to those
4 owners who have delivered to the secretary or other officers specified
5 in the bylaws a written record consenting to receive electronically
6 transmitted notices. An owner who has consented to receipt of
7 electronically transmitted notices may revoke the consent at any time
8 by delivering a written record of the revocation to the secretary or
9 other officer specified in the bylaws. Consent is deemed revoked if
10 the secretary or other officer specified in the bylaws is unable to
11 electronically transmit two consecutive notices given in accordance
12 with the consent.

Anyone know what a “written record” is? May an owner opt-in by e-mail? Is an e-mail a written record? May an owner opt-in by filling out a web-based form? May an owner opt-in by attaching a PDF consent form to an e-mail? May an owner vote by e-mail? (Look to the corporate statutes for that one.) May an owner waive any defense by previously accepting notice by e-mail? By showing up at the meeting? So many questions…

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Can a Condominium Declaration give a Lender in Foreclosure Exemption from Leasing Restrictions? 12 U.S.C.A § 1731b

Can a Condominium Declaration give a Lender in Foreclosure Exemption from Leasing Restrictions?

Of course it can. But apparently it may not.

We commonly find language in condominium declarations that give a lender in foreclosure an exemption from leasing restrictions. This makes sense insofar as a lender wants to protect its assets while the home is in foreclosure, and renting a vacant or abandoned home is one way it can generate income to suspend the continued impairment of its asset.

The National Housing Act of 1934, Pub.L. 84–345, 48 Stat. 847 (1934), among other things, created the FHA, which is administered by the U.S. Department of Housing and Urban Development (HUD). The FHA provides mortgage insurance to approved lenders throughout the United States and its territories. No FHA means more risk for lenders.

HUD is now apparently taking the position that common condominium leasing exemptions violate the National Housing Act of 1934, which prohibits federal insurance in cases that would result in transient or hotel usage.  In that case, any condominium project submitted for review and approval will be rejected if it contains this provision.

See Prohibition against transient housing, 12 U.S.C.A. § 1731b.

How will this affect condominiums during FHA’s re-certification and quality control reviews? I may imagine but I cannot.

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Equity and Basic Rules of Fairness (Buck Mountain Owners’ Association v. Prestwich, No. 167714-4-1, (Wash. Ct. App., filed March 4, 2013))

Equity and Basic Rules of Fairness require owners to share common expenses, even in the absence of an agreement to do so. Buck Mountain Owners’ Association v. Prestwich, No. 167714-4-1, (Wash. Ct. App., filed March 4, 2013) (unpublished). That’s neither a radical nor a novel concept.

The facts are as follows. Owners shared a roadway. Some owners were subject to a Continue reading

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They Fought the Lawn and the Lawn Won

They Fought the Lawn and the Lawn Won
by Brian P. McLean, Leahy McLean Fjelstad

In an epic battle between a homeowners association, owners, and a lawn, the lawn appears to be the only winner. Eleven years ago, Ed and Billye Simmon and their Florida homeowners association began a court battle over a $2,200 bill related to a bad lawn. Probably the association’s cost of re-sodding. According to the ABAJournal, the lawn was re-sod in about 2001 and the Simmons prevailed in 2012.

Justice finally took root. The court awarded the Simmons $85,000 in damages and is now considering Continue reading

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