Judge C.C. Bridgewater – In Memoriam

ccbridgewater

C.C. Bridgewater

Judge C. C. Bridgewater died July 20, 2014.

We will miss him.

He was a philosopher, a statesman, a husband, a father, a grandfather, a family man. He was my friend. We will miss his kindness, his opinions, his thoughtful observations on life.

We will miss his love of people, his grin, his love of life.

We will miss him.

 

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Beacon Residential v. Skidmore (California Case)

This is a big deal for new homeowners and California construction defect law, brought to you in part by my friend Steven Weil of Berding & Weil:

Building on substantial case law and the common law principles on which it is based, we hold that an architect owes a duty of care to future homeowners in the design of a residential building where, as here, the architect is a principal architect on the project—that is, the architect, in providing professional design services, is not subordinate to other design professionals. The duty of care extends to such architects even when they do not actually build the project or exercise ultimate control over construction. Accordingly, we affirm the judgment of the Court of Appeal.

Beacon Residential Cmty. Ass’n v. Skidmore, Owings & Merrill LLP, S208173, 2014 WL 2988058 (Cal. July 3, 2014).

“As California goes, so goes the nation.” Prof. Edgar Dykstra.

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Casey v. Sudden Valley, Budgets v. Assessments

Casey v. Sudden Valley Community Assn, No. 70329-3-I (Wn. App. May 27, 2014)

In many associations, a board adopts a budget, the board sends a summary of the budget to the owners, and the owners ratify the budget. This practice is consistent with RCW 64.38.025(3) – the Washington Act that applies to non-condominium homeowner associations. The provision requires a board to submit a proposed budget to the members of the association for a vote at a meeting. Under this statute, the budget is ratified unless a majority or percentage specified in the governing documents reject the budget.

The typical budget summary includes any proposed assessment increases. If the budget is ratified, then the association presumably has the authority to increase assessments. RCW 64.38’s ratification provision is clearly modeled after the Washington Condominium Act.

In Casey v. Sudden Valley, Division One held that owners may ratify a budget that requires an increase in assessments while separately rejecting an increase in assessments. To get to that conclusion the Court determined that the budget summary referenced in RCW 64.38 relates only to capital reserves – a mistaken interpretation of changes to Legislation made in recent years considering that the statute required budget summaries be sent to owners before the reserve study language was added.

The Sudden Valley court essentially held that an owner-ratified RCW 64.38 budget that includes an increase in assessments is irrelevant if the governing documents require a separate vote on assessment increases and the owners, by separate vote, reject the increase. In such a case a board may unilaterally amend the budget without owner approval.

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Judge Quinn-Brintnall – In Memoriam

Judge Christine Quinn-Brintnall died last week. The court’s press release is here: http://www.courts.wa.gov/newsinfo/?fa=newsinfo.pressdetail&newsid=2710

I worked for Judge Quinn-Brintnall for about eight months after she defeated Governor Locke’s appointee (whom I also worked for). She was a former prosecuting attorney for Pierce County. She scheduled a going away lunch on my last day at the Washington State Court of Appeals Div. II, the day of the Nisqually quake. Although the quake hit the appeals building like a semi, we had the lunch anyway.

She was a fine boss and she died too soon (age 62).

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Law Firm Move

Our Kirkland office is moving to Seattle on June 1, 2014. Our new address will be

901 Fifth Avenue, Suite 820, Seattle, WA 98164-1005.

We are maintaining our Eastside telephone number, (425) 889-8191, and adding a new Seattle line, (206) 403-1933.

This might explain in part why I’ve been so quiet…

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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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