As of February 13, 2023
Title: An act relating to providing protections for consumers engaging with common interest
communities.
Brief Description: Providing protections for consumers engaging with common interest
communities.
Sponsors: Senator Trudeau.
Brief History:
Committee Activity: Law & Justice: 2/13/23.
Brief Summary of Bill
Prevents common interest community (CIC) associations from
nonjudicially foreclosing on liens for assessments on residential real
property.
•
Requires associations to retain unit owner and board member lists, and
changes procedures related to the disclosure and copying of records
retained by associations.
•
Changes seller disclosure requirements related to residential real
property.
•
Makes patterns of violations of statutory requirements regulating CICs
by associations violations of the Consumer Protection Act.
•
SENATE COMMITTEE ON LAW & JUSTICE
Staff: Ryan Giannini (786-7285)
Background: Common Interest Communities. A common interest community (CIC) is a
This analysis was prepared by non-partisan legislative staff for the use of legislative
members in their deliberations. This analysis is not part of the legislation nor does it
constitute a statement of legislative intent.
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form of real estate in which each unit owner or homeowner has an exclusive interest in a
unit or lot and a shared or undivided interest in common area property. In Washington,
several statutes govern residential CICs, such as condominiums, cooperatives, leasehold
CICs, miscellaneous communities, and plat communities.
The Washington Uniform Common Interest Ownership Act (WUCIOA) took effect July 1,
2018, and is applicable to CICs created on or after that date. A CIC created prior to the
effective date of WUCIOA may choose to opt in to WUCIOA, which contains
comprehensive provisions addressing the management of property under its jurisdiction.
Otherwise, CICs created before July 1, 2018, typically are regulated by their governing
documents and remain subject to the following acts:
the Horizontal Property Regimes Act (HPRA), which apples to residential
condominiums created on or before July 1, 1990;
•
the Washington Condominium Act (WCA), which applies to condominiums created
after July 1, 1990; and
•
the Homeowners’ Association Act (HOAA), which provides a framework for the
formation and legal administration of homeowners’ associations created before July 1,
2018.
•
Organizational Documents. A CIC is administered by an association of unit owners or a
homeowners’ association—an organization consisting of property owners and homeowners
within the CIC. An association of unit owners derives its authority from several documents,
including the declaration of covenants, conditions, and restrictions, the association’s bylaws
and articles of incorporation, and the deeds to the property within a development.
Association Duties and Powers. A unit owners’ association’s duties include managing and
maintaining common areas for the benefit of the community, imposing and collecting
assessments on unit owners, and enforcing restrictive covenants that govern
the community. A unit owners’ association may adopt rules and regulations concerning
property use in the community, and impose fines for violations of those rules.
When a unit owner does not pay assessments as required, an association may collect
reasonable charges for late payments and establish a rate of interest to be charged on all
subsequent delinquent assessments. An association is entitled to recover any costs and
reasonable attorneys’ fees incurred in connection with the collection of delinquent
assessments.
Generally, an association has a statutory lien on each unit for any unpaid assessment against
the unit from the time the assessment is due. With some exceptions, the association’s lien
takes priority over all other liens and encumbrances. To collect unpaid assessments, an
association may bring an action to collect unpaid assessments or foreclose its lien on the
unit.
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Foreclosure of Common Interest Community Property. Liens on CIC property may be
foreclosed either judicially in the same manner as mortgages or nonjudicially in the same
manner as deeds of trust.
The WUCIOA, HPRA, and WCA prohibit an association from commencing an action to
foreclose the association lien for past-due assessments, unless certain pre-foreclosure
requirements are met. These pre-foreclosure requirements also apply to a CIC organized
under the HOAA if the governing documents of the CIC provide for a lien on the lot of any
owner for unpaid assessments. These pre-foreclosure requirements include:
the unit owner must owe at least three months or more of assessments or $200 of
assessments, whichever is greater;
•
the association must mail to the unit owner a notice of delinquency on or after the
date the assessments have become past due for at least 90 days;
•
effective until January 1, 2024, an association must wait 180 days from the date the
minimum required amount of past-due assessments has accrued before commencing
an action to foreclose a lien. Beginning January 1, 2024, the waiting period is
shortened to 90 days; and
•
the board of the association must approve commencement of the foreclosure action
specifically against the unit.
•
Recordkeeping Requirements. All four statutes governing CICs contain association
recordkeeping requirements, but only the WUCIOA and the HOAA contain a requirement
to keep a list of the names and addresses of unit owners. An association subject to
WUCIOA must make records available for examination and copying by all unit owners,
unit mortgage holders, and their respective authorized agents during reasonable business
hours or at a mutually convenient time and location, and at the offices of the association or
its managing agent. An association may charge a reasonable fee for producing and
providing copies of records and for supervising inspection of records. The right to copy
records includes the right to receive copies by photocopying or other means, including
through electronic transmission if available upon request by the unit owner. An association
may withhold certain records from inspection and copying to the extent that the records
concern certain subjects.
Information to Property Buyers. Disclosure Statement. A seller of residential real property
must provide a buyer with a disclosure statement about the property within five business
days after mutual acceptance of a written purchase agreement. The disclosure statement
requires the seller to disclose certain information about the property, including information
about any homeowners’ association.
Within three business days of receipt of the disclosure statement, the buyer may approve
and accept the disclosure statement or rescind the purchase agreement. If the disclosure
statement is delivered late or not delivered, the buyer’s right to rescind expires the earlier of
three days after receipt of the disclosure statement or the date the transfer closes. The failure
of an association to provide any requested information related to the homeowners’
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association or common interest community does not constitute a seller’s failure or refusal to
provide the seller disclosure form.
Public Offering Statement. For buyers of newly constructed CIC property, a detailed public
offering statement must be provided to the buyers by a declarant—usually the builders or
developer—before conveyance of the unit. The public offering statement provides certain
information to the buyer, including copies of the organizational documents and declaration.
After receipt of a public offering statement, a buyer has seven days to cancel the sale and
may extend a sale to not more than seven days after receipt.
Resale Certificate. A unit owner reselling CIC property must provide a resale certificate to a
buyer before executing a sale contract, or before conveyance. The resale certificate provides
certain information to the buyer, including copies of the governing documents and
disclosures about assessments and fees. The contract is voidable by the buyer for five days
after receipt. Within ten days after an owner’s request, the association must provide a resale
certificate and may charge a fee not to exceed $275 for the certificate and $100 for updates.
A unit owner is not liable for erroneous information in the certificate.
Washington Consumer Protection Act. The Consumer Protection Act (CPA) prohibits
unfair methods of competition, or unfair or deceptive practices in the conduct of any trade
or commerce. The attorney general is authorized to investigate and prosecute claims under
the CPA on behalf of the state or individuals in the state. A person injured by a violation of
the CPA may bring a civil action for injunctive relief, recovery of actual damages, and
reasonable attorneys’ fees. The courts may increase awarded damages up to three times the
actual damages sustained.
Summary of Bill: Foreclosure of Common Interest Community Property. Nonjudicial
foreclose on liens for assessments are not permitted. Associations may only foreclose on
liens for assessments through judicial foreclosure.
Recordkeeping Requirements. All associations are required to create and maintain complete
and accurate unit owner lists which must include unit owners’ names, listed telephone
numbers, addresses, email addresses, and number of votes allocated to each unit. Similarly,
all associations must maintain a complete and accurate list of their current board of directors
and officers.
Associations must retain the original or restated declarations, organizational documents, all
amendments to the declaration and organizational documents, and all rules currently in
effect, including information regarding assessments.
The documents and lists described above must be retained by the association, and made
available for examination and copying to all unit owners, holders of mortgages on the units,
and their respective authorizing agents. The documents must further be accessible on an
association’s website, if any.
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The documents and lists described above may be withheld from inspection and copying to
the extent that they concern:
the unlisted telephone number of any owner;•
the email address of an owner upon request of the owner to the association;•
information which would violate a court order or law; or•
agreements that for good cause prohibit disclosure.•
The association may charge the actual cost for producing and providing physical copies of
any records and for supervising the unit owner’s inspection. Associations may not charge
any costs for providing copies of records through an electronic transmission. The
documents and lists described above may not be used for commercial purposes.
Information to Property Buyers. Disclosure Statement. Sellers of residential real property
are required to provide a disclosure statement to a prospective buyer upon request before
mutual acceptance of a written contract to purchase residential real property. The disclosure
statement must be provided within five business days of the request, or unless otherwise
agreed to between the prospective buyer and seller. Providing the disclosure statement prior
to a written agreement satisfies the seller’s duty to provide a disclosure statement when a
buyer and seller later enter into a written agreement. A prospective buyer who requests and
receives a disclosure statement before mutual acceptance of a written agreement may not
later rescind the written agreement due to the disclosure statement.
The seller must provide additional information in the disclosure statement about whether
there are copies of a homeowners’ association’s declaration, organizational documents, or
rules or regulations available to be provided to the prospective buyer. The seller must attach
any such copies to the disclosure statement if they are available.
Failure of a homeowners’ association to provide requested information related to the
homeowners’ association constitutes a seller’s failure or refusal to provide a disclosure
statement.
A seller must amend the disclosure statement if the seller learns of information that would
make the disclosure inaccurate. No amendments are required if 30 days have passed since
the disclosure statement was delivered to the prospective buyer and there has been no
contact from the prospective buyer, or if corrective action is taken so that the information is
accurate by the time the buyer and seller enter into a written agreement.
Public Offering Statement. If a purchaser of a unit subject to WUCIOA or the WCA
receives a public offering statement prior to mutual acceptance of a written agreement for
the purchase and sale of a unit upon request of the purchaser, the purchaser does not have a
right to later cancel a contract due to the public offering statement.
Resale Certificate. A unit owner must provide a resale certificate to a purchaser of a unit
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subject to WUCIOA or the WCA before mutual acceptance of a written agreement for the
purchase and sale of a unit, before execution of any contract for sale of a unit, or before
conveyance of the unit.
Washington Consumer Protection Act. Cease and Desist Letters. The attorney general may
issue a cease-and-desist letter to any association to restrain and prevent a pattern of failure
to follow the requirements of the WUCIOA, HOAA, HPRA, and HCA.
Violations. A pattern of violations, evidenced by the issuance of two or more cease-and-
desist letters, is a violation of the CPA.
Appropriation: None.
Fiscal Note: Not requested.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: The bill takes effect on April 1, 2024.
Staff Summary of Public Testimony: PRO: This is a complex area of the law. This work
is a worthy one for those in homeowners’ associations (HOAs). This bill provides standards
that will allow a homeowner to know what they are agreeing to when they purchase a home,
and provide accountability for board members who violate rules. There are penalties in
place when there is a pattern of intentional violations which are very reasonable. Patterns of
violations by HOAs are considered violations under the CPA . Penalties will only occur
after the attorney general’s office (AGO) finds a pattern of violations, a cease-and-desist
letter is sent, and violations continue. Mandatory email lists are important to ensure
communication between all members of the association, and will help prevent association
boards from self-electing their members. This bill ensures board members and associations
are held accountable.
CON: One primary concern with the bill involves the AGO authority to sue a community
association for an alleged pattern of violations. The CPA is designed to protect the public
and promote fair honest competition in trade or commerce. Nonprofit community
associations are not actively engaged in commerce and should not be subject to this. There
are concerns with procedure which allows the AGO to sue a community association five
days after sending a cease-and-desist letter. Because members of the board are mainly
volunteers who have full-time jobs, it is difficult for them to respond to such letters. Serving
on a community association is a thankless job. This bill will make it difficult to find willing
volunteers to serve on the board because they are subject to lawsuits filed by the state.
OTHER: There is interest in the sections of the bill that deal with seller disclosure law. The
modifications to the questions on the seller disclosure statement may conflict with existing
seller disclosure requirements. The changes to the rights of rescission for a buyer based on
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when they receive the seller disclosure form may not be in the best interest of buyers.
Persons Testifying: PRO: Senator Yasmin Trudeau, Prime Sponsor; Steve Horvath,
Condo Connection; Patrick Johansen, RiseUpWA, Housing Justice Committee; Sherry
Stacy; Candace Carteen.
CON: Patrick McDonald, Washington State Chapter of Community Association Institute.
OTHER: Bill Clarke, Washington REALTORS.
Persons Signed In To Testify But Not Testifying: No one.
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