In last week's post "Hot Off the Press," we advised readers that the Washington Supreme Court published on that day Bilanko v. Barclay Court Owners Association,an important decision relating to challenges to declaration amendments involving Washington "New Act" condominiums.  The decision can be found here.  Over the past week we've had time to analyze the opinion and have come up with a few summary points.

As with the companion case: Filmore L.L.L.P. v. Centre Pointe Condominium, Bilanko involves a condominium association governed by RCW 64.34, et seq. ("New Act"), and its analysis should not apply to "Old Act" condominiums, or community associations other than "New Act" condominiums. Specifically, the court analyzed RCW 64.34.264(2), which acts as a 1-year statute of limitations (or repose) to challenging the validity of a "New Act" declaration amendment.

The Bilanko court held that RCW 64.34.264(2)'s one-year statute of limitations for challenging a declaration amendment applies to amendments where the association had authority to act, absent fraud or actions that would violate public policy.  Though it did not expressly overrule Division Three of the Court of Appeals' decision in Club Envy Spokane, LLC v. Ridpath Tower Condominium Association, the decision in Bilanko significantly limits Club Envy's impact. Since each situation or vote is different, to avoid pitfalls, Washington "New Act" condominium associations who passed rental cap declaration amendments or amendments restricting the "use" of a unit with less than 90% member approval should contact legal counsel to determine the best manner to proceed.

Bilanko did not overturn or criticize Filmore's decision that the rental cap in that particular declaration required 90% rather than 67% approval; thus, Filmore remains solid law.  Instead, the Bilanko court ruled that it did not reach that decision because the owner's challenge was barred by RCW 64.34.264(2) because the amendment had been recorded for over a year.

Following publication of Filmore, many "New Act" condominium associations who passed rental cap amendments with fewer than 90% approval stopped enforcing the cap because it was potentially subject to challenge. The decision in Bilanko may now protect these amendments from challenge.  For associations who adopted rental caps more than one year ago, and otherwise complied with their governing documents in adopting and recording the amendment, the question is now: How should these associations re-institute the cap, especially where units have been rented since publication of Filmore with the rental cap now exceeded? There may be ways to "grandfather" such units, but a board's actions are subject to and must follow their governing documents. It is recommended that these associations contact legal counsel in order to formulate a sound game plan for proceeding.

Bilanko provides a win for Washington condominium associations in that it provides much needed guidance assisting "New Act" condominium associations add some certainty regarding amendments adopted and recorded greater than one year. However, as in most instances involving legal analysis and conclusions, the devil is in the details. The express language in a particular condominium association's declaration, along with the precise manner in which the amendment was adopted and recorded, will determine how best to proceed.

As always, do not hesitate to contact one of the attorneys at Barker Martin if you have any questions relating to this, or any other community association legal issue.