The Washington Uniform Common Interest Ownership Act (Chapter 64.90 RCW “WCIOA”)) took effect on July 1, 2018.  Since that time, board members, managers, owners and (definitely) attorneys have been studying to understand its reach and ramifications.

Judging by the numerous questions we have received, there is a shared concern about complying with WCIOA’s notice and budget ratification provisions in RCW 64.90.525.  For some associations, like HOAs with restrictive affirmative budget voting requirements, the applicable budget ratification provisions are a welcome treat.  For others, however, it seems like properly disclosing the information required by WCIOA is something of a trick.

RCW 64.90.525, applicable to preexisting communities by way of RCW 64.90.080, states:

Budgets—Assessments—Special assessments.

(1) (a) Within thirty days after adoption of any proposed budget for the common interest community, the board must provide a copy of the budget to all the unit owners and set a date for a meeting of the unit owners to consider ratification of the budget not less than fourteen nor more than fifty days after providing the budget. Unless at that meeting the unit owners of units to which a majority of the votes in the association are allocated or any larger percentage specified in the declaration reject the budget, the budget and the assessments against the units included in the budget are ratified, whether or not a quorum is present.

(b) If the proposed budget is rejected or the required notice is not given, the periodic budget last ratified by the unit owners continues until the unit owners ratify a subsequent budget proposed by the board.

(2) The budget must include:

(a) The projected income to the association by category;

(b) The projected common expenses and those specially allocated expenses that are subject to being budgeted, both by category;

(c) The amount of the assessments per unit and the date the assessments are due;

(d) The current amount of regular assessments budgeted for contribution to the reserve account;

(e) A statement of whether the association has a reserve study that meets the requirements of RCW 64.90.550 and, if so, the extent to which the budget meets or deviates from the recommendations of that reserve study; and

(f) The current deficiency or surplus in reserve funding expressed on a per unit basis.

(3) The board, at any time, may propose a special assessment. The assessment is effective only if the board follows the procedures for ratification of a budget described in subsection (1) of this section and the unit owners do not reject the proposed assessment. The board may provide that the special assessment may be due and payable in installments over any period it determines and may provide a discount for early payment.

While the budget ratification process is not a new concept, there are a few unique requirements imposed by WCIOA.

One is that the notice timeframe is 14-50 days, not 14-60 like the Washington Condominium Act (Chapter 64.34 RCW) and the Washington Homeowners Associations Act (Chapter 64.38 RCW).

Another is that WCIOA requires the budget notices to contain the information listed in (2)(a) – (f), above.  While providing more information to owners is generally a good thing, the trick is properly providing information regarding expenses like “specially allocated expenses” in subsection (2)(b), which is not a term that is defined in prior condo or HOA laws.

If you have questions about the required budget disclosures, the attorneys at Barker Martin are available for consultation.

Happy Halloween!