Today, the Washington State Supreme Court published its ruling in Filmore LLLP v. Unit Owners Association of Centre Pointe Condominium. The opinion may be found here. For condominium owners and managers within the State of Washington, this is one of the most highly anticipated court decisions in years. The issue before the Court was whether a declaration amendment that imposes a rental cap, or ceiling, requires 67% approval, or constitutes a change in use, requiring a supermajority 90% approval of unit owners. The Court had an opportunity to decide what constitutes a "use," as that term is used in the Washington Condominium Act ("WCA"), but sidestepped the question, and instead, limited its analysis to the specific language of Centre Pointe Condominium's declaration. The court stated: But we need not interpret the WCA here because, in contrast to RCW 64.34.264(4), the Declaration itself identifies a number of "uses" that come within the special supermajority voting requirement in [the Declaration]. Where does the ruling leave condominium associations within Washington today? 1. The ruling is limited to condominiums governed by the WCA; thus, "Old Act" condominiums and homeowner associations should remain unaffected. 2. The Filmore decision turned on specific language of the Declaration. Consequently, all WCA, or "New Act", condominium associations will have to look beyond RCW 64.34.264(4), and consider how their particular Declaration defines or refers to "uses" in determining what percentage of owner vote is required to approve a Declaration amendment. 3. Piggybacking on number (2) above, it is conceivable that persons will use the Filmore opinion to challenge almost any Declaration amendment, arguing the amendment changes the "use" of a unit, thus triggering a 90% supermajority approval; especially in instances where the proposed amendment covers a provision identified or referred to in the Declaration as a "use." Given the differences in language utilized in various condominium Declarations, any New Act condominium that is contemplating amending its declaration should consider the impact of Filmore on its proposed changes or modifications. If you have questions, we highly recommend you seek qualified legal assistance. I or one of my colleagues at Barker Martin remain available for assistance on this, or any related community association matters. read more

Most every community association possesses discretion to grant a permit, license or variance for specified conduct of its members. For example, a homeowner association that has a 30-foot height limitation for structures on lots conceivably could grant a variance to an owner who wanted to build a 21 foot home due to extraordinary topography conditions. Or perhaps a condominium association could grant a permit for a disabled owner to use an elevator ordinarily restricted to commercial use. There is a limitless set of examples where permits, licenses or variances may be acceptable in the community association context. read more

The California water crisis and the hot weather so far this year (and over the last week!) have highlighted the need to plan ahead for community associations' water consumption. For example, in California, where the state government recently mandated a 25% reduction in urban water use, new legislation prohibits HOAs from penalizing residents for replacing their lawns with low-water use plants over concerns about a neighborhood's character. Another California bill prohibits fines for residents who stop watering when a drought emergency has been declared. In other communities across the country, water restrictions have become the norm and residents and architectural review committees clash in disputes over things like the replacement of lawn with artificial turf to reduce water consumption. It may only be a matter of time before these legal issues trickle to Oregon and Washington. Whether you're motivated by the bottom line in the rising cost of water, a wish to help the environment through "greener" practices, or the simple desire to avoid future legal wrangling over landscaping compliance, there are proactive steps your community should think about taking: 1. Amend your community's plan and rules. Consider allowing or even requiring native plants or xeriscaping (sustainable landscaping that may reduce or eliminate the need for supplemental irrigation) in the community's landscaping plan and architectural guidelines. Application of such principles can reportedly reduce water consumption by up to two-thirds and may decrease the need for certain landscaping services. 2. Repair or upgrade irrigation equipment. Leaky and inefficient equipment can lead to costly waste. Efficient drip irrigation systems and soil moisture detectors are available at a reasonable cost. 3. Adjust the timing and frequency of irrigation. Qualified landscapers can recommend the most efficient timing and frequency for watering based upon a host of factors like exposure, season, soil conditions, type of plant etc. 4. Store rain water. The collection of rainwater in cisterns may conserve potable water and reduce water charges. The City of Portland reports that the cost ranges from $200 for a 250 gallon cistern to $5,000 for a 10,000 gallon cistern. Talk to a qualified landscaper if you have questions about these and other landscaping options. Other community and online resources may also be available. Of course don't hesitate to contact Barker Martin if you need assistance analyzing the rules and regulations applicable to your community. read more

Many of you have probably read or heard about the tragic accident in Berkeley, California, where a residential balcony collapsed killing six students. http://www.cnn.com/2015/06/23/us/berkeley-balcony-collapse-dry-rot/. According to reports, the balcony collapsed due to beams that were "extensively rotted" and balconies that exhibited "significant rot and decay." We have encountered many clients and potential clients whose decks and buildings exhibit similar rot. Fortunately, accidents such as the one in Berkley are not frequent, but they do present a significant risk to homeowners and homeowners associations. It is often the case that associations are responsible to maintain decks and balconies as limited common elements. If they are not properly maintained, a maintenance obligation can quickly become a significant liability concern for the association. If an association discovers rot in its buildings, it has several options. If the association is within the applicable statute of limitations, it may have a claim against the builder and/or its subcontractors. For older projects outside of the statute of limitations, the options are more limited. Homeowners associations can assess the owners or possibly secure a bank loan. Neither of these options are particularly popular. Another possibility is to pursue the first-part property insurance procured to cover the association's property. Many of these policies provide coverage for "collapse." Fortunately, associations may not have to wait until an actual collapse such as the one in Berkley to secure coverage. In Queen Anne Park Homeowners Association v. State Farm Fire and Casualty Company, the Washington Supreme Court recently confirmed that when insurers do not specifically define collapse, the term is interpreted to mean "substantial impairment of structural integrity." Translating that into English, the court ruled that a building (or parts of a building) do not actually have to fall down in order to be covered as a "collapse." Associations should be mindful of their maintenance obligations. If rot or damage is discovered, associations should act quickly to protect the safety of its residents and to avoid a significant liability risk to the association. If an association discovers rot or decay, Barker Martin is happy to provide a free consultation to ensure the association knows all of its options. read more

Serving on a community association board is often a thankless job. In addition to the long hours and low pay (ok, no pay), there are myriad problems that a board member has to deal with. The governing documents (hopefully) spell out the board's responsibilities for the association. If something goes wrong, most associations have Directors' and Officers' insurance ("D&O Insurance")1 available to protect individual board members. D&O policies are meant to cover any "wrongful acts" committed by board members. While the term "wrongful acts" may sound sinister, the definition typically includes "any negligent acts, errors, omissions or breach of duty committed by an insured in their capacity as such." Hopefully, when a board or individual member of the board neglects to undertake a given responsibility, the D&O Insurance will provide a safety net. But what if one of those responsibilities is buying insurance in the first place? Nearly all governing documents for community associations require the association, through its board of directors, to purchase various types of insurance. Depending on the language of the governing documents, the required insurance may apply to common property, unit owner property, and the liability of the association, board, and unit owners. Obviously, if the board neglects to purchase D&O insurance, there is no safety net anyway. But what if the board either purchases the wrong kind of insurance, or no insurance, for the property and/or liability of the community as required by the governing documents? Surely, that would qualify as a "negligent act, error, or omission" of the board, wouldn't it? In the real world, the answer to that question is certainly yes. Unfortunately, insurers have closed the door on this type of claim. There is a standard exclusion in D&O insurance, which excludes "any failure to effect, maintain or procure any insurance policy or bond, including any failure to obtain proper amounts, forms, conditions or provisions on any insurance policy or bond." While D&O insurance does offer a safety net for board members in some situations, that net will be abruptly yanked away when it comes to purchasing the right insurance. Board members should pay special attention to the insurance requirements of the governing documents. If necessary, they should consult with their broker and/or their association attorney. If they don't, they are walking a tight rope without a safety net. 1. D&O insurance shouldn't be confused with Errors and Omissions ("E&O") insurance. The former is meant to cover directors and officers of an entity for their wrongful acts. The latter is typically meant to cover companies and their agents in the rendering of professional advice or services. read more