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Washington Uniform Common Interest Ownership Act


Dean Pody


It passed! As you probably already know, the Washington Uniform Common Interest Ownership Act commonly referred to as WUCIOA, (pronunciation yet to be determined), took effect July 1, 2018. What that means for you depends on whether your community is an existing community or one that may have been created in the few days since this article was published.


With the exception of some plat communities and miscellaneous communities of fewer than 12 units with annual average assessments of less than $300, all residential condominium, homeowner and cooperative associations that are created after June 30, 2018 will be subject to WUCIOA. If you are fortunate enough to have purchased a unit within one of these new communities, or will be purchasing a unit in one of these communities, there will be classes and articles published on the impact and interpretation of WUCIOA for years to come.


However, for the vast majority of existing communities in


Washington, almost all of the provisions of WUCIOA won’t apply unless your community elects to opt-in by amending its existing declaration. There is one major exception to this general rule, which is the provisions pertaining to the budget adoption process. While not entirely clear from the language in WUCIOA (a phrase that comes to mind often when reviewing its provisions) the intent appears to have been that the budget adoption procedures in WUCIOA supersede the procedures for almost all existing communities. In fact, the legislature’s Final Bill Report states that the process for adopting budgets in WUCIOA was intended to apply to all communities prospectively.


Whether an existing community will want to amend its declaration to avail itself and be subject to the entirety of WUCIOA is an open question and will depend on each community’s existing governing documents. For now, this article will focus on the budget adoption requirements, which apply to most existing communities, and the procedures that must be followed for existing communities to opt- in to be governed by the rest of WUCIOA.


Adoption of Budgets


As noted above, WUCIOA’s budget adoption provisions will apply to almost all communities regardless of when they were created. For condominiums governed by the Washington Condominium Act/RCW 64.34 (associations created after June of 1990) and non- condominium homeowner associations governed by RCW 64.38, the budget adoption process will not change significantly. However, for many condominiums governed by the Horizonal Property Regimes Act/RCW 64.32 (associations created prior to July of 1990) there may be substantial changes.


Under WUCIOA, associations must provide a copy of the full budget to all owners within thirty days of the board’s adoption of a proposed budget. Between fourteen and fifty days’ notice of a meeting to consider ratification must then be provided to owners. The budget is ratified at the meeting, regardless of whether there is a quorum, unless the unit owners of units to which a majority of the votes in the association are allocated vote to reject it.


The information that must be provided with the notice includes: (1) the projected income to the association listed by category, (2) projected common expenses by category, (3) the amount of assessments per unit and the date the assessments are due, (4) the


current amount of regular assessments budgeted for contribution to the reserve account, (5) a statement of whether the association has a reserve study, and if it does, the extent the budget meets or deviates from the recommendations in the reserve study, and (6) any deficiency in reserve funding stated on a per unit basis. These are slightly different disclosures than are currently required under RCW 64.34 and RCW 64.38.


The budget adoption procedures also clarify that special assessments must be ratified in the same manner as outlined above for regular budgets. As a whole, having all communities use the same process to adopt budgets and clarifying what information must provided to owners as part of the process should be beneficial to owners and communities and reduce the issues and challenges related to the validity of assessments in the future.


Requirements to Opt-In to WUCIOA


As alluded to above, existing associations may choose to be governed by the rest of WUCIOA by amending their declarations. However, there is no reason to panic. There is no deadline for communities to elect to opt-in. They can opt-in next year, the year after that or ten years down the road, and as explained below, this may be a case where being among the first isn’t necessarily best.


WUCIOA outlines a special procedure for amending an association’s declaration for purposes of adopting WUCIOA that supersedes the existing requirements for amendments contained in an existing association’s declaration. Although adopting WUCIOA can have fairly significant consequences for an association, the threshold to opt-in is relatively low.


To adopt WUCIOA, the board, or owners holding at least twenty percent of the votes in the association, may propose an amendment to adopt WUCIOA. Once the amendment is proposed, owners must be given at least thirty days’ advance notice of a meeting to discuss the proposed amendment. After the meeting the board must provide owners with a notice containing the proposed amendment and a ballot to approve or reject the amendment. The amendment is approved if owners holding at least thirty percent of the votes in the association participate in the voting process, and at least sixty- seven percent of the vote cast by participating owners is in favor of the proposed amendment. In other words, as little as 20.1 percent of owners can make an association opt-in.


Nevertheless, communities should not opt-in to WUCIOA without first consulting with counsel and considering the potentially significant ramifications of doing so. Although there are a lot of potentially good provisions in WUCIOA, there are also a lot of drafting issues that will likely be addressed through the legislature and the courts in the years to come. For example, for condominiums that elect to opt-in, the extent that WUCIOA supersedes any inconsistent or additional terms of a condominium’s existing governing documents is not clear. There are also a number of provisions that create additional administrative burdens. If an association isn’t facing significant issues that can only be addressed through opting in, the vast majority of communities should take a wait and see approach and reevaluate their situation after some of the issues with WUCIOA have been ironed out, as there likely will be many challenges to the application and interpretation of its specific provisions.


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