Changes to Community Association Foreclosures H

— By Valerie Oman, Esq. —

ouse Bill 1482 took effect on May 10, 2021 with little fanfare in Washington State. HB 1482 amends portions

of the Washington Uniform Common Interest Ownership Act (WUCIOA), the Condominium Act, the Horizontal Property Regimes Act, and the Homeowners Association Act. The changes add new requirements and steps that must be met/taken before an association can begin a foreclosure action against a delinquent owner.

Unlike most bills, which take effect 90 days after signing, HB 1482 took effect immediately.

Effective May 10, 2021 through the end of 2023, in order to commence an action to foreclose an association lien against a delinquent owner, the following steps are required:

1. An association may not begin a foreclosure action until an owner owes a sum equal to 3 months’ assessments or $200, whichever is greater. This amount may not include late fees, interest, fines, attorneys’ fees and costs, or other charges incurred by the association in connection with collecting on the delinquent account.

2. No sooner than 90 days after the account becomes delinquent, the association must mail a Notice of Delinquency containing specific language detailed in HB 1482. The Notice of Delinquency must be mailed to the owner’s mailing address (as provided to the association) and to the unit or lot address, even if the owner does not live there. The notice must be sent via regular First-Class mail and may not be hand-delivered or sent electronically, even if the owner has opted in to receive electronic notices. You cannot start a foreclosure action until this notice has been mailed.

3. At least 180 days must pass from the date the minimum amount due mentioned in #1 above has accrued. (In 2024, this period will drop from 180 days to 90 days.)

4. The board must approve the foreclosure against the specific unit/lot in question. It is not enough to have “blanket” approval (i.e., a board policy) to foreclose

once certain steps are taken or a certain balance due is achieved. Nor can the manager make this decision on behalf of the board. Rather, the board must vote to approve each individual foreclosure action started by the association.

What isn’t changing:

“Regular” delinquency notices can still be sent as usual. Late fees and interest are unaffected. During the COVID-19 pandemic, late fees and interest were suspended under Proclamation 20-51 which will be rescinded July 24, 2021 at 11:59 p.m. Liens can be recorded as usual (but recording fees are going up by $100 on July 25, 2021). Utility termination, rent interception, and personal lawsuits (including small claims actions) are not affected.

The main effect of HB 1482 is to slow down an association’s ability to foreclose, and add some procedural steps to the process before a foreclosure can begin. For most communities, this will not represent a significant delay, especially if the association sends the appropriate Notice of Delinquency as soon as the account reaches the threshold balance due.

On the other hand, there will almost certainly be unintended consequences created by these new requirements. For example, an association with a large special assessment to fund a significant repair project may be unable to start a foreclosure action quickly enough to collect the unpaid assessment in time to pay its contractors while the project is still ongoing. Association should keep this in mind when budgeting for special assessments or projects and when compiling their next annual budget.

For specific advice on your community’s approach to delinquencies and foreclosures, we recommend you consult with your association attorney. 23

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