PLEASE TELL YOUR LEGISLATORS - SSB 6175 HURTS HOMEOWNERS FAR MORE THAN IT HELPS
The bill that would become the Washington Common Interest Ownership Act, SSB 6175, continues to move forward in the legislature. The bill was passed out of the House Judiciary Committee with minor amendments that did not address concerns with the bill. As a law firm that has represented community associations in Washington State for over 25 years and that has been involved in committee work to draft legislation, we at Barker Martin have strong opinions about legislative action relating to homeowner rights and this bill, in particular. The bill is very long and its effects will be wide-ranging. As a service to those who subscribe to this email, we want to highlight some of the continued problems with the bill. If you want to confirm our information, citations to sections of the bill are below.
The bill is on the schedule to be heard on the House floor this week. If you share the concerns below, please contact your Representative to oppose this bill. At the bottom of this email, there is a sample communication that you can to share with your Representative.
We understand there are differences of opinion on many aspects of community association law, but as attorneys representing homeowner associations as general counsel and in litigation, we see the devastating effects upon homeowners that changes in the law can bring about and we oppose any law that doesn’t provide the minimum protections for homeowners as discussed below.
Non-Homeowners on Boards
Many of you have worked with or been on boards where the developer either still controlled the board or at the very least, had a seat on the board. We have had to argue many times on behalf of our clients that boards with persons appointed by the developer prevent the Association from exercising its rights against the developer. Yet this bill allows the developer to appoint a non-owner to a board, who cannot be removed by the owners for any reason. See Section 218 (1)(b) and 305(3). Moreover, instead of a fiduciary duty, developer-related board members only have the same duties as any other elected board member. See Section 303(b). This is another change from the status quo. Thus, proving that the existence of non-owners on the board impacted the Association’s ability to exercise its rights will be harder than it previously was. A community’s leadership should be chosen by the community, not dictated to them by “another person.”
Banks over Homeowners
Unlike the current Condo Act, SSB 6175 includes a limit on legal fees that can be collected as part of the “superpriority” lien from lenders – regardless of how much an Association has actually spent to foreclose a unit. See Section 317. No other lien holder in the State of Washington is subjected to this type of limitation. If a homeowner association is forced to foreclose a non-paying owner then its investment in attorney fees and costs should be protected. See Section 317.
No Warranty Rights for HOAs
Unlike the Uniform Common Interest Ownership Act, the Washington version does not grant warranty rights to homeowners in non-condominium HOAs. This was deemed “too controversial” for the committee or legislature to handle. Instead, the plan was to keep the “status quo” for condominium warranty rights, but that turned out not to be the case. See 401(3) (limiting warranty rights to condominiums).
WaCIOA Allows Declarants to Bind Associations to Arbitration
Prior to Homeowner Control of the Association.
The Uniform Act specifically requires that any binding arbitration agreement between an association and a declarant must be entered into after the period of declarant control. This is consistent with CAI policy, which encourages alternative dispute resolution (ADR) if it is truly voluntary and occurs after the dispute arises. SSB 6175 is in direct conflict with the uniform act and CAI policy. It allows parties to a dispute, including the association, to agree to alternative dispute resolution “at any time” without any limitation on the terms of binding or non-binding arbitration. See Section 418(2).
RCW 64.55, which was drafted by a balanced committee of industry stakeholders in 2005, currently gives developers the right to demand arbitration with certain limitations that protect an association’s right to judicial review. If SSB 6175 becomes law, Declarants will rely not on 64.55, but on their own one-sided arbitration clauses. In our experience, when developers try to bind associations to arbitration prior to a dispute, they often include language that does the following:
- Forces owners to pay all or a portion of arbitration costs without recourse;
- Requires notice of problems within shortened timelines.
- Requires the venue (location of the arbitration) to be out-of-state.
- Creates building standards that are lower than the minimum standards set by the building code.
- Limits remedies to loss in value rather than the cost of repairs even though Associations have a duty to make repairs.
- Attempts to bar recovery for attorney fees.
- Limits the arbitrator’s authority in ways that are detrimental to Associations.
In short, changes were made to the Condo Warranties after the drafting committee completed its work that may allow declarants to bind the Association to expensive and near-unconscionable arbitration provisions of their own choosing, despite the existence of a balanced statutory arbitration scheme enacted in 2005. See section 418(2), arguably allowing developers to put such provisions in the declaration itself.
Will There Be Any More Warranties for Condos?
In addition, the bill as drafted by the committee allowed the creation of “Miscellaneous Communities,” but originally, it had language ensuring that declarants could not avoid the condominium warranties by simply calling a condo a “miscellaneous community.” This language has been changed to make it far less clear that a “miscellaneous community” must be subject to the subdivision statute (which condos are not). See Section 102(33), 401(3).
Again, these are just a few of the many concerns our firm has regarding this bill. Are there provisions that would be helpful to owners, and in particular, HOAs? Yes. But given the catastrophic blow to a homeowners’ right to their day in court and loss of certainty as to condo warranties, the bill on the whole is far more detrimental than it is helpful.
PLEASE CONSIDER SENDING AN EMAIL TO YOUR REPRESENTATIVES ASAP!
You can look up your elected representative by using this link:
Please oppose SSB 6175. The bill is detrimental to HOAs and Condominiums in Washington State in several key respects including the following:
Sect. 218 (1)(b): It is fundamentally undemocratic to allow “another person” who is not an owner or member of an association to appoint up to 1/3 of the board of directors.
Section 317: Imposes ridiculously low limits on the legal fees and costs that are secured when an association exercises its lien rights. This will harm all Associations.
Sect. 317: SSB 6175 eliminates requirements that if any unit pays assessments, all units pay assessments.
Section 403(oo): Conversion condominium disclosures should include any recommended repairs and estimated costs of repair.
Section 418(2): A declarant should not be allowed to dictate unfair arbitration provisions to an association while the association is under declarant control. Provisions that prohibit overreaching arbitration terms need to be added to SSB 6175.
Changes at Barker Martin
It is with very mixed emotions that we at Barker Martin announce that our partner, Dan Zimberoff, will be leaving the firm effective at the end of 2017. We are happy to share that Dan is relocating to sunny Southern California due in no small part to the “sunny” reference, but also due to Dan’s desire to return to the San Diego area and actually live in the same state with his fiancée, Juli. We want to wish Dan and Juli and the rest of Dan’s family the absolute best for their future. At the same time, we are saddened to lose Dan as a partner and colleague. Most of us have worked with Dan since he joined the firm a little over 14 years ago and he will be sorely missed.
Dan will be continuing his work with California-based community associations under his new firm name, Homeowner Law. If any of you have connections with California communities or industry professionals, please do not hesitate to contact Dan.
For our part, we will continue to represent communities in Washington, Oregon and Florida. If you are currently working with Dan on any matter, he will continue to work with you through the end of the year. In the coming months, we may be contacting you to introduce you to other partners or staff to ensure the seamless transition of Dan’s local work to one of the other partners at Barker Martin.
During this transition, please do not hesitate to contact any of us if you have any input or questions. Otherwise, we look forward to continuing to serve you on your community association’s legal needs.
Barker Martin, P.S.
Please join us in welcoming John Barton to the firm as an associate attorney! John graduated from Charlotte School of Law in 2012, magna cum laude, after obtaining an undergraduate degree from Washington State University. For the last five years, John has been an attorney with the Western District of Washington’s Chapter 13 Trustee’s Office. John’s bankruptcy experience is a welcome addition to our expanding community association collections practice. John is currently licensed in Washington and will be applying for reciprocity to become licensed in Oregon shortly.
In his free time, John likes to hang with his wife and two dogs, and does some gaming in the loft. More importantly, however, John likes to bake, which is great because if you know the rest of us, you know we like to eat baked things!
Our collections clients will be getting to know John pretty well, but for the rest of you, John will be starting making the rounds at WSCAI and other industry events this month, so please come by and say hi.
Recovery For Rental Property Damages Webinar
Discovering property damage can lead to extensive repairs. For apartment owners who find themselves facing expensive repairs, even with 10-50 year old buildings, there may be another option. Owners often can look to their own first-party insurance as a means for recovery. Jim Guse, Partner at Barker Martin, P.S., is a leader in the firm’s insurance coverage practice group and will be sharing key strategies owners and managers can use to help offset the high cost of building repairs. Register for this webinar hosted by AAOA here.
The Latest Buzz about "Condo & HOA Buzz"
“Condo & HOA Buzz,” a weekly radio show co-hosted by Barker Martin partner Dan Zimberoff, is spotlighted KKNW AM’s featured talk radio show. The show offers a mix of education, entertainment, guests, features and call-in conversations. In short, all things and everything related to condominium and homeowner association living. Click here for more information.
Onward and Upward!
We are pleased to announce that Barker Martin's Portland office is now fully up and running at its new space downtown in the Crown Plaza Building, 1500 SW First Avenue, Suite 980. The office is in a quieter location just off Naito Parkway in the southern part of downtown and offers much easier and faster access for clients and business partners. The parking is also much better and more accommodating. For those that still can't make it to the office in person, we've included technology upgrades in our build-out that will allow us to conveniently connect remotely for meetings and education.
We're proud of the new office and encourage you to drop by to check it out and take a tour.
We are very excited to announce that Lindsey Sabec has joined the Portland Office of Barker Martin, P.S. Lindsey is a seasoned associate attorney who will be working with Dan and Jim on litigation matters as well as general counsel work for our community association clients. As a law clerk for the Honorable Frank L. Bearden in the Multnomah County Circuit Court, Lindsey was exposed to a broad range of legal issues and developed insight about the judicial side of litigation. Since then, Lindsey has handled a broad range of civil matters including insurance defense, personal injury, commercial loss, construction defect and general property damage claims from the defense side. As such, Lindsey adds a unique and invaluable perspective to our group. She also happens to be a lot of fun. We will be getting Lindsey "out there" to meet with many of you in the near future, but until then, please join us in welcoming Lindsey! She can be reached directly at email@example.com.
WSCAI Law Day
Community association Board Members and Managers alike face a number of obstacles when managing a large non-profit, which is why we invite you to join us on April 23rd at WSCAI’s Law Day! Experience community association attorneys engage in informative discussions regarding a range of topics, ranging from records requests to Airbnb regulations. There will be opportunities to learn from real-life issues that Board Members have faced in the past, and a crash course on tips and training for new Board Members. This is a great event to have your questions answered by professionals; all while networking and learning valuable skills! Breakfast and lunch will be provided, and there will be a silent auction as well! Learn more and register Here. We look forward to seeing you there!
Saturday, April 23, 2016
8 a.m. - 3:30 p.m.
Lynnwood Convention Center
3711 196th St SW
Lynnwood, WA 98036
Bowling Fundraiser for LAC!
You are invited to the Bowling for LAC fundraising event! Pin the date on your calendar and join Barker Martin and WSCAI as they strike up a good time! Get the party rolling with bowling, networking, food and more. Register now, there’s no time to spare!
Bowling: $45 if registered by Feb 18; $59 after Feb 18
Non-Bowlers: $25 if registered by Feb 18; $39 after Feb 18
Questions: 425.778.6378 or firstname.lastname@example.org
100 Andover Park W
Tikwila, WA 98188
Thursday, Feb 25
Condo & HOA Buzz Appreciation Event!
Barker Martin is pleased to welcome you to the Condo & HOA Buzz Appreciation Event! Join radio show co-hosts "Captain" Duncan Kirk & "Lieutenant" Dan Zimberoff as they host a party for the show's guests, sponsors and listeners.
To RSVP to this event, please email email@example.com.
February 4, 2016
The Pyramid Alehouse
1201 1st Ave. South
Seattle, WA 98134