Nonprofit Act Changes
As of January 1, 2022, Washington State has a new law that applies to all domestic and qualified foreign nonprofit corporations (such as most condominiums and homeowners associations). The new law is known as the Washington Nonprofit Corporations Act, or “Nonprofit Act” for short, and is codified at RCW 24.03A. The Nonprofit Act incorporates changes covering a number of topics, including but not limited to, electronic notices and procedures, actions taken by a nonprofit corporation without a meeting, governance of officers and directors, Board notices, meetings, and voting, actions taken by a Board without a meeting, and member inspection of an association’s books and records.
The Nonprofit Act must be read in conjunction with the Washington Horizontal Property Regimes Act (the Old Act or RCW 64.32), the Washington Condominium Act (the Condo Act or RCW 64.34), the Washington Homeowners Association Act (the HOA Act or RCW 64.38), and the Washington Uniform Common Interest Ownership Act (WUCIOA or RCW 64.90). The Nonprofit Act supplements these preexisting statutes.
Our hope was that the Nonprofit Act would provide great changes to benefit associations. However, in most cases RCW 64.32, 64.34, 64.38, 64.90 trump the Nonprofit Act. The Condo Act and WUCIOA include specific sections that expressly state that any conflict between the Nonprofit Act and the Condo Act and WUICOA, the Condo Act and WUICOA will control. Similarly, where the Old Act and the HOA Act contain more specific provisions, then the more specific provisions in RCW 64.32 and RCW 64.38 control.
For example, the Nonprofit Act allows nonprofit corporations to avail themselves of notice requirements for particular circumstances, including electronic notice transmission options or oral notice. Under RCW 24.03A.015(1), notice must be in the form of a “record”, which is defined as “information inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.” RCW 24.03A.010(63). Thus, notice (and documents) may be provided to officers, directors, and members in an electronic transmission by default unless otherwise provided in the nonprofit corporation’s articles or bylaws. The bylaws have a broad definition in RCW 24.03A.010(4) and include “the code or codes of rules, other than the articles, adopted for the regulation and governance of the internal affairs of the nonprofit corporation, regardless of the name or names used to refer to those rules, excluding separate policies or procedures adopted by the board.” We interpret this definition to incorporate a common interest community’s declaration as well as bylaws. In addition to electronic notice, RCW 24.03A.015 allows oral notice under certain circumstances.
However, RCW 64.32, RCW 64.34, RCW 64.38, and RCW 64.90 conflict with the Nonprofit Act. For notice requirements and delivery of notice for RCW 64.32, RCW 64.34, RCW 64.38, and RCW 64.90, associations you should follow the requirements of RCW 64.32, RCW 64.34, RCW 64.38, or RCW 64.90 unless your governing documents are more restrictive in which case you must follow your governing documents, or you can consider amending them.
Given the complex interaction between RCW 24.03A, RCW 64.32, 64.34, 64.38, 64.90, and each association’s governing documents, we recommend that our clients consult us the first time they deal with these issues. We have also created a chart that summaries the Nonprofit Act changes that might affect the procedures of the Board and Owners typically participate in, which is available for associations and/or management upon request.