Washington Associations: Collections Update
Recently, there have been two major changes in Washington law that impact association collections. On July 13, 2021, the Washington Governor rescinded Proclamation 20-51 effective as of 11:59 p.m. on July 24, 2021. This means that beginning July 25, 2021, Washington associations may resume assessing late fees and interest on delinquent accounts. That being said, each association should review its governing documents to determine the day of the month the late fee and interest can be assessed in order to ensure the association is in compliance its own governing documents.
The passing of HB 1482 is the other change in Washington law that impact community association collections. This bill creates new minimum balance and notice requirements that must be met before a Washington association can initiate a foreclosure action.
A basic summary of these requirements are:
There is a new requirement that the account must have a minimum balance in the sum of either $200.00 or 3 months or more unpaid assessments, whichever is greater, before an association can file a foreclosure lawsuit. Please note, you only common expense assessments and special assessments are included when calculating this minimum balance amount (fines, late fees, interest, administrative fees, attorneys’ fees and costs cannot be included when calculating the minimum balance amount).
There is a minimum time-period that an association must wait before a foreclosure lawsuit can be filed. Currently, this time-period is 180 days after the “minimum balance” amount is delinquent. After January 1, 2024, this time-period is reduced from 180 days to 90 days.
The association cannot start a foreclosure until after a “Notice of Delinquency” containing specific language is mailed via First Class Mail to the owner’s mailing address (as provided to the Association) and to the unit/lot address. The “Notice of Delinquency” cannot be sent until an account has been delinquent for 90 or more days.
The Board must specifically approve a foreclosure action against each individual property before the Association can initiate a foreclosure action against that unit/lot.
Please note, these new requirements only apply to foreclosure actions in Washington and do not apply to personal obligation lawsuits. If your association has any questions regarding these recent changes in Washington or needs collections advice, please do not hesitate to contact Barker Martin. We’d be happy to assist!