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Regular legislative session ends, not much effecting Associations this year

May 21, 2010 | Archive, Blog, Text Only Article | 0 comments

The 2010 regular legislative session came to an end on March 12 and Governor Gregoire called a special legislative session to begin March 15 in order for the legislature to complete its operating budget and work out the details of the revenue package necessary to fund the budget.

For the most part, all policy issues (non-budget related) for the 2009-10 biennial session are now finished and the 2011 legislature will start anew come January. A tenuous session followed by an unpredictable 2010 election season will provide for much excitement this fall and winter.

The legislature operates on a two-year biennial system. Odd numbered years are limited to 105 days in length and focus on the development of the two-year operating, transportation and capital budgets, while even numbered years are limited to just 60 days and are primarily focused on the supplemental budgets. Because the state faced a $9 billion deficit in 2009 and a $2.8 billion deficit in 2010, fiscal issues have dominated the stage and policy issues have taken a back seat this biennium.

With democrats controlling the House and Senate as well as the Governor’s mansion, some political strategists believe the recent fiscal crisis at the state and national levels will put that control at risk come November elections. All 98 members of the House of Representatives and 24 of the 49 members of the Senate are up for re-election this year. If the tide changes in Olympia, many issues that have been on the back burner may resurface in 2011.

For the most part, it was a quiet year for condominium and homeowner associations in Olympia. Several new bills were introduced in 2010 and many left over from the 2009 session, but none received much attention in this short, 60-day session.

The final outcome of legislation that the WSCAI’s Legislative Action Committee (LAC) focused on this biennium includes:

House Bill 2657: Dissolution of limited liability companies.
This bill, prime sponsored by Rep. Jamie Pedersen (D-Seattle) addresses the interpretation by the Washington State Supreme Court in Chadwick Farms Owners Association v. FHC, LLC, RCW 25.15.303, that only preserves claims against development LLCs after “dissolution” of an LLC, but it does not preserve claims against “cancelled” LLCs.  The new law, as signed by the Governor and takes effect June 10, 2010, will preserve claims against “cancelled” LLCs.  Special thanks to WSCAI members: Cynthia Jones, Co-Chair of WSCAI LAC and with Rafel Law Group; Jeremy Stilwell and Marlyn Hawkins of Barker Martin; and Michael Brandt of Brandt Law Group for their diligent work on this legislation.

 

Senate Bill 6460: Increasing the cap on the preparation of resale certificates.
Of the 25 states that require resale certificates for the purchase of condominiums, only four states regulate the fees charged. Washington State’s fee, established in 1990 with the adoption of the Condominium Act, is capped at $150. WSCAI’s LAC advanced legislation prime sponsored by Senator Chris Marr (D-Spokane) that increased the cap to $275 and ties future increases to the Consumer Price Index.  This bill did not pass, but the LAC will pursue it in 2011.

House Bill 2440: Allowing HOAs to access motor vehicle records.
Deborah Baker, President of Clearwood Community Association, led the charge on this legislation prime sponsored by Rep. Jim MCCune (R-Graham). The bill, under specific requirements, would have authorized a homeowners’ association to request information regarding the name and address of an individual vehicle owner in connection with driver and pedestrian safety. This bill is did not pass, but is expected to come back again in some form in 2011.

Senate Bill 6735: Concerning condominium association liens.
This legislation, introduced by Senator Rodney Tom (D-Medina), never received a hearing and did not pass, but WSCAI’s LAC was involved with helping Sen. Tom and his staff draft legislation “answer and questions” regarding the topic.

Currently, under the Washington Condominium Act (Act), associations may have a lien on a unit for any unpaid assessments against a unit from the time the assessment is due.  The Act provides a priority to the extent of certain assessments that would have become due during the six months immediately preceding (1) the date of sheriff’s sale in judicial foreclosure; or (2) the date of a trustee’s sale in a non-judicial foreclosure; or (3) the date or recording the declaration of forfeiture on a real estate contract.

The Act also provides that this priority is reduced to three months for an eligible mortgagee.

Eligible mortgagee means the holder of a mortgage on a unit that has filed with the secretary of the association a written request that it be given copies of notices of any action by the association that requires the consent of mortgagees.

The proposed legislation would have created a lien priority for certain assessments that would have become due during months immediately preceding (1) the recording of a lis pendens in an action for judicial foreclosure; or (2) the date of the trustee’s sale in a non-judicial foreclosure; or (3) the date of recording the declaration of forfeiture on a real estate contract.

This lien priority would have included assessments made against a unit for any period of time during which the unit owner is default on his or her obligation to the condominium association, the association notified the mortgagee of the default, and the mortgagee failed to enforce his or her rights to foreclose on its mortgage. In addition, the lien priority of 12 months would have been reduced to six months for an eligible mortgagee.

 

Because the legislation never received a hearing, the LAC did not take a position on the bill. It is unknown at this time if Sen. Tom plans to revisit the issue in 2011.

 

 

House Bill 2820: Concerning reserve account funding levels.
Introduced by Rep. Al O’Brien (D- Bothell), this legislation would have required that by January 1, 2015, associations with twenty-five or more unit owners be encouraged to establish a reserve account and maintain at least a seventy percent funding level in the reserve account as determined by using the association’s most current reserve study.

This legislation did not receive a hearing and did not pass, but it is an illustration of legislators beginning to hear more and more from their constituents about underfunded reserves.

With Rep. O’Brien retiring from the legislature this year it is unclear who, if anyone will be focused on this legislation in 2011. However, it should be noted that funding of reserves is being discussed more among legislators in Olympia.

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