[WSBARP] new case HOA statute

[Rob Wilson-Hoss]

Hi, Jim, how are you doing?  Thanks for the response.  I would agree with
you, but for the actual language of the statute, which says what a HOA is.
And it does not refer to anything in the governing documents, except the
obligation to pay because of (at the minimum) ownership. So, when the
statute says a homeowners association, 

 

means a corporation, unincorporated association, or other legal entity, each
member of which is an owner of residential real property located within the
association's jurisdiction, as described in the governing documents, and by
virtue of membership or ownership of property is obligated to pay real
property taxes, insurance premiums, maintenance costs, or for improvement of
real property other than that which is owned by the member. “Homeowners'
association” does not mean an association created under chapter 64.32 or
64.34 RCW,

 

the tests are spelled out, and if an "association" meets those tests, it is
an HOA:

 

·       corporation, unincorporated association or other legal entity, and
we already know that "unincorporated association" is as clear as mud, but
nothing about this requires reference in covenants;

·       each member owns residential real property located within the
association's jurisdiction;

·       jurisdiction is as described in the governing documents (and if the
association had to be described in the governing documents, why not also say
that, when it already says jurisdiction as described in the governing
documents, so the Legislature knows how to say that);

·       by virtue of membership in the association or ownership of the
property (again, nothing about covenants specifying an association);

·       is obligated to pay something (again, clarity goes missing).

 

I understand that the statute has always been difficult in many ways, and
where it came from, but when it defines homeowners' associations, and does
it in this way, I don't see that the recorded restrictions or other
covenants have to specify an association of any particular sort, or any
association at all. It's just not in the definition, regardless of whether
it should be or not.

 

Under this statute, if I file a declaration of covenants and restrictions,
and cover the elements required in the statute, I don't think I also have to
describe the association. Is the result messy? Certainly. Would the opposite
result that you argue for be worse for small associations that aren't called
out in the covenants, but need a way to administer maintenance of
facilities, setting assessments and collections? Certainly. Otherwise, what
do they do? Maintenance and payment are voluntary, even though the covenants
say they are mandatory? Individual members sue each other for the general
obligation to pay for maintenance of roads that people use, in the absence
of recorded enforcement tools?

 

Hey, I could be wrong, but I am sort of used to reading statutes, and
sometimes I am actually right about them. This one seems to say what it
says, to me. 

 

This is apart from the actual result in Walsh v. Halme, which is a whole
other question. My objection is to how they got there; the larger objection
is that they just don't seem to take HOA cases very seriously, Exhibit A
being the discussion about super unincorporated associations. 

 

I apologize for boring everyone with this; what it all really illustrates is
the immutable truth that no association is bulletproof from some sort of
attack by disgruntled members who are bent on deconstructing an association
or what it has done, based on the statutory scheme and whatever nonprofit
statute may apply (or Robert's Rules of Order - don't get me started on
those). 

 

Jim is absolutely right, the HOA act needs amending. In many ways. 

 

Rob   

 

 

Robert D. Wilson-Hoss 
Hoss & Wilson-Hoss, LLP 
236 West Birch Street 
Shelton, WA 98584 
360 426-2999

www.hossandwilson-hoss.com
rob at hctc.com

 

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From: wsbarp-bounces at lists.wsbarppt.com
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of James L. Strichartz
Sent: Wednesday, March 09, 2016 12:01 PM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] new case HOA statute

 

Rob,

 

I must respectfully disagree with you.  I think that the decision was
correct.  Unless the governing documents set up a mandatory membership
organization ab initio I think that all you have is a covenant running with
the land that is enforceable by any of the individual lot owners.  I do not
think that you can bootstrap your way into such an entity after the fact,
particularly when the covenant does not set up a method for amendment with
less than 100%.  

 

RCW 64,38 was not a well considered piece of legislation.  It was cobbled
together by Ralph Munro in response to all of the complaints that the
Secretary of State’s office was getting from disgruntled homeowners.  It was
never reviewed by the Bar or the WCA Task Force.  It clearly needs some
amendments since WCIOA appears to be a dead issue in this State.

 

Jim

 

 


Jim Strichartz

Attorney

Fellow, College of Community Association Lawyers

Law Offices of James L. Strichartz

201 Queen Anne Avenue North, Suite 400

Seattle, WA 98109-4824


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From: wsbarp-bounces at lists.wsbarppt.com
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Rob Wilson-Hoss
Sent: Wednesday, March 09, 2016 11:32 AM
To: 'WSBA Real Property Listserv'
Subject: Re: [WSBARP] new case HOA statute

 

Thanks, Eric. There are problems with the position that governing documents
have to specify or refer to an association. First, as to current members and
new members, as soon as they participate, vote, pay assessments, and so on,
then they will ratify. But this leaves a mess, because some will not have
ratified, in theory. So, some in, some out.

 

Then, you have the problem of unjust enrichment, see the end of Lake
Limerick v. Hunt, 120 Wash App 246. Everyone has to pay. If everyone has to
pay, then how do you administer the payments (or the work) without an
association, some mechanism to take actions?

 

As to what an unincorporated association is, the Supreme Court in Riss v.
Angel spent a bunch of time talking around that issue, and the result is
sort of like a partnership, for the purposes of that decision. Of course,
there, there were documents.  

 

I just don't think courts take HOA cases seriously, and I am not the only
one. Walsh v. Halme can't actually get to where they went - something more
than just an unincorporated association. That's just plain invented by the
court and of no use to practitioners. 

 

I agree, the issue for the HOA statute is what an unincorporated association
is, or at least, that's one of the issues. I disagree that groups that work
together to enforce a one-page set of covenants have, commonly, bylaws and
other operating rules. Many do, but  I know of a great many that do not,
including in particular small road maintenance and water associations. And
again, I disagree that governing documents have to specify an association;
the definition in the statute does not make that a requirement. Just that
they have to pay. That's the point of that statute - to avoid the need to
have the association provided for in the governing documents. 

 

Thanks for the reference to 1.16.080. Also look at CR 23.2 and the cases
construing it. One of the comments refers to the lack of any definition of
unincorporated association, for class action purposes. At least that's
consistent....

 

Rob

 

Robert D. Wilson-Hoss 
Hoss & Wilson-Hoss, LLP 
236 West Birch Street 
Shelton, WA 98584 
360 426-2999

www.hossandwilson-hoss.com
rob at hctc.com

 

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This office does debt collection and this e-mail may be an attempt to
collect a debt, Any information obtained will be used for that purpose.  To
the extent the Federal Fair Debt Collection Practices Act (15 U.S.C. § 1692)
applies this firm is acting as a debt collector for the
condominium/homeowners' association named above to collect a debt owed to
it. Any information obtained will be used for collection purposes. You have
the right to seek advice of legal counsel.

 

From: wsbarp-bounces at lists.wsbarppt.com
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Eric Nelsen
Sent: Wednesday, March 09, 2016 10:46 AM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] new case HOA statute

 

Rob, if you're ready to write the Bar Bulletin article on HOAs and
covenants, I promise I'll read it!

 

I just read Walsh v. Halme and I think the "what is an association" section
is a bit, well, inartful. But then, so is the statute, since the legislature
clearly didn't think too hard about what constitutes a legal entity and what
doesn't, before writing something like "a corporation, unincorporated
association, or other legal entity." Which is kind of like saying, "a table,
a fruitcake, or other item of furniture." But then, see RCW 1.16.080
<http://app.leg.wa.gov/RCW/default.aspx?cite=1.16&full=true#1.16.080> ,
which says that "unincorporated association" in a statute can also include
LLCs. Go figure--so an LLC can be a fruitcake for purposes of statutory
construction.

 

Regardless of the HOA statute, I think the case comes down to: What does it
take to form an unincorporated association? I think that your example of
long-established groups of people working to collectively enforce a one-line
covenant can still qualify as an unincorporated association, because I
highly doubt that such a group does not have a set of bylaws and rules for
elections of officers, etc. such that those are the formative documents for
the Association, not the one-line covenant that the Association enforces. It
is just in the nature of the beast – any group of more than three people
that tries to organize collectively ends up establishing a set of governance
rules in order to prevent the chaos of total democracy, and get everyone's
buy-in that decisions can be made by majority rather than unanimity. And I
don't think the governing documents have to be recorded; they just have to
exist.

 

I think the problem in Walsh v. Halme is not that Walsh et al. didn't form
an Association--they did. But they only did it for themselves, for their own
properties, and because Halme didn't participate and didn't consent, he is
not a member of the Association and he and his property are not subject to
its jurisdiction.  The other term I see in case law for "unincorporated
associations" is "voluntary associations," which I think makes the point.
One can voluntarily join a group, or voluntarily purchase a property under a
covenant that says ownership of the property constitutes membership in a
group, but the point is that it's voluntary.

 

By the way, I do think that HOAs have questionable authority when formed
independent of recorded covenants--that is, the covenant being enforced does
not impose membership in an association for the burdened/benefitted
properties. If membership in the HOA does not travel with the land, then on
any transfer the new owner can elect not to join the HOA. But that doesn't
mean the covenant is unenforceable; it just means that a non-consenting
party will have to be sued for a covenant violation, and the court will
determine for itself whether the covenant has been violated, rather than
reviewing the HOA's determination that the covenant was violated.

 

Sincerely,

 

Eric

 

Eric C. Nelsen

SAYRE LAW OFFICES, PLLC

1320 University St

Seattle WA  98101-2837

phone 206-625-0092

fax 206-625-9040

 

 

 

 

 

From: wsbarp-bounces at lists.wsbarppt.com
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Rob Wilson-Hoss
Sent: Tuesday, March 08, 2016 11:40 AM
To: 'WSBA Real Property Listserv'
Subject: [WSBARP] new case HOA statute

 

Interesting new published Div. II case about what a HOA is, Walsh v. Halme,
out today. The statute at issue is 64.38.005(11), which defines homeowners'
associations:

 

RCW 64.38.010(11) defines a “homeowners’ association” as a corporation,
unincorporated association, or other legal entity, each member of which is
an owner of residential real property located within the association's
jurisdiction, as described in the governing documents, and by virtue of
membership or ownership of property is obligated to pay real property taxes,
insurance premiums, maintenance costs, or for improvement of real property
other than that which is owned by the member.

 

and the precise point is, what means the first part of this - "a
corporation, unincorporated association, or other legal entity?" Some
questionable analysis leads to the conclusion that the recorded documents
must refer to some sort of entity other than the owners themselves, that is
something more than your run-of-the-mill unincorporated association:  

 

The HAA does not define “unincorporated association” or “legal entity,” and
no Washington case addresses the meaning of these terms in the homeowners’
association context. Use of the word “other” before “legal entity” suggests
that “unincorporated association” as used in RCW 64.38.010(11) must be a
“legal entity.” However, unincorporated associations generally are not legal
entities. Newport Yacht Basin Ass’n of Condo. Owners v. Supreme Nw., Inc.,
168 Wn. App. 56, 74, 277 P.3d 18 (2012). Therefore, RCW 64.38.010(11) seems
to require something more than a “typical” unincorporated association.

 

According to the court, when the statute says "unincorporated association,"
that is modified by "other legal entity," so the governing documents
actually have to refer to something more than a typical unincorporated
association, whatever that is. Age has its privileges; mine includes the
privilege to say, no, that is not what the Legislature meant, and this is
statutory interpretation of the most outcome-based sort. If the court were
right, and "other legal entity" modified unincorporated association, then
the only unincorporated associations that would count would be legal
entities, which by definintion they are not. Oops. The court no doubt
recognized this when it said that the statute "seems to require something
more than a 'typical' association." So it went ahead and helped the
Legislature out by providing its own rule.   

 

At any rate, the analysis then goes on to a discussion of what a typical
unincorporated association is; it never gets to a discussion of what
something more than a typical unincorporated association might be. 

 

Regardless, the result is that any HOA is at risk of challenge if its
governing documents do not refer in some unspecified way to some sort of
unspecified category of association of members. And that includes a whole
lot (at least hundreds if not thousands) of very long-established and
successful HOAs with that one-page set of minimal restrictive covenants that
many were using in the 1960s; you know, the ones that include, 

 

No noxious or offensive activity shall be carried on upon said Tract or any
part thereof, nor shall anything be done or maintained thereon which may be
or become an annoyance or nuisance to the neighborhood.

 

Look, this is a serious issue and always has been, since the HOAA was
adopted. Does it really apply all of the HOAA rules to small water or road
maintenance associations? But the answer to the issue, politically, is to
find a way to amend the statute to aim the HOAA rules to actual HOAs and not
impose a bunch of silly requirements or powers on small associations that
don't have or want rules about structure or behavior limitations. Here,
according to this court, the answer is to interpret the statute to require
that the governing documents include some reference to something more than a
typical unincorporated association. 

 

Right now, this is simply a statutory interpretation issue - what does
"unincorporated association" mean in this context?  

  

As for me, I don't think "other legal entity" defines or limits
"unincorporated association," citing to Homer Simpson ("duh") (what did you
want the Legislature to say, "unincorporated association, or other entity
that has some legal status in addition to unincorporated and incorporated
associations?") (and how can "other legal entity" apply to an unincorporated
association that is by definition not a legal entity?); and I think this
term, "unincorporated association," is meant to include an association of
people. If we read the dictionary definitions of "association" in Google we
can find one to suit every need and taste, including, "a connection or
relationship between things or people," and a"group of persons banded
together for a specific purpose." Road maintenance agreements and water
agreements qualify under these definitions.

 

Finally, if anyone thinks that this opens the door to water or road
maintenance associations starting to control the color palette for front
doors, please remember the limitations of Wilkinson v. Chiwawa: is it
already a covenant? (can't add new ones unless the old ones say you can
specifically); can't add additional burdens; must be consistent with the
general scheme of the development. Etc.

 

Your obedient servant,

 

Rob

 

 

Robert D. Wilson-Hoss 
Hoss & Wilson-Hoss, LLP 
236 West Birch Street 
Shelton, WA 98584 
360 426-2999

www.hossandwilson-hoss.com
rob at hctc.com

 

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This office does debt collection and this e-mail may be an attempt to
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