[WSBARP] HOA inherent powers?

Tue Apr 3 15:57:37 PDT 2018

I can try to help. First, you have to look at all of the governing
documents, not just the Bylaws, for the right to lien. That means, plat
maps, covenants, Articles, other recorded documents, the original deed out
from the developer, and anything else. 

Then you have to apply Wilkinson v. Chiwawa Communities. Do the recorded
documents not say anything at all about liens? If so, then maybe they cannot
have a lien provision grafted onto them, under the Wilkinson rule that if
your documents say they can be amended, that doesn't include adding new
features, unless it specifically says they can be added to. If they do say
something about liens, then what do they say? Do they say they can lien? Can
lien and are prior? Can lien but lender loans are prior? You have to figure
out what they do say.

Then, if the recorded documents talk about liens somewhere but don't talk
about priority, can the association adopt a priority position? Is that
related in the way it needs to be related under Wilkinson? And if so, how?
Rule? Covenant amendment?

The one thing that doesn't matter, based on recent case law, including
Wilkinson, is the actual statute that provides for association powers,
64.38.020.  Yes, under that statute, and especially (13) and (14), an HOA
can do pretty much anything, but that is subject to the general limitation
at the beginning of the statute, "Unless otherwise provided in the governing
documents." Wilkinson never comes close to discussing this statute; even
though Wilkinson is all about the powers of the association, the only
possible way the statutory powers section can be reconciled with that case
is by reading Wilkinson to say, when the governing documents are what they
were in that case (silent on the question), then they provide otherwise.
Which is like trying to tap dance while standing on your head. The
relationship between that statute and case law is quite remote.

For insight into the frustrations that follow Wilkinson, just read the
majority and the lead minority opinions. They are insulting to each other in
the extreme. Something else was going on beyond the pure issues of law,
methinks.  

So, to answer your question, maybe. Who knows? If the association can impose
the lien, and there is no lender priority, then the lien survives
foreclosure sale. Check out Lake Limerick v. Hunt, 120 Wash. App. 246
(2004). 

Rob

Robert D. Wilson-Hoss 
Hoss & Wilson-Hoss, LLP 
236 West Birch Street 
Shelton, WA 98584 
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www.hossandwilson-hoss.com
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From: wsbarp-bounces at lists.wsbarppt.com
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Paul Neumiller
Sent: Tuesday, April 03, 2018 3:27 PM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] HOA inherent powers?

Richard, I can address the second part of your question.  A lender accepting
a DIL is not an innocent party/purchaser.  While a foreclosure action will
relate back to the date the deed of trust was recorded and therefore wipe
out all junior liens and obligations, a DIL is treated as a current sale of
the property for the price of the forgiveness of the loan.  This means that
the lender takes the property subject to the liens of record.  For example,
before my clients accept a DIL from a defaulting debtor, we always pull a
Trustee Sale Guaranty (“TSG”) to see what is recorded against the property.
If there are many and expensive junior liens, my client will continue with
the foreclosure procedure in order to wipe out the junior liens.  But if
there are no junior liens or just a few for only a couple thousand dollars,
my client may make the decision to abandon the foreclosure procedure, accept
a DIL and then just pay off the junior liens and get early possession of the
property.  If lender pulled a TSG, the lender should have seen that the
property was subject to CC&Rs and should have contacted the HOA to see if
the debtor was current in the payment of assessments and dues.

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com>
On Behalf Of Richard Holland
Sent: Tuesday, April 3, 2018 10:53 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] HOA inherent powers?

Property owned by A with a DOT to Lender.  HOA for the property.  Lender
forecloses and takes title by DIL.  HOA months later liens the property for
unpaid dues by A.  Review of HOA Bylaws etc. does not specifically mention
the power to lien the property for unpaid dues just the catchall ‘any remedy
at law or in equity’.  RCW 64.38 does not explicitly grant the power to lien
but there are the ‘catchall clauses’:  

(13) Exercise all other powers that may be exercised in this state by the
same type of corporation as the association; and

(14) Exercise any other powers necessary and proper for the governance and
operation of the association.

So two major issues, to me:  1) Can an HOA just inherently lien a property
for unpaid dues when nothing expressly in the Bylaws gives them that power?
2) How can an HOA lien a property no longer owned by A for A’s debt? 

I understand that the Bylaws run with the land but, for example, if A had
sold to B (assume GFPV), I don’t see how in the world the HOA could do this
to an innocent B.

Am I missing something obvious?

Sincerely,

Richard L. Holland

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