[WSBARP] WSBARP amendment of covenants

Fri Aug 4 16:00:21 PDT 2023

You don’t think the amendment provisions of RCW64.90 changed that rule as to HOA created fter 7/1/18

Bryce H. Dille
Dille Law, PLLC
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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Carmen Rowe
Sent: Friday, August 4, 2023 3:01 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] WSBARP amendment of covenants

The short answer is no, that is subject to challenge and invalid.

Courts have limited the general right to amend to avoid "defeating the expectations" of owners at the time of purchase. Expectation of right to rent is specifically considered a right you can't take, the minority cannot be "victims" of the will of the majority. The formal distinction is "amendment" versus "change" to covenants.

Taking away ability to rent is considered a "change" under some specific law. It will depend on the covenants, but reading the body of caselaw as a whole, I think rental restrictions, bars or caps pretty much never fly if not already restricted in the original covenants.

The primary case to read is Wilkinson v. Chiwawa, though you really do have to read the cases as a whole and subsequent implementation of Wilkinson to see just how draconian WA courts have been in restricting amendment rights. I don't see a way to restrict rentals unless already restricted in some way, and even then the "new" restrictions almost have to be exactly the same as the existing ones, just adjusting the numbers - I have seen decisions reject regulation a specific aspect of leasing if that specific restriction isn't already in there. Like, even when covenants regulate leasing in general, it's not just an "amendment" but a "change" (contrary to logic) to impose time limitations; shortening time (i.e., to ban short-term rentals) is considered a no-no when there was no time limit in the original covenants.

Bad law, IMO, to tie association's hands to the degree WA has - but such is the law at this moment.

Carmen Rowe

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Message: 5
Date: Fri, 4 Aug 2023 09:18:51 -0700
From: <jgrant at accima.com<mailto:jgrant at accima.com>>
To: "'WSBA Real Property Listserv'" <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] WSBARP Digest, Vol 107, Issue 1
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I live in a HOA; the covenants were changed not allowing short term rentals.  It was approved by the % needed under the CC&R?s to amend.  I thought that once approved that would be binding on all members of the HOA, as well as grantees in the future of those members.  Yes?

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Carmen Rowe
Sent: Thursday, August 3, 2023 1:16 PM
To: wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] WSBARP Digest, Vol 107, Issue 1

I think if you look at the cases, it's still pretty clear - the question of whether money changes hands is flat out not part of the equation. It's whether the use is "residential" in nature. Meals and recreational activities - if simply offering the amenities of the association - are residential. Now, if they were operating say a tour business off the property, that's a business. But has to be something outside how a resident would use it. That's really the key: are the "activities" the same as someone living there as a resident would? if so, it's "residential" for purposes of covenants.

The really crappy thing is that it is nigh impossible for an association to bar use of properties as short-term rentals unless the covenants already made some reference to the time required/prohibited by leases. A look at Wilkenson alone might lead one to think that so long as the covenants discuss "rentals" that you can amend to prohibit short-term rentals, and I've seen attorneys advise associations as such. Unfortunately, that's fairly clearly incorrect in my opinion. The subsequent caselaw has not panned out that way.  Simply regulating leases does not (per cases subsequent to Wilkenson) lead to allowing an association to amend to restrict shorter time-frames, unless there is already some specific reference to time-frames in the covenants. You very likely can't even pass regulations that substantively impair such use.

Some dissents along the way have pointed out that this use of Wilkenson is terrible, as no one could have anticipated use of residences as hotels until the last decade or so (using the words from one such dissent), so how could you have left the door open to regulate something you couldn't have conceived of? you couldn't - thus tying the hands of associations under the current criteria of the law re: amendments. There is even a majority opinion (from the so very often literary Division III) that eloquently bemoans the rule - but resignedly notes that the appellate courts must adhere to the Supreme Court decisions until the law gets with modern times.

But so goes it, until someone persuades the Supreme Court that the law needs to change in light of the modern use of such platforms.

One helpful hint is that an association can at least require that any short-term rentals comply with the applicable WA statute (RCW 64.37) - that at least provides some threshold requirements (insurance, etc.). Since it's legally required by state statute, it's not a barred amendment/regulation by the association.

The other best approach is a strict and steeply increasing fine schedule for repeated violations of already existing covenants re: nuisance, noise, etc. - as the problems inherent with short-term rentals almost always involve such violations, so hit the owner's pocketbooks for whatever that may help to deter such use, or get the owner very involved in trying to ensure good behavior.

An interesting rabbit hole I've had a few occasions to take a deep dive into.

Carmen Rowe

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