Calling all Tacoma real estate professionals, homeowner associations, and real estate buyers. Were you aware that, for the first time in the State of Washington’s history, all common interest communities (CICs) fall under the purview of a unified legal framework?
What Exactly Are CICs?
CICs, also commonly referred to as common interest developments or “CIDs,” are all real estate properties in which affiliated property owners are contractually obligated to pay for a portion of real estate taxes, insurance premium expenses, maintenance fees, and improvement costs. CICs or CIDs include condominiums, co-ops, retirement developments, vacation timeshares, and other similar housing projects, comprised of individually-owned units, in addition to shared premises and community-accessible common areas.
Washington State CIC Laws Are Now Consolidated
The legal stipulations, applicable to the creation and implementation of CIC developments, were consolidated into a single, uniform chapter as of July 1, 2018. Previously, each category of CIC was independently governed by a distinct set of laws and regulations, with some development types (such as co-ops) having essentially no guiding legal guidelines at all. That has all changed. Now all residential CIC developed after July 1, 2018 fall under the Washington Uniform Common Interest Ownership Act (WUCIOA), or RCW 64.90 et seq, a unified statutory framework setting out the legal guidelines for these unique type of properties.
The WUCIOA is a considerably lengthy and complex statute covering the following broad range of issues:
- Applicability & General Provisions
- CIC Creation & Amendments
- HOA Issues: Management, Meetings & Notices, Voting, Accounts, Assessments, Liens & Records, Budgets, and Reserve Studies
- CIC Unit Alterations
- Flags, Political Signage, and Solar Panels
- Purchaser Disclosures
- Tenant Conversion Rights
- Express Warranties (applicable to condos only)
- Implied Warranties (applicable to condos only)
- Statute of Limitations for Warranties
In most cases, non-residential CICs are not included in the WUCIOA. CICs that were created prior to the implementation of the WUCIOA do not automatically fall under its scope. However, the governing bodies of these older communities can independently elect to be subject to the stipulations set forth in the WUCIOA. In order to do so, a constituent of owners that represent at least 30% or more of the potential votes in a pre-existing CIC must take part in the vote in order to provide a quorum – and a minimum of 67% of the votes submitted must favor opting-in to the WUCIOA.
For CICs created after July 1, 2018, a WUCIOA election is not needed, as these properties automatically fall under the scope of the new guidelines. Developers, seeking to help mitigate the current inventory shortage plaguing the Washington housing market, now have a clear, streamlined option pertaining to the organizational framework of their planned residential projects. Generally, the regulations are virtually identical for all CIC categories – meaning that the developer’s choice of organizational structure is premised on individual preference and economic conditions, not legal requirements. There is, however, one significant exception: The condo guidelines under the WUCIOA imposes express and implied warranties of liability on the developer, whereas no other CIC category offers comparable consumer protection measures.
Condominium Warranty Requirements
The express and implied warranty obligations set forth under the WUCIOA for condos mandate that these type of CICs have units that are suitable for their intended purpose. This means, for example, that a residential unit must qualify as being habitable and safe for occupants. Floors must be free of tripping dangers. Residential units and common areas must not have any defective features, and their construction must be carried out in compliance with the most recent iterations of safety, building, construction, and engineering codes.
If a CIC condo unit owner or buyer feels that these warranties have not been fulfilled, the individual has the option of filing a breach of warranty claim in court. Damages are capped at the reasonable dollar amount of repair, unless the repair expenses obviously exceed the reduction in market value caused by the breach of warranty. Claims that are successfully advanced can also be awarded reasonable attorney’s fees and related expenses.
Developer’s Rights & Obligations under the WUCIOA
The WUCIOA mandates that potential developers must issue a compliant initial public offering announcement. This statement is basically a document outlining the long-term goals and objectives for the proposed CIC, describing what structures and facilities are to be constructed, identifying the amenities, and describing the manner in which the units and their respective owners will interact with one another in terms of sharing communal costs and responsibilities. The would-be developer is liable for any material misrepresentations in, or omissions of, essential facts from the public offering document. The proposed developer is also permitted to elect specific members to the board both during and after the period of the developer’s control. However, the appointed members must not be affiliated with the developer in order to avoid bias.
Per the WUCIOA, developers are afforded certain rights, which includes, but is not limited to, the following:
- Overseeing the maintenance and management offices and posting of promotional signage
- Making the CIC answerable to a master association
- Appointing or removing any officer or board representative
- Vetoing any board action
Likewise, CIC associations are afforded rights and are held to certain obligations under the WUCIOA. All associations are statutorily tasked with the preparation, passage, and execution of itemized budgets. Associations are allowed to withdraw reserve funding for unbudgeted expenditures that are not related to replacement fees of reserve components, as long as the board gives adequate notice to CIC owners and implements a repayment schedule capped at 24 months.
Trusted Tacoma Real Estate Attorneys
The new statutory framework implemented by the Washington State legislature via the WUCIOA is particularly nuanced and confusing even for the most experienced and capable real estate professionals attempting to understand how the new laws will affect them. Non-compliance with the new regulations and guidelines could result in unnecessary and costly delays in construction, fees, and other unwanted administrative penalties. That is why it is essential for you to consult with an experienced Tacoma, WA, real estate attorney as soon as possible if you are currently part of, or planning to join or develop, a CIC. The attorneys at Bolan Law Group., are here to address your concerns and provide you with exemplary legal counsel at all stages of your case. Contact us today online, or call us to get started.