Washington state received unexpected notoriety recently when the Washington State Legislature enacted a provision that not only impacts the local Homeowners Associations for which it was intended, but could have persuasive influence over Homeowners Association ratification and budgeting processes across the United States. For this reason, the legislation, its background, and its potential effects, must be unpacked and scrutinized.
Homeowners Association Bylaws in Bellingham WA
RCW, the official body of laws for Washington State, stipulates that if a proposed Homeowners Association budget is rejected by the eligible HOA voters; the requisite number of homeowners do not participate in the election; or if notice of a ratification vote is not properly given, i.e. if the budgetary measure fails for some reason and no actual budget is implemented, then the “periodic budget last ratified by the owners (becomes the operating budget of the HOA) until such time as the owners ratify a subsequent budget proposed by the board of directors.”
A basic breakdown of RCW 64.38.025(3) and how they affect Homeowners Association Bylaws in Bellingham WA:
This provision supersedes any provisions in Homeowners Association Bylaws which do not comply with the strict time-frame requirements of Homeowners Association budget ratification. The statute in effect prevents a Homeowners Association from being unable to do business solely through lack of funding by that Association.
According to a report in HOATalk.com, the implications of the court ruling on Washington State RCA 64.38.025 (3) are that a Homeowners Association cannot rely on mere budgetary ratification to effect changes in their operating policy and Homeowners Association position for a matter in dispute. Actual affirmative action must ensue about the issue in controversy rather than allowing the action to take effect by default through natural and proper budgetary and spending measures authorized by Homeowners Association Bylaws. The statute states that it supersedes–takes precedence over–Homeowners Association bylaws as they are written, if in conflict with the state law on the books regarding Homeowners Association budgetary matters.
Homeowners associations in Washington State cannot stipulate in their Homeowner’s Association Bylaws that homeowners can reject an action of the board through their vote and action on budgetary matters. In other words, passage of an act on the basis of the existence of funding alone cannot enable the legislative act to stand or fall. Instead, an affirmative vote bringing the legislative act into being or letting it fail is required in order to enact a law in Washington State.
Additionally, association Bylaws must operate in the time frames consistent with RCW 64.38.035 (3) to keep the Homeowners Association operations in compliance with Washington State law. This includes not only requirements for voting eligibility and quorum, but also other applicable details generally reserved for the sole purpose of Homeowners Association rules as per the private bylaws.
Here is the actual text from RCW 64.38.025:
“(3) Within thirty days after adoption by the board of directors of any proposed regular or special budget of the association, the board shall set a date for a meeting of the owners to consider ratification of the budget not less than fourteen nor more than sixty days after mailing of the summary. Unless at that meeting the owners of a majority of the votes in the association are allocated or any larger percentage specified in the governing documents, or bylaws.
Within thirty days after adoption by the board of directors of any proposed regular or special budget of the association, the board shall set a date for a meeting of the owners to consider ratification of the budget not less than fourteen nor more than sixty days after mailing of the summary. Unless at that meeting the owners of a majority of the votes in the association are allocated or any larger percentage specified in the governing documents reject the budget, in person or by proxy, the budget is ratified, whether or not a quorum is present. In the event the proposed budget is rejected or the required notice is not given, the periodic budget last ratified by the owners shall be continued until such time as the owners ratify a subsequent budget proposed by the board of directors.”
Simply put, this court ruling means:
RCW 64.38.025 supersedes any provisions in Homeowner’s Associations Bylaws that would let legislation fail intentionally due to a fixable technicality, according to HOATALK.com.
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