A Safe Harbor
Joints and organs wear out as we age. Our eventual need to replace outworn hips and clean clogged arteries is a simple fact of life.
Homes age in consequential ways too. Building exteriors and building components wear out. The need to remove and replace outworn infrastructure is also a fact of life.
Much of Washington’s residential infrastructure – building exteriors and components – is reaching the end of the road. But removing and replacing it is complicated by the fact that much of it is co-owned by the homeowners who share its use.
The good news is that a uniform law designed to empower owners to replace their outworn residential infrastructure was approved by Washington’s Legislature in 2018. The bad news is that a 2024 amendment to that law inadvertently placed its benefits beyond the easy reach of those homeowners most in need of the solutions the law is designed to provide.
A Long Running Affordable Housing Experiment
A few million hard working Washingtonians achieved their American Dream of home ownership by buying homes in a planned unit development or a condominium, homes that owe their very existence to an affordable housing experiment launched decades ago.
This experiment drove down housing costs by clustering homes, allowing for shared ownership and use of the open space and amenities. Condominiums extended the scope of this beneficial cost-cutting by placing building exteriors and building systems into the common ownership of those whose homes were shielded from stormy weather by the roof and walls they shared.
This shared infrastructure housing model drove the decades long production of Washington’s once affordable housing stock. While high interest rates presently make home buying unaffordable for most would-be buyers, this housing stock nonetheless still supplies most of Washington’s still attainable housing.
A Well Designed Operating System
Of course, those who created this affordable housing model also understood that, absent an effective means to care for the shared-infrastructure, this model was not sustainable. As infrastructure wore out, the inability to remove and replace it would eventually make homes uninhabitable.
So, to provide for its care, the model called for creating an owners’association. And to ensure that the association could, and would, attend to its caretaking mission, it would be imbued with an operating system that enabled it to make and implement caretaking decisions.
Distribution of this operating system took place in a cascading manner. The system was first embedded in a uniform law, which Washington and other states then embedded in their common interest community statutes, and which developers then embedded in the recorded declarations of each subdivision or condominium they built. These declarations largely mirrored the then-applicable statute. And it is through operating in close adherence to its declaration that an association reaps the intended benefits of the statute in effect when it was first created.
A Redesigned Operating System
Because an association’s operating system must keep pace with the life-cycles of the infrastructure it is designed for maintaining, the operating system for Washington owners’ associations has twice undergone a complete redesign.
In 1990, the Washington Condominium Act overhauled state law to enable associations to more effectively respond to the mid-life maintenance needs of co-owned infrastructure.
And in 2018, the Washington Common Interest Ownership Act again overhauled state law to more effectively respond to the end-of-useful-life needs of co-owned infrastructure.
As alluded to above, the cascading deployment of a new operating system in a way that embeds it in an association’s declaration in a reliably useable form fails if the operating system cannot be fully “downloaded” by the existing association.
Just as the “free” teaser-version of some game-changing App locks its full functionality behind a pay wall, WUCIOA’s “free” download version creates a largely worthless declaration. To avail itself of WUCIOA’s full functionality, an association must replace its outdated declaration and bylaws with a new set that enables it to make full use of the redesigned operating system WUCIOA represents.
On paper, WUCIOA’s new operating system is downloadable. In practice, it is not.
What makes it impossible to download is WUCIOA’s flawed “turnout threshold.”
WUCIOA’s Flawed 67% “Turnout Threshold”
WUCIOA’s general rule is that a declaration cannot be changed unless the change is approved by at least 67% of the total votes in the association.
But 67% of the total votes is not just the approval threshold. It is also the voter turnout threshold. That is, if 100% of the votes actually cast all favor a change, the proposed change still fails if fewer than 67% of eligible voters cast votes on the proposal.
In each of the last ten Presidential Elections, fewer than 67% of eligible voters cast votes in the election. Paradoxically, it is harder to change an association’s declaration than it is to elect our President.
Why? Because a declaration serves a dual purpose. It both authorizes an association to make caretaking decisions and simultaneously protects the property rights of existing owners.
Protecting existing property rights is achieved by requiring that a declaration change that might impair an existing owner’s fundamental property rights must be approved by at least 67% of the total votes in an association. And Washington courts further require that any such proposed change also include “reasonable protections” for any vested property right.
Because the 67% turnout threshold is designed to serve the narrow purpose of protecting an existing property right, the Act carves out no fewer than twelve exceptions to its general rule.
WUCIOA’s 30% “Safe Harbor” Threshold
When first enacted in 2018, WUCIOA exempted existing association from the Act. This spared existing associations from having to comply with the Act’s burdensome procedural requirements. But it also prevented existing associations from reaping the benefits only available to those associations to whom the Act fully applied.
So, the Act provided that an existing association could waive its exemption from the Act by amending its declaration to “opt-in” to the Act as the statute under which it must operate.
But since a 67% turnout threshold would make approving such an amendment almost impossible, the Act lowered the turnout threshold to 30% for such an “opt-in” amendment. That is, an opt-in amendment would be deemed approved if (i) at least 30% of the eligible voters actually voted, and (ii) at least 67% of the votes cast favored approving the opt-in amendment.
This was a “safe harbor” provision in the sense that, by complying with this “opt-in” provision, an existing association’s “opt-in” amendment would be deemed valid, even though fewer than 67% of eligible voters actually voted.
Repurpose the 30% Safe Harbor Threshold
Existing associations lost their exemption from WUCIOA by a 2024 amendment to the Act that, instead, now mandates that existing associations must comply with the Act by the end of next year.
The need for an existing association to vote on an “opt-in” amendment no longer exists, since the Act will soon apply to existing associations, whether they want it to or not. And few, if any, existing associations will see any value in using the 30% Safe Harbor threshold to merely move up the date on which they must comply with the Act.
But now that existing associations must soon comply with the Act, the 30% Safe Harbor threshold can be repurposed to provide a means by which associations may “download” a complete replacement declaration and replacement bylaws. For it is only through removing outdated documents and replacing them in their entirety with new ones that both comply with WUCIOA and incorporate experience-based best practices that an association can hope to reap the full caretaking functionality that WUCIOA is designed to confer.
For these compelling reasons, the Act should be amended in the upcoming Legislative session to authorize an existing association to use the 30% Safe Harbor threshold as a means by which to entirely replace its existing declaration and bylaws with a fully functional set of WUCIOA replacement documents, provided, however, that any proposed change to a fundamental property right must (i) be approved by at least 67% of the total votes in the association and (ii) include reasonable protections for the vested property rights of existing owners.