Solving WUCIOA’s “Y2K” Problem
A homeowners’ association’s operating system is its governing documents, because they enable the association to operate in compliance with applicable laws.
Come midnight on New Year’s Eve next year, the operating systems of homeowners’ associations serving over 1 million Washington residents might abruptly stop working.
But skillful use of two WUCIOA “voter turnout” requirements may help to prevent this catastrophe from occurring.
Background
An association’s operating system is its governing documents. These documents are, in turn, based on association statutes. And association statutes are what made planned unit developments and condominiums economically viable forms of homeownership in the first place.
Planned unit developments and condominiums are two forms of what can best be described as the “shared-asset” housing model. The shared-asset housing model has these three defining characteristics.
Three Defining Characteristics
Shared ownership and use of common areas and amenities is this model’s first defining feature. Creating a homeowners’ association to care for the common areas is the second. And association dependence on its governing documents, derived from association statutes, to guide it in operating in compliance with applicable law is the third.
Fifty years ago, buyers of homes in condominiums and planned unit developments were at first unsure about how to operate these associations they had been saddled with. So, lawyers wrote model statutes spelling out how association elections, decisions, funding, and the like should be handled. State legislatures then enacted slightly modified versions of these statutes. And these association statutes provided owners with a functional framework for operating their associations.
The basic statutory framework is this. Owners are mandatory members of their association. Its mission is to care for the common property. Its operating instructions, as set out in the association statute, are also embedded in a set of governing documents. A declaration assigns rights and tasks. Bylaws allocate votes, then delegate decision making to a board comprised of directors chosen by owners. The board, in turn, is entrusted with making and implementing caretaking decisions in a way it believes best serves the owners as a whole.
The Right Way vs. The Wrong Way
The association statutes which furnish associations with an operating system will periodically require updating. That is why WUCIOA is replacing Washington’s existing association statutes.
But there is a right way and a wrong way to update an outdated operating system. Comparing Windows 11 to WUCIOA highlights the difference.
Microsoft created the Windows 11 operating system to replace the outdated Windows 10 operating system. Because businesses are heavy users of programs and apps that are based on the Windows operating system, Microsoft had to design its replacement process to be as minimally disruptive as possible.
Microsoft managed its users’ migration to its new operating system in a way that was gradual, inexpensive, and minimally impactful on the businesses that rely on the operating system to run their businesses.
But suppose that Microsoft had, instead,
(i) set a “by midnight” type deadline for converting to Windows 11, then
(ii) charged existing users of its operating system somewhere between $5,000 and $20,000 to download its mandatory upgrade, and then
(iii) deleted Window 10 from the computers of any business that had not completed its download before the “by midnight” deadline arrived.
That approach would epitomize the wrong way to update an outdated operating system.
And yet that is the very approach that WUCIOA actually uses.
The Wrong Way
All existing associations have until midnight on New Year’s Eve next year to switch to WUCIOA as the source of their operating system.
As a practical matter, switching to a WUCIOA based operating system means replacing an association’s existing documents with a WUCIOA compliant set of replacement documents, since it is embedding the statute into its governing documents that actually enables a board to adhere to what WUCIOA requires.
Embedding the statute into its governing documents starts with blending association specific content and WUCIOA compliant content into a WUCIOA compliant replacement set. Creating blended replacement documents is time consuming and expensive.
Next, the blended documents must then be “downloaded” in order to become the association’s new operating system. Blended documents are “downloaded” by having them approved by the requisite percentage of owners.
A failed “download” attempt is extremely consequential. At the stroke of midnight on New Year’s Eve next year, all three legacy association statutes are deemed repealed and all corresponding provisions in an association’s existing documents are deemed invalid.
The good news is that WUCIOA allows a board to remove these then-invalid provisions. The bad news is that what little remains after this redacting is done will be woefully inadequate for the task at hand: operating an association in compliance with WUCIOA.
WUCIOA’s Voter Turnout Requirements Hold the Key
Those associations that grabbed the WUCIOA migration task by the horns early on were eventually confronted with these two facts.
First, replacement documents routinely garner the support of at least 67% of the owners who care enough to actually vote on the proposed replacement documents.
Second, replacement documents routinely fall short of being approved by at least 67% of the total votes in the association.
To win approval of replacement documents by at least 67% of the total votes in an association, one must necessarily achieve a voter turnout of more than 67% of the total votes in the association.
But getting at least 67% of eligible voters to actually vote on something is extremely challenging. For example, in the most recent presidential election, with both sides convinced that the fate of the nation hung on the outcome, only 65.3% of eligible voters actually turned out to vote.
Course-Correcting vs. Changing Course
Setting the voter turnout threshold at 67% of the total votes in an association for a proposal to change a declaration sometimes serves a legitimate purpose.
In a sense, a declaration charts the course association members will follow going forward. If a proposed declaration amendment threatens to change course - abandoning the course owners are presently on, and taking the owners in the opposite direction - then requiring a voter turnout of at least 67% of the total votes in the association makes sense.
If, instead, a proposed declaration amendment is a mere course correction that otherwise maintains the declaration’s previously established course, then requiring a voter turnout of at least 67% of the total votes in an association is self-defeating. It would prevent implementation of a strongly supported course correction simply because owner apathy robbed the association of the 67% voter turnout required to amend the declaration.
Calibrating Voter Turnout Requirements
This is why WUCIOA calibrates its voter turnout thresholds to align with the relative magnitude of a proposed change.
A voter turnout of 67% of the total votes in an association is required for a change-of-course amendment. For example, a proposed amendment that would change certain types of “you can do this” provisions into “you cannot do this” provisions is a change of course amendment for which a 67% voter turnout threshold is justified.
But WUCIOA sets a much lower voter turnout threshold for a WUCIOA amendment, as that is a course correcting amendment, one that serves to replace a soon-to-be-gutted set of governing documents with a new, WUCIOA compliant, set of replacement documents. Provided that an association follows the procedural roadmap which WUCIOA provides, the voter turnout threshold for a WUCIOA amendment is just 30% of the total votes in the association.
So, by following WUCIOA’s roadmap, an association can win approval of WUCIOA compliant replacement documents if (i) at least 30% of the total votes in the association participate in the balloting, and (ii) at least 67% of the votes actually cast are cast in favor of approving the replacement documents.
When Changing Course, Afford “Reasonable Protection”
There is, of course, the risk that a change-of-course provision makes its way into the course-correcting amendment. But the WUCIOA amendment provision is not intended to lower the voter turnout threshold for a change-of-course provision. While 67% of the votes actually cast wins approval of the course-correcting documents, any change-of-course provision embedded in those documents must be removed before recording the declaration unless the provision has been approved by at least 67% of the total votes in the association.
As a practical matter, most change-of-course amendments typically propose to replace a provision that permits a specific use with a new provision that now prohibits the previously permitted use.
WUCIOA - as originally enacted - afforded an additional layer of protection for owners potentially impacted by such an amendment: It not only required that such an amendment must be approved by at least 67% of the total votes in the association, it further required that such an amendment must also specifically “provide reasonable protection for a use permitted at the time the amendment was adopted.”
The Countdown Resumes
During the time it took you to read this post, midnight of New Year’s Eve a year from now has inched microscopically closer. There is probably still enough time left for most associations to update to a WUCIOA compliant operating system before midnight arrives.
But an association’s success in doing so seems to turn, in part, on the skillful use of the two different voter turnout thresholds WUCIOA described above: Approve course-correcting WUCIOA replacement documents by 67% of the votes actually cast, while requiring that any change-of-course provision be approved by at least 67% of the total votes in the association and that it also provide “reasonable protection” for a use permitted at the time the provision was approved.