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Improving RCW64.90 (previously SB6175)

There are some very good features about the State of Washington's RCW 64.90 that I highlighted previously on FB because it adds reasonable rights that should be available to members of HOAs in Washington if these rights do not exist, or worse if these rights have been ignored or circumvented by an HOA's Board of Directors. As written previously, this law will govern all New HOAs created after July 1, 2018; and it will apply to preexisting HOAs created prior to this date if members choose to adopt it.

Since RCW 64.90 is less than a year old, it needs to grow and flourish, meaning all of the potential and actual impacts of this legislation on HOAs have not been considered fully at this time. Therefore, some sections of RCW 64.90 will be amended and other sections may be repealed or replaced. In the meantime, members of these "preexisting " HOAs should weigh whether RCW 64.38 will continue to govern them or whether RCW 64.90 protects their interests better that RCW64.38 protects them.

The following example explains my point. One of the more important sections of both laws cover the budget approaval process. RCW64.38 addresses the Board's proposed Budget that requires members' approval; but omits any references to other assessments. Therefore, an HOA's Board can decide by a majority vote of the Board to create a reserve fund or special special assessment for repairs or capital improvements, respectively, without presenting any information to members about the repairs or improvements and without obtaining members' approved vote.

RCW64.90.525 (2) addresses the Board's proposed Budgets—Assessments—Special Assessments. The content of the Budget must include:(a) The projected income to the association by category;(b) The projected common expenses and those specially allocated expenses that are subject to being budgeted, both by category;(c) The amount of the assessments per unit and the date the assessments are due;(d) The current amount of regular assessments budgeted for contribution to the reserve account;(e) A statement of whether the association has a reserve study that meets the requirements of RCW 64.90.550 and, if so, the extent to which the budget meets or deviates from the recommendations of that reserve study; and(f) The current deficiency or surplus in reserve funding expressed on a per unit basis.

RCW64.90.525 (3) The board, at any time, may propose a special assessment. The assessment is effective only if the board follows the procedures for ratification of a budget described in subsection (1) of this section and the unit owners do not reject the proposed assessment. The board may provide that the special assessment may be due and payable in installments over any period it determines and may provide a discount for early payment.

RCW 64.90.525 (2) and (3) provides information about what the members should be entitled to know prior to voting on a Board's proposed repairs and/or improvements. However, I am troubled by the language in RCW 64.90.525 (1.a) that states "Unless at that meeting the unit owners of units to which a majority of the votes in the association are allocated or any larger percentage specified in the declaration reject the budget, the budget and the assessments against the units included in the budget are ratified, whether or not a quorum is present".

In other words, in order to reject the Board's proposals, the members must arrive at the annual meeting with at least 51 percent of the lots represented in person or by proxy, otherwise the budget, or other proposed assessments are approved. In other words, the scale is tipped in favor of the Board's recommendations because many members of HOAs do not bother to vote. Therefore, hopefully, the WA legislature will repeal Section 1.a and replace it with a democratic process (i.e.,It should take 51% to reject or to approve these proposals.

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