AWC continues to track bills related to condo liability reform, as a means to address adding housing capacity and options. Two such bills have passed out of their house of origin.

A substitute version of HB 1576 passed out the House. It has been referred to its Senate committee, but is not yet scheduled for a hearing.

The basic proposal of the original bill was left intact. Prior to filing a suit, the condo’s homeowners’ association board (HOA) must convene the condo unit owners and the construction firm to discuss the alleged defects occurring in two or more of the condos or common areas or elements of the building. The construction firm is allowed to offer to remedy the defects.

Here’s where the substitute bill made changes:

• Struck the requirement that a majority of the unit owners must vote to authorize the HOA to bring a construction defect action. Instead, the HOA is approved to do so unless a majority of unit owners votes to reject the action. This is the key policy change in the substitute.
• Notice to unit owners must be provided prior to filing the action.
• Notice to unit owners and construction professionals must include:
  • The date, time, and location of the meeting where the construction defect action will be discussed and voted on;
  • The nature of the action and the relief sought; and
  • The expenses and fees that the board anticipates will be incurred in prosecuting the action.
• Additionally, requires that the notice to unit owners include:
  • A ballot;
  • Time and date by which a ballot must be delivered, which may not be fewer than 45 days after the meeting; and
  • Percent of votes necessary to reject the action.
• Unit owners may vote in person or by ballot.
• Ratification is required for the HOA to proceed unless the alleged defects are to a nonresidential facility and the cost to repair is not more than $100,000.

SB 5334 changes the implied warranties for the construction of a condominium. The requirement the unit, common elements, and improvements be constructed in compliance with all laws then applicable to such improvements is removed. Instead, the building must be constructed in accordance with applicable building codes, generally accepted in the state of Washington at the time of construction. To establish an alleged breach of warranty has an adverse effect on performance, the purchaser must prove the alleged breach:

• Is more than technical;
• Is significant to a reasonable person; and
• Has caused or will cause physical damage to the unit or common elements; has materially impaired the performance of mechanical, electrical, plumbing, elevator, or similar building equipment; or presents an actual unreasonable safety risk to the occupants of the condominium.

SB 5334 also provides immunity from liability to the members of the HOA.

This is the proposal AWC has been working on with the realtors, condo developers, and legislators. We will be testifying in support.

Dates to remember

SB 5334 will be heard at 10 am on Friday, March 15 in the House Civil Rights & Judiciary Committee.