Three separate proposals have been introduced that support one of AWC’s priority issues for removing barriers to affordable housing – condominium liability laws. Under current law, a developer who chooses to build condos can almost guarantee they will be sued by the future occupants. As such, developers who take on this risk tend to build condos at the higher end of the price scale, in order to make up for the losses that will accompany a suit. Building lower-cost condos just doesn’t pencil out, so the market lacks this housing option. Condos are often a desirable way for first-time home buyers to build equity at a lower entrance price point. They are also a great option for retired homeowners to downsize when they no longer need or want a larger, single-family home with yard.
SB 5334/HB 1306
This proposal 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.
These companion bills also provide immunity from liability to the members of the condo’s homeowners association board (HOA). SB 5334 is sponsored by Sen. Jamie Pederson (D–Edmonds); its companion, HB 1306 is sponsored by Rep. Tana Senn (D–Mercer Island).
This is the proposal AWC has been working on with the realtors, condo developers, and legislators. We will be testifying in support.
HB 1576
Also sponsored by Rep. Senn, HB 1576 changes the requirements for a HOA to bring a lawsuit. Prior to filing a suit, the HOA must convene the condo homeowners 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. In order to proceed with a lawsuit, the HOA must have a majority of the homeowners agree to sue.
This is a proposal that we saw last session; AWC continues to support this approach, as well.
SB 5219
This proposed solution, sponsored by Sen. Mike Padden (R–Spokane Valley), takes a third approach – exempting smaller condo developments from the warranty liability. Condo developments that have less than seven units would not be subject to the warranty provisions in current law. We welcome your feedback on this approach.
Dates to remember
SB 5334 & SB 5219 will be heard on Monday, January 28 at 10 am in the Senate Law & Justice Committee. Both are also scheduled for a committee vote on Thursday, January 31 at 10 am.