Hurry. You only have one year to challenge that Condo Amendment. Or do you?

Condo’s, just like HOA’s, are governed by CCR’s, or as they are more simply called in the condo world, Declarations. Declarations may run to a hundred or more pages and can cover every aspect of how a condo is used. If you don’t like the Declarations, the best answer is to probably not buy the condo. Unfortunately, owners don’t always read the Declaration before they buy, or may fail to grasp the significance of one critical paragraph in a 100-page document. Let’s say that the clause you don’t like isn’t in the Declaration, but a later amendment? What can you do? One option, other than ignoring it and hoping no one will notice, is to challenge the amendment as was attempted in Bilanko v. Barclay Court Owners Association, 185 Wn.2d 443, 375 P.3d 591 (2016).

In Bilanko, Carolyn Bilanko purchased a condo in the Barclay Court Condominiums. The Declaration contained no rental/lease restrictions, but an amendment, adopted prior to Bilanko’s purchase, contained a cap that allowed only 7 units in the building to be leased at any one time. Bilanko attempted to challenge the amendment asserting that under the Declaration, any such amendment required approval of 90% of the owners, but was only approved by 67%. A sound technical argument to challenge an amendment – you didn’t get enough votes.

Bilanko’s problem, by statute, such a challenge had to be made within one year of the amendment’s recording, RCW 64.64.264, and the amendment had been recorded in 2008 – 7 years before Bilanko’s challenge.

RCW 64.34.264(2) is a simple statute that requires little interpretation:

No action to challenge the validity of an amendment adopted by the association pursuant to this section may be brought more than one year after the amendment is recorded.

The difficulty for the Supreme Court in Bilanko wasn’t in rejecting the challenge to the amendment, but attempting to distinguish Bilanko’s challenge, which was denied, from a challenge made over 4 years after recording upheld in Club Envy of Spokane, LLC v. Ridpath Tower Condo. Association, 184 Wn. App. 593, 337 P.3d 1131, 1132 (2014), a decision of the Court of Appeals.

In Club Envy, the challengers argued that the one year bar in RCW 64.34.264(2) should not apply because the amendment was improperly adopted – it was not approved by the needed number of owners. Sound like the challenge in Bilanko? The logic followed by the Court of Appeals is that Condo Associations are corporations. If a corporation fails to follow its rules (Articles of Incorporation, Bylaws, Declaration), its actions are void ab initio (void from the beginning), the one-year rule would not apply. So, how do you reconcile the two cases – or do you need to?

Rather than overturn Club Envy, whose results the Supreme Court agreed with, the court engaged in a painful discussion of what corporate acts are void versus voidable, when all that was needed was for it to paint a fuller picture of the facts involved in Club Envy. As noted by the Supreme Court, Club Envy dealt with amendments that were most likely recorded by the Association’s president, with no type of vote ever having been taken. Against this backdrop, the court would not allow the one year rule to be used as a weapon against innocent owners.

Unfortunately, the result of Bilanko’s attempt to uphold Club Envy, and its discussion of how some actions by the Association may be void (not subject to the one-year rule), whereas others are voidable (subject to the one-year rule), will cause needless litigation. What should have happened, is for the court to have simply stated that the one-year rule will apply in all cases but out and out fraud.

The takeaway, if you want to challenge an amendment to a condo declaration in Washington, do it in one year of recording.

 

This blog post is offered for general information and educational purposes only. It is not offered as legal advice and does not constitute legal advice or opinion. Although I intend to keep this information current, I do not promise or guarantee that the information is correct, complete, or up-to date. You should not act or reply upon the information in this post without seeking the advice of an attorney.

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