Information about WUCIOA (#4)

 

This is the fourth in a series of communications intended to inform LRAA members about the results of the Board’s review of the new Washington Uniform Common Interest Ownership Act (WUCIOA).

LRAA Bylaw Changes Required by 
Mandatory Provisions of WUCIOA

The Washington legislature made a number of WUCIOA provisions mandatory for existing common interest communities including LRAA. These mandatory provisions require that amendments and additions be made to LRAA’s Amended and Restated Bylaws so that LRAa is in compliance with the new law. Summaries of those Bylaw additions and changes appear below. Members will have an opportunity to review and vote on the specific language at the next annual membership meeting. “RCW” refers to the Revised code of Washington.

For more information on the Washington Uniform Common Interest Ownership Act (WUCIOA) and why we are talking about it, please vist our Governance page.

1. RCW 64.90.405 paragraphs (1) (b) & (c) RE mandatory and require LRAA to do two things: adopt budgets and impose assessments for common expenses and specially allocated expenses on the members, as described in RCW 64.90.525. RCW 64.90.525 is also mandatory and describes how budgets, assessments and special assessments are to be handled.

The budget process described in WUCIOA is similar to the process LRAA currently follows, with a few exceptions. The new law imposes timing obligations on the Board that are slightly different than those called for in our existing Bylaws. Under WUCIOA a copy of the proposed budget must be sent to each member within thirty days of its adoption by the board along with a notice of a meeting where the budget will be considered by the members. Our existing Bylaws specify the timing of that notice at “no less that 14 nor more than 60 days prior to the meeting, while WUCIOA requires the notice to be sent no less than 14 nor more than 50 days prior to the meeting.

Another difference is that our existing Bylaws call for the members to “approve” the proposed budget, whereas WUCIOA requires that unless a majority of members at that meeting “reject” the proposed budget, it is deemed “ratified.” Either way members are able to decide on LRAa’s budget.

RCW 64.90.525 provides a detailed list of the information the Board must include in the annual budget, while our existing Bylaws include a more general description of what must be included. The greater details provides more information to members. Some new categories of information that will be provided includes the current amount of regular assessments budgeted for contribution to the required reserve account, a statement of whether the association has a reserve study that meets the requirements of the law, the extent to which the budget meets or deviates from the recommendations of that reserve study, and the current deficiency or surplus in reserve funding.

Our existing Bylaws allow the Board to impose special assessments “if required for the proper operation of the Association.” Under this mandatory WUCIOA provision, the Board is still permitted to impose special assessments, but they become effective only if the Board follows the procedures for ratification of a budget by the members. That means members must be notified of the perceived need for a special assessment and provides them an opportunity to consider the need for a special assessment.

RCW 64.90.405 and RCW 64.90.525 require amendments to LRAA’s Revised and Re-stated Bylaw Articles 6.03, 11 and 12.

2. RCW 64.90.480 relates to expenses incurred by LRAA that are caused by the willful misconduct or gross negligence of any member or that member's tenant, guest, invitee, or occupant. Those expenses may be assessed against the member, but that assessment can only be made after notice and an opportunity for the member to be heard.

RCW 64.90.480 requires an amendment to LRAA’s Revised and Re-stated Bylaw 12.01.

3. RCW 64.90.545 requires LRAA to prepare and update a reserve study. The initial reserve study must be prepared by a reserve study professional. This study must be updated annually, but only the study update performed every third year must be prepared by a reserve study professional.

RCW 64.90.545 requires the addition of a new Bylaw 11.09.

4. RCW 64.90.535 requires LRAA to establish one or more reserve accounts for the deposit of reserve funds. That account must be an income-earning account that is maintained under the direct control of the Board.

RCW 64.90.540 requires the addition of a new Bylaw 11.10.

5. RCW 64.90.540 allows the Board to withdraw funds from the reserve account to pay for unforeseen or un-budgeted costs that are unrelated to replacement costs of the reserve components. Withdrawals must be recorded in Board meeting Minutes and the board must give notice of the withdrawal to each

member. Finally, the Board must adopt a repayment schedule to bring the reserve account back up to the appropriate level.

Reserve account withdrawals to pay for replacement costs of reserve components not included in the reserve study do not require notice.

RCW 64.90.540 requires the addition of a new Bylaw 11.11.

6. RCW 64.90.550 describes the details of what a reserve study must include. The burden of complying with this provision would fall on the reserve study professional.

The requirements of RCW 64.90.550 are addressed in language included in a new Bylaw 11.09.01.

7. RCW 64.90.555 allows members to demand that the cost of a reserve study: i) be included in the next annual budget, ii) be done by a reserve study professional and iii) be prepared by the end of that budget year. Assuming that budget is not rejected by the members, the board must comply with the members’ demand.

RCW 64.90.555 requires the addition of a new Bylaw 11.12.

8. RCW 64.90.560 limits the monetary damages or other liability that may be awarded against or imposed upon the association or its officers or board members, or any person who may have provided advice or assistance to the association for failure to: establish or replenish a reserve account, have a current reserve study prepared or updated, or make reserve disclosures.

RCW 64.90.560 requires the addition of a new Bylaw 11.13.

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