What is WUCIOA?
Washington recently enacted the Washington Uniform Common Interest Ownership Act (“WUCIOA” or “Act”), which was signed by the Governor and is effective as of July 1, 2018. The Act, which is codified at Chapter 64.90 RCW, et seq., constitutes Washington’s first comprehensive regulatory regime that is generally applicable to most condominiums, housing cooperatives, subdivisions, and other common interest communities currently recognized and regulated by Washington law.
The 134-page Act consists of 110 sections that impose a detailed overlay of rules governing the creation, operation and governance of most condominiums, housing cooperatives, subdivisions, and other common interest communities such as planned developments. The Act’s provisions apply prospectively to all common interest ownership arrangements that fall within the Act’s definition of common interest community created on or after July 1, 2018.
What does WUCIOA do?
WUCIOA’s provisions are intended to provide a comprehensive and uniform framework of rules with respect to establishing, operating, and governing common interest communities such as condominiums, housing cooperatives, subdivisions, planned developments and similar arrangements that include common ownership of real property. Historically, these various forms of common ownership arrangements were each subject to separate statutory provisions, resulting in substantial variations in the way they were regulated under Washington law. As of July 1, 2018, all of these various forms of common ownership will largely be treated in a more consistent manner under the regulatory regime established by the Act.
How will WUCIOA affect real estate development?
The impact of WUCIOA will vary depending on the particular type of common ownership interest:
- Condominiums: The existing Condominium Act (Chapter 64.34 RCW) will no longer apply to any condominiums formed on or after July 1, 2018. While WUCIOA varies from the Condominium Act in a number of ways, the basic framework governing the formation, organization, management, and resale of condominiums under the Act are very similar to the rules imposed by the existing Condominium Act in most respects. Importantly, the Act maintains the implied warranties of quality set forth in the existing Condominium Act, which expose developers to substantial liability for damages and attorneys’ fees for construction defect claims.
- Housing Cooperatives: WUCIOA establishes comprehensive regulations for housing cooperatives formed on or after July 1, 2018, which is a significant departure from the state’s historical treatment of housing cooperatives, which were virtually unregulated under existing Washington law. While the Act imposes rules for new housing cooperatives that mirror the rules applicable to condominiums, except for the implied warranties of quality imposed on condominium developers, which are not extended to cooperatives.
- Subdivisions: The provisions of the Act are generally applicable to all subdivisions (including short subdivisions and unit lot subdivisions) created pursuant to a declaration recorded on or after July 1, 2018. Importantly, the Act expressly exempts subdivisions containing twelve or fewer lots, but only if (i) the subdivision is not subject to any future development rights; and (ii) the declaration expressly provides that the annual average assessment shall not exceed $300 while the developer retains control of the subdivision association, unless a greater amount is approved by a super-majority of unit owners.
- Homeowners’ Associations: Among other things, the Act generally requires that a common interest community establish a homeowners’ association prior to conveyance of any parcels or units to a purchaser. The association may be organized as a corporation or limited liability company. The Act contains detailed rules pertaining to the governance and operation of homeowners’ associations,
Pro-Tip: Any condominium or subdivision declaration recorded on or after July 1, 2018 should be carefully reviewed to evaluate whether it fully complies with the Act’s provisions. Fortunately, the consequences of non-compliance can often be cured or mitigated by recording an amended declaration, particularly if the amended declaration is recorded in a timely manner. Please seek the advice of an attorney if you have any questions or concerns about a recently recorded or soon-to-be recorded subdivision declaration.
WUCIOA is a complex and important addition to Washington real estate law – it imposes a wide array of detailed requirements and obligations that will likely have a significant impact and impose new risks with respect to virtually all residential condominiums created on or after the Act’s effective date. For other types of residential real estate development involving an element of common ownership, such as subdivisions and housing cooperatives, the Act establishes an entirely new regulatory framework that real estate developers, architects, brokers, surveyors, attorneys, and other real estate professionals will need to become familiar with in order to minimize unnecessary costs and exposure to liability.
To learn more about the Act and its implications, please contact David A. Petteys at (206) 876-7828, or via email at firstname.lastname@example.org.
Disclaimer: this update is for informational purposes only and is not intended to constitute legal advice. Your receipt of this update and/or use of the information presented herein does not create an attorney-client relationship between the recipient or user and our firm or any of its attorneys. We strongly recommend seeking the advice of a qualified attorney to address these and any other legal issues or concerns. Thank you.