BP BHEAD INT S

AN ACT Relating to homeowner's associations; amending RCW 64.38.010 and 64.38.045; adding a new section to chapter 64.38 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds it is in the best interest of homeowners' associations that some degree of regulation be provided over the individuals or entities who are hired to manage the funds of homeowners' associations.

Sec. 2. RCW 64.38.010 and 1995 c 283 s 2 are each amended to read as follows:

For purposes of this chapter:

(1) "Homeowners' association" or "association" means a corporation, unincorporated association, or other legal entity, each member of which is an owner of residential real property located within the association's jurisdiction, as described in the governing documents, and by virtue of membership or ownership of property is obligated to pay real property taxes, insurance premiums, maintenance costs, or for improvement of real property other than that which is owned by the member. "Homeowners' association" does not mean an association created under chapter 64.32 or 64.34 RCW.

(2) "Governing documents" means the articles of incorporation, bylaws, plat, declaration of covenants, conditions, and restrictions, rules and regulations of the association, or other written instrument by which the association has the authority to exercise any of the powers provided for in this chapter or to manage, maintain, or otherwise affect the property under its jurisdiction.

(3) "Board of directors" or "board" means the body, regardless of name, with primary authority to manage the affairs of the association.

(4) "Common areas" means property owned, or otherwise maintained, repaired or administered by the association.

(5) "Common expense" means the costs incurred by the association to exercise any of the powers provided for in this chapter.

(6) "Residential real property" means any real property, the use of which is limited by law, covenant or otherwise to primarily residential or recreational purposes.

(7) "Homeowners' association management" means the activities undertaken for a homeowners' association, pursuant to an agreement in exchange for a fee, commission, or other valuable consideration; which activities may include, preparation of budgets and other financial documents; collecting, controlling, or disbursing funds; obtaining insurance; arranging for and coordinating maintenance and repair to the association property; conducting association meetings; and supervising the day to day operations of the association or other activities as directed by the board.

(8) "Homeowners' association manager" means a person, firm, or organization hired to engage in homeowners' association management.

(9) "Director" means director of licensing or the director's designee.

(10) "Department" means the department of licensing.

NEW SECTION. Sec. 3. A new section is added to chapter 64.38 RCW to read as follows:

(1) No person, firm, or corporation may act or hold itself out as a homeowners' association manager unless, prior to engaging in the business of homeowners' association management, the person, firm, or corporation registers with the director under this chapter and rules adopted under this chapter. However, if the governing documents of the association require an annual audit, the manager is not required to register. No registration is assignable or transferrable.

(2) An application for registration as a homeowners' association manager must be submitted in the form prescribed by rule by the director, and must contain, but is not limited to the following:

(a) The name, address, and telephone number of the homeowners' association manager;

(b) Along with the application, a registration fee is an amount determined under RCW 43.24.086 may be required.

(3)(a) Each homeowners' association manager shall renew his or her registration on or before July 1 of every other year or as otherwise determined by the director.

(b) Renewal of a registration is subject to the same provisions covering issuance, suspension, and revocation of a registration for any of the grounds set out under the administrative procedure act, chapter 34.05 RCW and where the applicant's past conduct indicates the applicant will not be able to carry out the applicant's duties in accordance with the law and with integrity and honesty. The director must promptly notify the applicant in writing by certified mail of his or her intent to refuse to renew the registration. The registrant may, within twenty-one days after receipt of that notice of intent, request a hearing on the refusal. The registrant may contest the decision regarding conditions imposed or registration denied through the process established by the administrative procedure act, chapter 34.05 RCW.

(4) The director may deny, suspend, or revoke the registration of a homeowners' association manager if the director finds that the applicant:

(a) Was previously the holder of a registration issued under this chapter, and the registration was revoked for cause and never reissued by the director, or the registration was suspended for cause and the terms of the suspension have not been fulfilled;

(b) Has been found guilty of a felony within the past five years involving moral turpitude, of a misdemeanor concerning fraud or conversion, or has had a judgment imposed in a civil action involving willful fraud, misrepresentation, or conversion;

(c) Has made a false statement of a material fact in an application under this chapter or in any data attached to such application;

(d) Has violated this chapter or failed to comply with a rule adopted by the director under this chapter;

(e) Has committed a fraud or fraudulent practice as a homeowners' association manager; or

(f) If the homeowners' association manager is found in violation of this chapter, the director may revoke the registration of the homeowners' association manager.

Sec. 4. RCW 64.38.045 and 1995 c 283 s 9 are each amended to read as follows:

(1) The association or ((~~its managing agent~~)) the homeowners' association manager shall keep financial and other records sufficiently detailed to enable the association to fully declare to each owner the true statement of its financial status. All financial and other records of the association, including but not limited to checks, bank records, and invoices, in whatever form they are kept, are the property of the association. Each association managing agent shall turn over all original books and records to the association immediately upon termination of the management relationship with the association, or upon such other demand as is made by the board of directors. An association managing agent is entitled to keep copies of association records. All records which the managing agent has turned over to the association shall be made reasonably available for the examination and copying by the managing agent.

(2) All records of the association, including the names and addresses of owners and other occupants of the lots, shall be available for examination by all owners, holders of mortgages on the lots, and their respective authorized agents on reasonable advance notice during normal working hours at the offices of the association or its managing agent. The association shall not release the unlisted telephone number of any owner. The association may impose and collect a reasonable charge for copies and any reasonable costs incurred by the association in providing access to records.

(3) At least annually, the association shall prepare, or cause to be prepared, a financial statement of the association. The financial statements of associations with annual assessments of fifty thousand dollars or more shall be audited at least annually by an independent certified public accountant, but the audit may be waived if sixty-seven percent of the votes cast by owners, in person or by proxy, at a meeting of the association at which a quorum is present, vote each year to waive the audit.

(4) The funds of the association shall be kept in accounts in the name of the association and shall not be commingled with the funds of any other association, nor with the funds of any manager of the association or any other person responsible for the custody of such funds. Any finances managed by a homeowners' association manager required to be registered under this chapter must be audited at least every two years.