BILL REQ. #:  S-0601.1 

Read first time 01/28/2005.   Referred to Committee on Financial Institutions, Housing & Consumer Protection.

     AN ACT Relating to amendment of governing documents of a homeowners' association; and adding a new section to chapter 64.38 RCW.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 64.38 RCW to read as follows:
     (1) If in order to amend a declaration of covenants, conditions, and restrictions, the declaration requires owners having more than fifty percent of the votes in the association, in a single class voting structure, or owners having more than fifty percent of the votes in more than one class in a voting structure with more than one class, to vote in favor of the amendment, the association, or any owner of a separate interest, may petition the superior court of the county in which the homeowners' association is located for an order reducing the percentage of the affirmative votes necessary to approve such an amendment. The petition shall describe the effort that has been made to solicit approval of the association members in the manner provided in the declaration, the number of affirmative and negative votes actually received, the number or percentage of affirmative votes required to approve the amendment in accordance with the existing declaration, and other matters the petitioner considers relevant to the court's determination. The petition shall also contain, as exhibits thereto, copies of all of the following:
     (a) The governing documents;
     (b) A complete text of the amendment;
     (c) Copies of any notice and solicitation materials utilized in the solicitation of owner approvals;
     (d) A short explanation of the reason for the amendment, such as the amendment is necessary to update or amend an outdated or obsolete provision in the declaration;
     (e) Any other documentation relevant to the court's determination.
     (2) Upon filing the petition, the court shall set the matter for hearing and issue an ex parte order setting forth the manner in which notice shall be given.
     (3) The court may, but is not required to, grant the petition if it finds all of the following:
     (a) The petitioner has given not less than fifteen days' written notice of the court hearing to all members of the association, or to any mortgagee of a mortgage or beneficiary of a deed of trust who is entitled to notice under the terms of the declaration, and to the city, county, or city and county in which the homeowners' association is located that is entitled to notice under the terms of the declaration.
     (b) Balloting on the proposed amendment was conducted in accordance with all applicable provisions of the governing documents.
     (c) A diligent effort was made to permit all eligible members to vote on the proposed amendment.
     (d) Owners having more than fifty percent of the votes, in a single class voting structure, voted in favor of the amendment. In a voting structure with more than one class, where the declaration requires a majority of more than one class to vote in favor of the amendment, owners having more than fifty percent of the votes in each class required by the declaration to vote in favor of the amendment voted in favor of the amendment.
     (e) The amendment is reasonable.
     (f) Granting the petition is not improper for any reason stated in subsection (5) of this section.
     (4) If the court makes the findings required by subsection (3) of this section, any order issued pursuant to this section may confirm the amendment as being validly approved on the basis of the affirmative votes actually received during the balloting period or the order may dispense with any requirement relating to quorums or to the number or percentage of votes needed for approval of the amendment that would otherwise exist under the governing documents.
     (5) The court may not approve any amendment to the declaration that:
     (a) Changes provisions in the declaration requiring the approval of owners having more than fifty percent of the votes in more than one class to vote in favor of the amendment, unless owners having more than fifty percent of the votes in each affected class approved the amendment.
     (b) Eliminates any special rights, preferences, or privileges designated in the declaration as belonging to the declarant, without the consent of the declarant.
     (c) Impairs the security interest of a mortgagee of a mortgage or the beneficiary of a deed of trust without the approval of the percentage of the mortgagees and beneficiaries specified in the declaration, if the declaration requires the approval of a specified percentage of the mortgagees and beneficiaries.
     (6) An amendment is not effective pursuant to this section until the court order and amendment have been recorded in every county in which a portion of the homeowners' association is located. The amendment may be acknowledged by, and the court order and amendment may be recorded by, any person designated in the declaration or by the association for that purpose, or if no one is designated for that purpose, by the president of the association. Upon recording of the amendment and court order, the declaration, as amended in accordance with this section, has the same force and effect as if the amendment were adopted in compliance with every requirement imposed by the governing documents.
     (7) Within a reasonable time after the amendment is recorded, the association shall mail a copy of the amendment to each member of the association, together with a statement that the amendment has been recorded.