BILL REQ. #: H-5315.1
| State of Washington | 60th Legislature | 2008 Regular Session |
READ FIRST TIME 02/04/08.
AN ACT Relating to reserve accounts and studies for condominium associations; amending RCW 64.34.010, 64.34.020, 64.34.304, 64.34.410, and 64.34.425; and adding new sections to chapter 64.34 RCW.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1 A new section is added to chapter 64.34 RCW
under the subchapter heading "Article 3" to read as follows:
(1) An association is encouraged to establish a reserve account to
fund major maintenance, repair, and replacement of common elements,
including limited common elements that will require major maintenance,
repair, or replacement within thirty years. A reserve account shall be
established in the name of the association. The board of directors is
responsible for administering the reserve account.
(2) Unless doing so would impose an unreasonable hardship, an
association shall prepare and update a reserve study, in accordance
with the association's governing documents and RCW 64.34.224(1). The
initial reserve study must be based upon a visual site inspection
conducted by a reserve study professional.
(3) Unless doing so would impose an unreasonable hardship, the
association shall update the reserve study annually. At least every
three years, an updated reserve study must be prepared and based upon
a visual site inspection conducted by a reserve study professional.
(4) This section and sections 2 through 6 of this act apply to
condominiums governed by chapter 64.32 RCW or this chapter and intended
in whole or in part for residential purposes. These sections do not
apply to condominiums consisting solely of units that are restricted in
the declaration to nonresidential use. An association's governing
documents may contain stricter requirements.
NEW SECTION. Sec. 2 A new section is added to chapter 64.34 RCW
under the subchapter heading "Article 3" to read as follows:
(1) A reserve study as described in section 1 of this act is
supplemental to the association's operating and maintenance budget. In
preparing a reserve study, the association shall estimate the
anticipated major maintenance, repair, and replacement costs, whose
infrequent and significant nature make them impractical to be included
in an annual budget.
(2) A reserve study shall include:
(a) A reserve component list, including quantities and estimates
for useful life of each reserve component, remaining useful life of
each reserve component, and current repair and replacement cost for
each component;
(b) The date of the study and a statement that the study meets the
requirements of this section;
(c) The level of reserve study performed:
(i) Level I: Full reserve study funding analysis and plan;
(ii) Level II: Update with visual site inspection;
(iii) Level III: Update with no visual site inspection;
(d) The association's reserve account balance;
(e) The percentage of the fully funded balance that the reserve
account is funded;
(f) Special assessments already implemented or planned;
(g) Interest and inflation assumptions;
(h) Current reserve account contribution rate;
(i) Recommended reserve account contribution rate;
(j) Projected reserve account balance for thirty years and a
funding plan to pay for projected costs from those reserves without
reliance on future unplanned special assessments; and
(k) Whether the reserve study was prepared with the assistance of
a reserve study professional.
(3) A reserve study shall include the following disclosure:
"This reserve study should be reviewed carefully. It may not include all common and limited common element components that will require major maintenance, repair, or replacement in future years, and may not include regular contributions to a reserve account for the cost of such maintenance, repair, or replacement. The failure to include a component in a reserve study, or to provide contributions to a reserve account for a component, may, under some circumstances, require you to pay on demand as a special assessment your share of common expenses for the cost of major maintenance, repair, or replacement of a reserve component."
NEW SECTION. Sec. 3 A new section is added to chapter 64.34 RCW
under the subchapter heading "Article 3" to read as follows:
An association may withdraw funds from its reserve account to pay
for unforeseen or unbudgeted costs. The board of directors shall
record any such withdrawal in the minute books of the association,
cause notice of any such withdrawal to be hand delivered or sent
prepaid by first-class United States mail to the mailing address of
each unit or to any other mailing address designated in writing by the
unit owner, and adopt a repayment schedule not to exceed twenty-four
months unless it determines that repayment within twenty-four months
would impose an unreasonable burden on the unit owners.
NEW SECTION. Sec. 4 A new section is added to chapter 64.34 RCW
under the subchapter heading "Article 3" to read as follows:
(1) Where more than three years have passed since the date of the
last reserve study prepared by a reserve study professional, the owners
of the units to which at least twenty percent of the votes are
allocated may demand, in writing, to the association that the cost of
a reserve study be included in the next budget and that the study be
obtained by the end of that budget year. The written demand must refer
to this section. The board of directors shall, upon receipt of the
written demand, provide unit owners making the demand reasonable
assurance that the board of directors will include a reserve study in
the next budget and, if the budget is not rejected by the owners, will
arrange for the completion of a reserve study.
(2) In the event a written demand is made and a reserve study is
not timely prepared, a court may order specific performance and award
reasonable attorneys' fees to the prevailing party in any legal action
brought to enforce this section. An association may assert
unreasonable hardship as an affirmative defense in any action brought
against it under this section. Without limiting this affirmative
defense, an unreasonable hardship exists where the cost of preparing a
reserve study would exceed ten percent of the association's annual
budget.
(3) A unit owner's duty to pay for common expenses shall not be
excused because of the association's failure to comply with this
section or sections 2 through 6 of this act. A budget ratified by the
unit owners under RCW 64.34.308(3) may not be invalidated because of
the association's failure to comply with this section or sections 2
through 6 of this act.
NEW SECTION. Sec. 5 A new section is added to chapter 64.34 RCW
under the subchapter heading "Article 3" to read as follows:
Subject to section 4 of this act, the decisions relating to the
preparation and updating of a reserve study must be made by the board
of directors of the association in the exercise of the reasonable
discretion of the board. Such decisions must include whether a reserve
study will be prepared or updated, and whether the assistance of a
reserve study professional will be utilized.
NEW SECTION. Sec. 6 A new section is added to chapter 64.34 RCW
under the subchapter heading "Article 3" to read as follows:
Monetary damages or any other liability may not be awarded against
or imposed upon the association, the officers or board of directors of
the association, or those persons who may have provided advice or
assistance to the association or its officers or directors, for failure
to: Establish a reserve account; have a current reserve study prepared
or updated in accordance with sections 1 through 5 of this act; or make
the reserve disclosures in accordance with section 2 of this act and
RCW 64.34.410(1)(oo) and 64.34.425(1)(s).
Sec. 7 RCW 64.34.010 and 1993 c 429 s 12 are each amended to read
as follows:
(1) This chapter applies to all condominiums created within this
state after July 1, 1990. RCW 64.34.040 (separate titles and
taxation), RCW 64.34.050 (applicability of local ordinances,
regulations, and building codes), RCW 64.34.060 (condemnation), RCW
64.34.208 (construction and validity of declaration and bylaws), RCW
64.34.212 (description of units), RCW 64.34.304(1) (a) through (f) and
(k) through (r) (powers of unit owners' association), RCW 64.34.308(1)
(board of directors and officers), RCW 64.34.340 (voting—
(2) The provisions of chapter 64.32 RCW do not apply to
condominiums created after July 1, 1990, and do not invalidate any
amendment to the declaration, bylaws, and survey maps and plans of any
condominium created before July 1, 1990, if the amendment would be
permitted by this chapter. The amendment must be adopted in conformity
with the procedures and requirements specified by those instruments and
by chapter 64.32 RCW. If the amendment grants to any person any
rights, powers, or privileges permitted by this chapter which are not
otherwise provided for in the declaration or chapter 64.32 RCW, all
correlative obligations, liabilities, and restrictions in this chapter
also apply to that person.
(3) This chapter does not apply to condominiums or units located
outside this state.
(4) RCW 64.34.400 (applicability—
Sec. 8 RCW 64.34.020 and 2004 c 201 s 9 are each amended to read
as follows:
In the declaration and bylaws, unless specifically provided
otherwise or the context requires otherwise, and in this chapter:
(1) "Affiliate" means any person who controls, is controlled by, or
is under common control with the referenced person. A person
"controls" another person if the person: (a) Is a general partner,
officer, director, or employer of the referenced person; (b) directly
or indirectly or acting in concert with one or more other persons, or
through one or more subsidiaries, owns, controls, holds with power to
vote, or holds proxies representing, more than twenty percent of the
voting interest in the referenced person; (c) controls in any manner
the election of a majority of the directors of the referenced person;
or (d) has contributed more than twenty percent of the capital of the
referenced person. A person "is controlled by" another person if the
other person: (i) Is a general partner, officer, director, or employer
of the person; (ii) directly or indirectly or acting in concert with
one or more other persons, or through one or more subsidiaries, owns,
controls, holds with power to vote, or holds proxies representing, more
than twenty percent of the voting interest in the person; (iii)
controls in any manner the election of a majority of the directors of
the person; or (iv) has contributed more than twenty percent of the
capital of the person. Control does not exist if the powers described
in this subsection are held solely as security for an obligation and
are not exercised.
(2) "Allocated interests" means the undivided interest in the
common elements, the common expense liability, and votes in the
association allocated to each unit.
(3) "Assessment" means all sums chargeable by the association
against a unit including, without limitation: (a) Regular and special
assessments for common expenses, charges, and fines imposed by the
association; (b) interest and late charges on any delinquent account;
and (c) costs of collection, including reasonable attorneys' fees,
incurred by the association in connection with the collection of a
delinquent owner's account.
(4) "Association" or "unit owners' association" means the unit
owners' association organized under RCW 64.34.300.
(5) "Board of directors" means the body, regardless of name, with
primary authority to manage the affairs of the association.
(6) "Common elements" means all portions of a condominium other
than the units.
(7) "Common expenses" means expenditures made by or financial
liabilities of the association, together with any allocations to
reserves.
(8) "Common expense liability" means the liability for common
expenses allocated to each unit pursuant to RCW 64.34.224.
(9) "Condominium" means real property, portions of which are
designated for separate ownership and the remainder of which is
designated for common ownership solely by the owners of those portions.
Real property is not a condominium unless the undivided interests in
the common elements are vested in the unit owners, and unless a
declaration and a survey map and plans have been recorded pursuant to
this chapter.
(10) "Contribution rate" means, in a reserve study as described in
section 1 of this act, the amount contributed to the reserve account so
that the association will have cash reserves to pay major maintenance,
repair, or replacement costs without the need of a special assessment.
(11) "Conversion condominium" means a condominium (a) that at any
time before creation of the condominium was lawfully occupied wholly or
partially by a tenant or subtenant for residential purposes pursuant to
a rental agreement, oral or written, express or implied, for which the
tenant or subtenant had not received the notice described in (b) of
this subsection; or (b) that, at any time within twelve months before
the conveyance of, or acceptance of an agreement to convey, any unit
therein other than to a declarant or any affiliate of a declarant, was
lawfully occupied wholly or partially by a residential tenant of a
declarant or an affiliate of a declarant and such tenant was not
notified in writing, prior to lawfully occupying a unit or executing a
rental agreement, whichever event first occurs, that the unit was part
of a condominium and subject to sale. "Conversion condominium" shall
not include a condominium in which, before July 1, 1990, any unit
therein had been conveyed or been made subject to an agreement to
convey to any transferee other than a declarant or an affiliate of a
declarant.
(((11))) (12) "Conveyance" means any transfer of the ownership of
a unit, including a transfer by deed or by real estate contract and,
with respect to a unit in a leasehold condominium, a transfer by lease
or assignment thereof, but shall not include a transfer solely for
security.
(((12))) (13) "Dealer" means a person who, together with such
person's affiliates, owns or has a right to acquire either six or more
units in a condominium or fifty percent or more of the units in a
condominium containing more than two units.
(((13))) (14) "Declarant" means:
(a) Any person who executes as declarant a declaration as defined
in subsection (((15))) (16) of this section; or
(b) Any person who reserves any special declarant right in the
declaration; or
(c) Any person who exercises special declarant rights or to whom
special declarant rights are transferred; or
(d) Any person who is the owner of a fee interest in the real
property which is subjected to the declaration at the time of the
recording of an instrument pursuant to RCW 64.34.316 and who directly
or through one or more affiliates is materially involved in the
construction, marketing, or sale of units in the condominium created by
the recording of the instrument.
(((14))) (15) "Declarant control" means the right of the declarant
or persons designated by the declarant to appoint and remove officers
and members of the board of directors, or to veto or approve a proposed
action of the board or association, pursuant to RCW 64.34.308 (4) or
(5).
(((15))) (16) "Declaration" means the document, however
denominated, that creates a condominium by setting forth the
information required by RCW 64.34.216 and any amendments to that
document.
(((16))) (17) "Development rights" means any right or combination
of rights reserved by a declarant in the declaration to: (a) Add real
property or improvements to a condominium; (b) create units, common
elements, or limited common elements within real property included or
added to a condominium; (c) subdivide units or convert units into
common elements; (d) withdraw real property from a condominium; or (e)
reallocate limited common elements with respect to units that have not
been conveyed by the declarant.
(((17))) (18) "Dispose" or "disposition" means a voluntary transfer
or conveyance to a purchaser or lessee of any legal or equitable
interest in a unit, but does not include the transfer or release of a
security interest.
(((18))) (19) "Effective age" means the difference between useful
life and remaining useful life.
(20) "Eligible mortgagee" means the holder of a mortgage on a unit
that has filed with the secretary of the association a written request
that it be given copies of notices of any action by the association
that requires the consent of mortgagees.
(((19))) (21) "Foreclosure" means a forfeiture or judicial or
nonjudicial foreclosure of a mortgage or a deed in lieu thereof.
(((20))) (22) "Fully funded balance" means the value of the
deteriorated portion of all the reserve components. The fully funded
balance for each reserve component is calculated by multiplying the
current replacement cost of that reserve component by its effective
age, then dividing the result by that reserve component's useful life.
The sum total of all reserve components' fully funded balances is the
association's fully funded balance.
(23) "Identifying number" means the designation of each unit in a
condominium.
(((21))) (24) "Leasehold condominium" means a condominium in which
all or a portion of the real property is subject to a lease, the
expiration or termination of which will terminate the condominium or
reduce its size.
(((22))) (25) "Limited common element" means a portion of the
common elements allocated by the declaration or by operation of RCW
64.34.204 (2) or (4) for the exclusive use of one or more but fewer
than all of the units.
(((23))) (26) "Master association" means an organization described
in RCW 64.34.276, whether or not it is also an association described in
RCW 64.34.300.
(((24))) (27) "Mortgage" means a mortgage, deed of trust or real
estate contract.
(((25))) (28) "Person" means a natural person, corporation,
partnership, limited partnership, trust, governmental subdivision or
agency, or other legal entity.
(((26))) (29) "Purchaser" means any person, other than a declarant
or a dealer, who by means of a disposition acquires a legal or
equitable interest in a unit other than (a) a leasehold interest,
including renewal options, of less than twenty years at the time of
creation of the unit, or (b) as security for an obligation.
(((27))) (30) "Real property" means any fee, leasehold or other
estate or interest in, over, or under land, including structures,
fixtures, and other improvements thereon and easements, rights and
interests appurtenant thereto which by custom, usage, or law pass with
a conveyance of land although not described in the contract of sale or
instrument of conveyance. "Real property" includes parcels, with or
without upper or lower boundaries, and spaces that may be filled with
air or water.
(((28))) (31) "Remaining useful life" means the estimated time, in
years, that a reserve component can be expected to continue to serve
its intended function.
(32) "Replacement cost" means the current cost of replacing,
repairing, or restoring a reserve component to its original functional
condition.
(33) "Residential purposes" means use for dwelling or recreational
purposes, or both.
(((29))) (34) "Reserve components" means common elements whose cost
of maintenance, repair, or replacement is infrequent, significant, and
impractical to include in an annual budget.
(35) "Reserve study professional" means an independent person
suitably qualified by knowledge, skill, experience, training, or
education to prepare a reserve study in accordance with sections 1 and
2 of this act.
(36) "Special declarant rights" means rights reserved for the
benefit of a declarant to: (a) Complete improvements indicated on
survey maps and plans filed with the declaration under RCW 64.34.232;
(b) exercise any development right under RCW 64.34.236; (c) maintain
sales offices, management offices, signs advertising the condominium,
and models under RCW 64.34.256; (d) use easements through the common
elements for the purpose of making improvements within the condominium
or within real property which may be added to the condominium under RCW
64.34.260; (e) make the condominium part of a larger condominium or a
development under RCW 64.34.280; (f) make the condominium subject to a
master association under RCW 64.34.276; or (g) appoint or remove any
officer of the association or any master association or any member of
the board of directors, or to veto or approve a proposed action of the
board or association, during any period of declarant control under RCW
64.34.308(4).
(((30))) (37) "Timeshare" shall have the meaning specified in the
timeshare act, RCW 64.36.010(11).
(((31))) (38) "Unit" means a physical portion of the condominium
designated for separate ownership, the boundaries of which are
described pursuant to RCW 64.34.216(1)(d). "Separate ownership"
includes leasing a unit in a leasehold condominium under a lease that
expires contemporaneously with any lease, the expiration or termination
of which will remove the unit from the condominium.
(((32))) (39) "Unit owner" means a declarant or other person who
owns a unit or leases a unit in a leasehold condominium under a lease
that expires simultaneously with any lease, the expiration or
termination of which will remove the unit from the condominium, but
does not include a person who has an interest in a unit solely as
security for an obligation. "Unit owner" means the vendee, not the
vendor, of a unit under a real estate contract.
(40) "Useful life" means the estimated time, in years, that a
reserve component can be expected to serve its intended function.
Sec. 9 RCW 64.34.304 and 1993 c 429 s 11 are each amended to read
as follows:
(1) Except as provided in subsection (2) of this section, and
subject to the provisions of the declaration, the association may:
(a) Adopt and amend bylaws, rules, and regulations;
(b) Adopt and amend budgets for revenues, expenditures, and
reserves, and impose and collect assessments for common expenses from
unit owners;
(c) Hire and discharge or contract with managing agents and other
employees, agents, and independent contractors;
(d) Institute, defend, or intervene in litigation or administrative
proceedings in its own name on behalf of itself or two or more unit
owners on matters affecting the condominium;
(e) Make contracts and incur liabilities;
(f) Regulate the use, maintenance, repair, replacement, and
modification of common elements;
(g) Cause additional improvements to be made as a part of the
common elements;
(h) Acquire, hold, encumber, and convey in its own name any right,
title, or interest to real or personal property, but common elements
may be conveyed or subjected to a security interest only pursuant to
RCW 64.34.348;
(i) Grant easements, leases, licenses, and concessions through or
over the common elements and petition for or consent to the vacation of
streets and alleys;
(j) Impose and collect any payments, fees, or charges for the use,
rental, or operation of the common elements, other than limited common
elements described in RCW 64.34.204 (2) and (4), and for services
provided to unit owners;
(k) Impose and collect charges for late payment of assessments
pursuant to RCW 64.34.364(13) and, after notice and an opportunity to
be heard by the board of directors or by such representative designated
by the board of directors and in accordance with such procedures as
provided in the declaration or bylaws or rules and regulations adopted
by the board of directors, levy reasonable fines in accordance with a
previously established schedule thereof adopted by the board of
directors and furnished to the owners for violations of the
declaration, bylaws, and rules and regulations of the association;
(l) Impose and collect reasonable charges for the preparation and
recording of amendments to the declaration, resale certificates
required by RCW 64.34.425, and statements of unpaid assessments;
(m) Provide for the indemnification of its officers and board of
directors and maintain directors' and officers' liability insurance;
(n) Assign its right to future income, including the right to
receive common expense assessments, but only to the extent the
declaration provides;
(o) Join in a petition for the establishment of a parking and
business improvement area, participate in the rate payers' board or
other advisory body set up by the legislative authority for operation
of a parking and business improvement area, and pay special assessments
levied by the legislative authority on a parking and business
improvement area encompassing the condominium property for activities
and projects which benefit the condominium directly or indirectly;
(p) Establish and administer a reserve fund as described in section
1 of this act;
(q) Prepare a reserve study as described in section 1 of this act;
(r) Exercise any other powers conferred by the declaration or
bylaws;
(((q))) (s) Exercise all other powers that may be exercised in this
state by the same type of corporation as the association; and
(((r))) (t) Exercise any other powers necessary and proper for the
governance and operation of the association.
(2) The declaration may not impose limitations on the power of the
association to deal with the declarant which are more restrictive than
the limitations imposed on the power of the association to deal with
other persons.
Sec. 10 RCW 64.34.410 and 2005 c 456 s 19 are each amended to
read as follows:
(1) A public offering statement shall contain the following
information:
(a) The name and address of the condominium;
(b) The name and address of the declarant;
(c) The name and address of the management company, if any;
(d) The relationship of the management company to the declarant, if
any;
(e) A list of up to the five most recent condominium projects
completed by the declarant or an affiliate of the declarant within the
past five years, including the names of the condominiums, their
addresses, and the number of existing units in each. For the purpose
of this section, a condominium is "completed" when any one unit therein
has been rented or sold;
(f) The nature of the interest being offered for sale;
(g) A brief description of the permitted uses and use restrictions
pertaining to the units and the common elements;
(h) A brief description of the restrictions, if any, on the renting
or leasing of units by the declarant or other unit owners, together
with the rights, if any, of the declarant to rent or lease at least a
majority of units;
(i) The number of existing units in the condominium and the maximum
number of units that may be added to the condominium;
(j) A list of the principal common amenities in the condominium
which materially affect the value of the condominium and those that
will or may be added to the condominium;
(k) A list of the limited common elements assigned to the units
being offered for sale;
(l) The identification of any real property not in the condominium,
the owner of which has access to any of the common elements, and a
description of the terms of such access;
(m) The identification of any real property not in the condominium
to which unit owners have access and a description of the terms of such
access;
(n) The status of construction of the units and common elements,
including estimated dates of completion if not completed;
(o) The estimated current common expense liability for the units
being offered;
(p) An estimate of any payment with respect to the common expense
liability for the units being offered which will be due at closing;
(q) The estimated current amount and purpose of any fees not
included in the common expenses and charged by the declarant or the
association for the use of any of the common elements;
(r) Any assessments which have been agreed to or are known to the
declarant and which, if not paid, may constitute a lien against any
units or common elements in favor of any governmental agency;
(s) The identification of any parts of the condominium, other than
the units, which any individual owner will have the responsibility for
maintaining;
(t) If the condominium involves a conversion condominium, the
information required by RCW 64.34.415;
(u) Whether timesharing is restricted or prohibited, and if
restricted, a general description of such restrictions;
(v) A list of all development rights reserved to the declarant and
all special declarant rights reserved to the declarant, together with
the dates such rights must terminate, and a copy of or reference by
recording number to any recorded transfer of a special declarant right;
(w) A description of any material differences in terms of
furnishings, fixtures, finishes, and equipment between any model unit
available to the purchaser at the time the agreement for sale is
executed and the unit being offered;
(x) Any liens on real property to be conveyed to the association
required to be disclosed pursuant to RCW 64.34.435(2)(b);
(y) A list of any physical hazards known to the declarant which
particularly affect the condominium or the immediate vicinity in which
the condominium is located and which are not readily ascertainable by
the purchaser;
(z) A brief description of any construction warranties to be
provided to the purchaser;
(aa) Any building code violation citations received by the
declarant in connection with the condominium which have not been
corrected;
(bb) A statement of any unsatisfied judgments or pending suits
against the association, a statement of the status of any pending suits
material to the condominium of which the declarant has actual
knowledge, and a statement of any litigation brought by an owners'
association, unit owner, or governmental entity in which the declarant
or any affiliate of the declarant has been a defendant, arising out of
the construction, sale, or administration of any condominium within the
previous five years, together with the results thereof, if known;
(cc) Any rights of first refusal to lease or purchase any unit or
any of the common elements;
(dd) The extent to which the insurance provided by the association
covers furnishings, fixtures, and equipment located in the unit;
(ee) A notice which describes a purchaser's right to cancel the
purchase agreement or extend the closing under RCW 64.34.420, including
applicable time frames and procedures;
(ff) Any reports or statements required by RCW 64.34.415 or
64.34.440(6)(a). RCW 64.34.415 shall apply to the public offering
statement of a condominium in connection with which a final certificate
of occupancy was issued more than sixty calendar months prior to the
preparation of the public offering statement whether or not the
condominium is a conversion condominium as defined in RCW
64.34.020(((10))) (11);
(gg) A list of the documents which the prospective purchaser is
entitled to receive from the declarant before the rescission period
commences;
(hh) A notice which states: A purchaser may not rely on any
representation or express warranty unless it is contained in the public
offering statement or made in writing signed by the declarant or by any
person identified in the public offering statement as the declarant's
agent;
(ii) A notice which states: This public offering statement is only
a summary of some of the significant aspects of purchasing a unit in
this condominium and the condominium documents are complex, contain
other important information, and create binding legal obligations. You
should consider seeking the assistance of legal counsel;
(jj) Any other information and cross-references which the declarant
believes will be helpful in describing the condominium to the
recipients of the public offering statement, all of which may be
included or not included at the option of the declarant;
(kk) A notice that addresses compliance or noncompliance with the
housing for older persons act of 1995, P.L. 104-76, as enacted on
December 28, 1995;
(ll) A notice that is substantially in the form required by RCW
64.50.050;
(mm) A statement, as required by RCW 64.35.210, as to whether the
units or common elements of the condominium are covered by a qualified
warranty, and a history of claims under any such warranty; ((and))
(nn) A statement that the building enclosure has been designed and
inspected as required by RCW 64.55.010 through 64.55.090, and, if
required, repaired in accordance with the requirements of RCW
64.55.090; and
(oo) If the association does not have a reserve study that has been
prepared in accordance with sections 1 and 2 of this act or its
governing documents, the following disclosure: "This association does not have a current reserve study.
The lack of a current reserve study poses certain risks to you,
the purchaser. Insufficient reserves may, under some
circumstances, require you to pay on demand as a special
assessment your share of common expenses for the cost of major
maintenance, repair, or replacement of a common element."
(2) The public offering statement shall include copies of each of
the following documents: The declaration, the survey map and plans,
the articles of incorporation of the association, bylaws of the
association, rules and regulations, if any, current or proposed budget
for the association, the balance sheet of the association current
within ninety days if assessments have been collected for ninety days
or more, the association's current reserve study, if any, and the
inspection and repair report or reports prepared in accordance with the
requirements of RCW 64.55.090.
If any of the foregoing documents listed in this subsection are not
available because they have not been executed, adopted, or recorded,
drafts of such documents shall be provided with the public offering
statement, and, before closing the sale of a unit, the purchaser shall
be given copies of any material changes between the draft of the
proposed documents and the final documents.
(3) The disclosures required by subsection (1)(g), (k), (s), (u),
(v), and (cc) of this section shall also contain a reference to
specific sections in the condominium documents which further explain
the information disclosed.
(4) The disclosures required by subsection (1)(ee), (hh), (ii), and
(ll) of this section shall be located at the top of the first page of
the public offering statement and be typed or printed in ten-point bold
face type size.
(5) A declarant shall promptly amend the public offering statement
to reflect any material change in the information required by this
section.
Sec. 11 RCW 64.34.425 and 2004 c 201 s 4 are each amended to read
as follows:
(1) Except in the case of a sale where delivery of a public
offering statement is required, or unless exempt under RCW
64.34.400(2), a unit owner shall furnish to a purchaser before
execution of any contract for sale of a unit, or otherwise before
conveyance, a resale certificate, signed by an officer or authorized
agent of the association and based on the books and records of the
association and the actual knowledge of the person signing the
certificate, containing:
(a) A statement disclosing any right of first refusal or other
restraint on the free alienability of the unit contained in the
declaration;
(b) A statement setting forth the amount of the monthly common
expense assessment and any unpaid common expense or special assessment
currently due and payable from the selling unit owner and a statement
of any special assessments that have been levied against the unit which
have not been paid even though not yet due;
(c) A statement, which shall be current to within forty-five days,
of any common expenses or special assessments against any unit in the
condominium that are past due over thirty days;
(d) A statement, which shall be current to within forty-five days,
of any obligation of the association which is past due over thirty
days;
(e) A statement of any other fees payable by unit owners;
(f) A statement of any anticipated repair or replacement cost in
excess of five percent of the annual budget of the association that has
been approved by the board of directors;
(g) A statement of the amount of any reserves for repair or
replacement and of any portions of those reserves currently designated
by the association for any specified projects;
(h) The annual financial statement of the association, including
the audit report if it has been prepared, for the year immediately
preceding the current year;
(i) A balance sheet and a revenue and expense statement of the
association prepared on an accrual basis, which shall be current to
within one hundred twenty days;
(j) The current operating budget of the association;
(k) A statement of any unsatisfied judgments against the
association and the status of any pending suits or legal proceedings in
which the association is a plaintiff or defendant;
(l) A statement describing any insurance coverage provided for the
benefit of unit owners;
(m) A statement as to whether there are any alterations or
improvements to the unit or to the limited common elements assigned
thereto that violate any provision of the declaration;
(n) A statement of the number of units, if any, still owned by the
declarant, whether the declarant has transferred control of the
association to the unit owners, and the date of such transfer;
(o) A statement as to whether there are any violations of the
health or building codes with respect to the unit, the limited common
elements assigned thereto, or any other portion of the condominium;
(p) A statement of the remaining term of any leasehold estate
affecting the condominium and the provisions governing any extension or
renewal thereof;
(q) A copy of the declaration, the bylaws, the rules or regulations
of the association, the association's current reserve study, if any,
and any other information reasonably requested by mortgagees of
prospective purchasers of units. Information requested generally by
the federal national mortgage association, the federal home loan bank
board, the government national mortgage association, the veterans
administration and the department of housing and urban development
shall be deemed reasonable, provided such information is reasonably
available to the association; ((and))
(r) A statement, as required by RCW 64.35.210, as to whether the
units or common elements of the condominium are covered by a qualified
warranty, and a history of claims under any such warranty; and
(s) If the association does not have a reserve study that has been
prepared in accordance with sections 1 and 2 of this act or its
governing documents, the following disclosure: "This association does not have a current reserve study.
The lack of a current reserve study poses certain risks to you,
the purchaser. Insufficient reserves may, under some
circumstances, require you to pay on demand as a special
assessment your share of common expenses for the cost of major
maintenance, repair, or replacement of a common element
."
(2) The association, within ten days after a request by a unit
owner, and subject to payment of any fee imposed pursuant to RCW
64.34.304(1)(l), shall furnish a resale certificate signed by an
officer or authorized agent of the association and containing the
information necessary to enable the unit owner to comply with this
section. For the purposes of this chapter, a reasonable charge for the
preparation of a resale certificate may not exceed one hundred fifty
dollars. The association may charge a unit owner a nominal fee for
updating a resale certificate within six months of the unit owner's
request. The unit owner shall also sign the certificate but the unit
owner is not liable to the purchaser for any erroneous information
provided by the association and included in the certificate unless and
to the extent the unit owner had actual knowledge thereof.
(3) A purchaser is not liable for any unpaid assessment or fee
against the unit as of the date of the certificate greater than the
amount set forth in the certificate prepared by the association unless
and to the extent such purchaser had actual knowledge thereof. A unit
owner is not liable to a purchaser for the failure or delay of the
association to provide the certificate in a timely manner, but the
purchaser's contract is voidable by the purchaser until the certificate
has been provided and for five days thereafter or until conveyance,
whichever occurs first.