FINAL BILL REPORT

SHB 1329

                                  C 192 L 88

BYHouse Committee on Judiciary (originally sponsored by Representatives Crane, Brough, Sutherland, Lewis, Heavey, Padden, Nutley, Peery and Hargrove)

Changing provisions relating to the homestead exemption.

House Committe on Judiciary

Senate Committee on Law & Justice

SYNOPSIS AS ENACTED

BACKGROUND:

The use of real property may be restricted, or certain obligations associated with ownership of the property may arise, through legal agreements.  These agreements, commonly called covenants, conditions, and restrictions, are often permanent and are passed from owner to owner when the property is conveyed or transferred.

A condominium or homeowner association may be created or operated based on a covenant that permanently runs with the real property.  The association often manages and maintains areas that the individual real property owners own in common, or provide other services to all the owners.  Examples of common areas include hallways in condominiums and swimming pools or clubhouses in planned subdivisions.

Generally the individual property owners elect persons to govern the condominium or homeowner association, and the owners vote on other major matters such as the budget.  Typically an association has the power to assess and collect dues to carry out its duties, and unpaid dues constitute a lien on the real property of the individual owners.

A homestead exemption protects certain property from seizure by creditors.  The state constitution mandates that the legislature protect a certain portion of the homestead. It applies to property used as a primary residence.

The legislature has excluded some liens from homestead protection.  These excluded liens include: mechanic's and materialmen's liens; mortgages or deeds of trust; certain debts arising out of a bankruptcy filed by one spouse within six months of the other spouse's bankruptcy; and child support debts.

A Court of Appeals has held that the lien for unpaid homeowner assessments is subject to the homestead protection.

SUMMARY:

A lien for unpaid condominium or homeowner association assessments is excluded from the homestead protection.

Notice that nonpayment of the association fees may result in foreclosure on the real property must be given by the association to each new owner when the association learns of a new owner.  The notice must also state that the homestead protection does not apply.  An association does not have a duty to seek out and find new owners.

VOTES ON FINAL PASSAGE:

      House 95   0

      Senate    47     1

EFFECTIVE:June 9, 1988