HOUSE BILL REPORT

HB 1329

BYRepresentatives Crane, Brough, Sutherland, Lewis, Heavey, Padden, Nutley, Peery and Hargrove

Changing provisions relating to the homestead exemption.

House Committe on Judiciary

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (13)

      Signed by Representatives Armstrong, Chair; Crane, Vice Chair; Appelwick, Brough, Hargrove, P. King, Lewis, Locke, Meyers, Moyer, Padden, Patrick and Scott.

House Staff:Charlie Gavigan (786-7340)

AS REPORTED BY COMMITTEE ON JUDICIARY FEBRUARY 2, 1988

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 homeowner association may be created or operate based on a covenant that permanently runs with the real property.  A homeowner 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 association, and the owners vote on other major matters such as the budget.  Typically a homeowner association has the power to access 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 the owners of certain property from seizure by creditors.  The state constitution mandates that the legislature protect a certain portion of the homestead.  The current homestead exemption amount is $30,000.  It applies to property used as a primary residence and to the proceeds of the sale of property used as a primary residence.

The legislature has excluded some liens from homestead protection.  These excluded liens include: (1) mechanic's and materialmen's liens; (2) mortgages or deeds of trust; (3) certain debts arising out of a bankruptcy filed by one spouse within six months of the other spouse's bankruptcy; and (4) child support debts.

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

SUMMARY:

SUBSTITUTE BILL:  A lien for unpaid homeowners association assessments is excluded from the homestead protection.

Notice that nonpayment of the association fees results in a lien on the real property of the owner must be given by the association 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.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The notice provisions are added.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Barbara Peterson, Pinebrook Homeowners' Association; Bill Crowell; Bill Wilken.

House Committee - Testified Against:      Greg Bass, Evergreen Legal Services.

House Committee - Testimony For:    A homeowners association lien is similar to the other exclusions permitted by statute, such as mechanic's liens and mortgages and deeds of trust.  The property and the homeowner are being benefited.  Purchasers should be aware of the obligation when they buy the property.  Also, other homeowners are hurt when some members do not pay because services must decline or fees must be increased.

House Committee - Testimony Against:      This goes against the policy for the homestead protection.  Associations have other remedies available to collect delinquent dues.