Q: Is it legal for a condominium’s board of directors to raise homeowner’s dues retroactively? Last June, our board voted to raise the dues for 2001. Written notification didn’t go out until November. In that notice, owners were instructed to pay the difference between the old dues and the new dues going all the way back to January. The average bill was $230 per unit. Our condos were built prior to 1990, before the state condo act took effect, and the board of directors is controlled by an investment group that built the complex and still owns a majority of the units (80 out of 130). When I asked about the retroactive dues charge, I was told that the board "could have" voted in a special assessment. That’s true, but they didn’t vote in a special assessment. According to the minutes of the June meeting, the board only voted to adopt the proposed 2001 operations budget (which included the higher dues rate). There was no specific vote to raise the dues or pass a special assessment. Am I just being too picky and technical, or has the board acted in an unlawful manner? One of the owners just purchased a unit last May and they were required to pay the dues difference all the way back to January just like everyone else. Now, that really stinks. I’m contemplating taking legal action, but I don’t want to start down the path if the board’s actions are legal.
— D.T., Kirkland
A: First of all, you are correct in drawing a distinction between condominiums that were completed prior to the 1990 Condominium Act and those that were built after passage of the law. The state law applies only to condominium declarations filed after July 1, 1990.
Under the condo act, a dues increase like the one you just described would not be legal. The law requires that a proposed operating budget be submitted to the condo owners and that a meeting of the association be called within 60 days of distribution. The old condominium budget remains in effect until the new budget is ratified. If there is a lack of a quorum at the budget meeting, the budget is automatically approved. Owners must show up at the meeting if they wish to reject the budget.
However, many of the condominiums in the Puget Sound region fall under the old Horizontal Property Regimes Act because their declarations were recorded prior to July 1, 1990. This law has no set procedures for the adoption of condominium budgets. It’s strictly up to the procedures spelled out in the condominium’s declarations and by-laws.
It sounds like your condominium board handled the dues increase very poorly from a public relations point of view, and it may have even committed some minor technical errors, but probably nothing severe enough that a court would overturn the board’s actions. As you suggested in your letter, the condo board could simply call the difference between the old dues and the new dues a special assessment and make it effective immediately. Since the investment group controls the board and the majority of votes in the homeowner’s association, its actions are restricted only by the condominium declarations and applicable state laws.
I sympathize with you. It’s very frustrating when the deck seems to be stacked against you. Your situation is another good example of the many differences between condominium living and single-family home ownership.
Condo buyers need to look beyond their individual unit and closely examine the management structure of the condominium homeowner’s association and carefully read the condominium’s by-laws and declarations.
Before you buy, talk to other condo owners in the complex who are not selling their units, so you can get some unbiased information about the responsiveness of the condo’s board of directors. Frankly, I would be reluctant to buy into a complex where a single entity controlled 60 percent of the votes in the homeowner’s association.
Mail your real estate questions to Steve Tytler, The Herald, P.O. Box 930, Everett, WA 98206. Fax questions to Tytler at 425-339-3435, or e-mail him at economy@heraldnet.com
Steve Tytler is a licensed real estate broker and owner of Best Mortgage, Inc. You can visit the Best Mortage Web site at www.bestmortgage.com.
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