For New Act condo associations (those created July 1, 1990 or later), state law requires that 90% of owners (and every affected owner) vote in in favor of a declaration amendment in order to pass a “restriction on use.” For Old Act condo associations, state law only requires that 60% of owners consent to any change in restrictions on use, including rental restrictions. (Keep in mind that individual declarations may require a greater percentage.) Failure to get the required vote makes the restriction invalid and unenforceable.
The Washington State Supreme Court, in Filmore LLLP v. Unit Owners Ass’n of Centre Pointe Condo, classified a rental restriction as a restriction on use. The Washington Supreme Court’s ruling in Filmore was very narrow. The Court specifically stated that its decision did not address the interpretation of “restrictions on use” from the statute; rather, the Court based its decision only on the interpretation of Centre Pointe’s Declaration. That Declaration included its section on rentals/leasing in the “Restriction on Use” portion of the Declaration. If your condominium’s Declaration does not classify leasing as a “use,” it is possible that a could would view the issue differently than it did in Filmore.
The Filmore decision left several unanswered questions. The court did not address the language requiring approval of “each unit particularly affected,” which could, in effect, require approval of 100% of an association’s unit owners. The court also failed to address whether leasing-related requirements other than pure rental caps constitute use restrictions, and whether rental restrictions adopted more than one year ago, would be void. That second issue was addressed by the court recently, and the Court held that an amendment to a condominium Declaration may not be challenged more than one year after it is recorded. So even if your Association adopted a rental cap with less than the required percentage of owners voting in favor, if the amendment was recorded more than one year ago, it is probably not subject to challenge.
If you have questions about the validity of your rental cap or other related issues, please contact us.
Hi,
I own a condo in Redmond. My community currently has a Rental cap in place. The community was established in 1996. Rental cap was put in place in 1998 with 67% votes. My question is specifically about the 90% vote rule. Do we need 90% votes even to increase or remove rental cap?
Thanks,
Saad
Hi Saad,
Without reviewing the governing documents for your Association, we actually can’t answer that question.
Good luck!
My condo assoc was established in 1983, and rentals were allowed. Rentals were NOT considered a “restriction on use”. It was simply mentioned that the units could be used as ownership or rental basis.
In 2018, a policy was passed that grandfathered in all units that were used as rentals as of Nov. 25, 2017, regardless of how long they had been used as rentals. Instead of being grandfathered in until sold, they were grandfathered until such time as a unit owner might “occupy” the unit. “Occupy” was not defined, but has been interpreted to mean reside in the unit rather than simply purchase a unit.
The rationale given for the change was to enable our condo to meet guidelines for the mortgage changes made in 2009 (e.g., Fannie Mae and Freddie Mac.
The “no rental” policy has been interpreted by the Board to mean that even if an illness or disability prevents an owner from living in a unit, it cannot be rented out to cover expenses of living elsewhere. Further, not even renting for only a portion of a year for a sabbatical or other use is prohibited. I wonder whether a policy that is so restrictive is necessary for Fannie Mae and Freddie Mac? Are restrictions that are this restrictive common?
I wonder whether this interpretation can be challenged, invalidated or changed by the Board without a member vote?
We can’t answer these questions without reviewing the rental restriction as it was drafted, and understanding how your association administers. Most amendments are immune to challenge if more than one year has passed since the amendment was recorded.
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