We believe that section 326 of the Washington Uniform Common Interest Ownership Act (“WUCIOA”) eliminates any restriction on assessment increases within the CC&Rs of an existing HOA. Our legal argument is strongest in cases of a special assessment. However, the argument should also prove to be successful for dues increases contained within the regular budget. The argument works best if the association can demonstrate that the restrictions are out of date and do not reflect the current financial needs of the community and statutory obligations imposed after the CC&Rs were recorded.

WUCIOA § 326 applies to all existing Homeowner Associations. It establishes the process for ratifying a budget and the accompanying assessments. Section 326 provides that a proposed budget is approved unless a majority of owners (or a larger number if required by the declaration) reject the budget. A restriction on dues increases conflicts with the provision as drafted by the Washington State legislature. The statute allows the current owners to serve as the arbiters of whether the proposed budget and assessments are reasonable.

Section 326 represents an evolution of the budget approval process found in the HOA Act. Like WUCIOA, the HOA Act allows a majority of owners to block the budget proposed by the board, and allows for the approval of the budget without the participation of a quorum of the owners. In most respects, WUCIOA proscribes the same budgeting process as the HOA Act, except with respect to Special Assessments. The HOA Act does not directly address the board’s power to pass a special assessment. WUCIOA changes this and expressly gives the board the right to levy a special assessment if ratified by the owners. This change indicates that the legislature wanted to protect the power of the board to raise funds for the community.

WUCIOA § 326 overrides the CC&Rs of an HOA because of § 117 of WUCIOA. To protect the public interest, the legislature chose to supersede the existing provision of an HOA’s governing documents with § 326. Where provisions within the HOA’s governing documents conflict with § 326, they will be wiped out and § 326 will replace the inconsistent provision. This particular section does not apply to condominiums and is not contained within the model legislation that served as the inspiration for WUCIOA. These facts suggest that the legislature was particularly concerned with an HOA’s ability to adopt a realistic budget.

The argument is strongest when the board seeks to raise funds through a special assessment. Section 326 specifically empowers the board to propose a special assessment and ratify it through the statutory budget process. Any provisions that limit the board’s power to levy a special assessment would necessarily conflict with § 326. As a result, the provisions would be eliminated under § 117 of WUCIOA, to ensure the board could propose a special assessment as it saw fit, subject only to the obligation to hold a meeting to allow owners to vote it down.