Internal Appeal Procedures and Dispute Resolution Standards Can Reduce Lawsuits

The Washington Court of Appealsrecently issued an unpublished opinion relating to the Prince Hall Grand Lodgeof Free & Accepted Masons of Washington. A member of the Grand Lodge was suspended after he raised allegationsthat one of the Grand Masters and the Grand Lodge Entertainment Committee hadmismanaged funds.  The member sued tocontest that suspension.  However, theGrand Lodge Constitution states that “no member … shall resort to civil courtsto establish any right or to redress any grievances arising out of themembership in the Order or connected therewith until … he shall have exhaustedthe remedies within the Order and in a manner provided by the Constitution, lawand regulations of this Grand Lodge.”

The appellate court upheld therequirement that members of the Grand Lodge must exhaust its internal appealprocedures before filing lawsuits.  It emphasizedWashington courts’ unwillingness to interfere with private associations’ interpretationsof internal rules and procedures unless they are arbitrary and unreasonable.  The court affirmed the dismissal of themember’s lawsuit because he did not pursue the proper appeal procedure (vote ofthe members at the next annual meeting) before filing it.     

Some Washington condominium andhomeowners associations have internal appeal procedures and dispute resolution standards in their original governing documents.  Many others do not.  For those associations in the latter category,amending the declaration or covenants to require exhaustion of internal appealprocedures and fulfillment of dispute resolution requirements (such asmandatory mediation) can help defuse some future disputes with owners before they turninto lawsuits.          

Disputes Between Owners Pose Risks to Community Associations

It is always unfortunate when disputes between neighbors escalate into litigation. The Washington Court of Appeals was recently confronted with just such a case. The first sentence of its unpublished opinion last month sets the tone: “Tensions arose among neighbors in a Redmond cul-de-sac after the Wherretts began parking numerous vehicles and buses on their property and on the street.” Police involvement, surveillance, civil anti-harassment orders, and a lawsuit followed. The court notes during the course of its opinion that taking numerous photographs and videos of items in public view for the purpose of documenting alleged misconduct did not form the basis for a legal claim against one of the owners. The court ultimately affirms the summary judgment dismissal of the plaintiff’s case.

Community association boards must choose their approach carefully when owners quarrel. Do they stay out of the dispute entirely? Do they provide a forum to discuss the dispute? Do they convey a position regarding the dispute? All of those choices involve varying amounts of risk that the association will be sued by one of the owners. Minimizing that risk is an important (some would say the most important) consideration when boards are evaluating how to respond to disputes between owners.

Boards understandably tend to prefer the “stay out of it” approach to owner disputes whenever possible, and this is a legitimate response in many instances. However, boards must verify that disputes do not involve a violation of their association's governing documents before selecting that option. If a board fails to do so and the dispute does involve such a violation, then one of the owners may be able to successfully argue that the association is also liable for damages.

Super Priority Lien Gives Washington Condo Associations Leverage Over Lenders

The Washington Condominium Act grants condominium associations a super priority lien over mortgage holders. This super priority lien ensures that some delinquent assessments (those that are due during the six months immediately preceding the foreclosure) will be paid by lenders if foreclosures occur. It can also be a powerful weapon if lenders do not respond to associations’ foreclosure actions. In the recent decision of Summerhill Village Homeowners Association v. Roughley, the Washington Court of Appeals held that a mortgage on a unit can be completely eliminated by a condominium association’s foreclosure action if an association has a super priority lien and the lender does not respond.

If a Washington condominium’s declaration was recorded after July 1, 1990, then it automatically has the right to claim the super priority lien contained in the Washington Condominium Act. If a Washington condominium’s declaration was recorded on or before July 1, 1990, then its association can probably not take advantage of the super priority lien until its declaration is amended to include it. All Washington condominium associations that cannot currently claim the super priority lien should strongly consider amending their declarations to give themselves the ability to do so.

A condominium board that wants to amend its declaration should consult with an experienced real estate attorney to ensure that all applicable legal requirements are met. Failing to obtain such legal advice can have dire consequences. In a recent unpublished decision, the Washington Court of Appeals affirmed a trial court’s ruling that an amended set of covenants for a homeowners association was void and unenforceable because it was not properly executed.

Individual Owners Can Benefit From Bar Association Resources

Since my legal practice focuses on condominium and homeowners associations, I do not typically represent individual owners with grievances against those associations. When such owners contact me, I let them know that the King County Bar Association’s free legal consultations (http://www.kcba.org/pbs/legalhelp.aspx) and Lawyer Referral Service (206-267-7010; LRS@KCBA.org) are excellent resources. I also indicate to those owners that political processes like calling meetings, holding elections, and approving amendments can also be used to effect change in their communities.

My Office Is Moving to the Laurelhurst Professional Center!

I am pleased to announce that the Law Office of Kevin L. Britt, P.S. is moving to the Laurelhurst Professional Center on February 1, 2012. The office’s mailing address will change on that date to 3626 NE 45^th Street, Suite 300, Seattle, WA 98105. The office’s phone number will change on that date to (206) 420-0021. The office’s website, my email address, and this blog will not be affected by this relocation. The new office spaces are larger and have windows(!), so this is a happy occasion indeed.

I am also pleased to note that this is my 100^th blog post. But that is just the beginning! I look forward to providing information of interest and importance to Washington condominium and homeowners associations in 2012 and beyond.