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February 26, 2019

Condo Law Reform Might Be Coming Soon

Spire3The Washington State Condominium Act is a barrier to seeing more condominium buildings constructed in our region but also affects the prices of those that are being built.

Why is it a barrier? Well, simply put, it makes it easy for condo owners to sue condo building developers, even over minor construction defects. This litigation is costly, both in insurance and legal costs to the developers and in order to make the project profitable, if they do decide to take on the risk which most are not, the developers have to tack those costs into the cost of the units making condo units more and more expensive.

Over the years, there have been efforts to reform this liability law in Olympia with no success. However, several bills are currently gaining steam amid the shortage of affordable homeowner options in our state. One of those bills, which will make it harder for condo owners to sue developers, has passed unanimously through the state senate and is on its way to the House. The bill is being described as a compromise that will allow condo owners to still bring legitimate lawsuits if warranted, while protecting developers. It will raise the bar for what condo owners can sue over and any lawsuit brought will will need to prove the construction team violated state building codes and that not only does the defect exist but it would cause harm. This bill would also reduce the personal liability of the condo association officers by granting them immunity, as it stands under the current laws these officers could be forced to pay to repair defects in their building if they do not sue the builders, which further incentivizes HOA Boards to sue preemptively to protect themselves.

Two other bills currently on the floor would exempt condo buildings under seven units from some of the legal risks and another would require condo owners to secure a majority vote of the HOA members before they could move forward with suing.

Our state legislators admit that these changes won't suddenly spur a flood of new condo buildings being constructed around the region but believe that once the the real estate and insurance markets react that these changes will help encourage a more significant amount of condo development.

By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.