2014/04/23 Council Agenda Packet

Memorandum KELLER ROHRBACK L.L.P. November 11,2013 Page 2 First,the definition of an association indirectly addresses termination in that the definition includes an unincorporated association as a homeowners' association.RCW 64.38.010(11) defines a homeowners' association as follows: (11)"Homeowners' association"or"association" means a corporation, unincorporated association,or other legal entity,each member of which is an owner of residential real property located within the association's jurisdiction,as described in the governing documents, and by virtue of membership or ownership of property is obligated to pay real property taxes, insurance premiums,maintenance costs,or for improvement of real property other than that which is owned by the member. "Homeowners' association" does not mean an association created under chapter 64.32 or 64.34 RCW. RCW 64.38.010(11).Emphasis added.This definition expressly includes an association which is not incorporated with the Secretary of State of Washington. Therefore,if an association is administratively dissolved, the association does not terminate and the unincorporated association continues with members still under a duty to pay property taxes, insurance premiums or other requirements set forth in the governing documents. Second,RCW 64.38 directly addresses termination by prohibiting the board of the homeowners' association to terminate the association. RCW 64.38.025(2)states: The board of directors shall not act on behalf of the association to amend the articles of incorporation, to take any action that requires the vote or approval of the owners,to terminate the association, to elect members of the board of directors,or to determine the qualifications, powers, and duties,or terms of office of members of the board of directors; but the board of directors may fill vacancies in its membership of the unexpired portion of any term. RCW 64.38.025(2).Emphasis added. Third, RCW 64.28.020 addresses termination in the enabling language for the powers of the association. Under RCW 64.38.020,a homeowners' association may exercise the same powers as any other nonprofit corporation in Washington: "Unless otherwise provided in the governing documents,an association may. . . . [e]xercise all other powers that may be exercised in this state by the same type of corporation as the association." RCW 64.38.020(13). A homeowners' association is usually formed as a nonprofit corporation under RCW 24.03. RCW 24.03.220 allows for the voluntary dissolution of a nonprofit corporation upon the vote of two-thirds of the voting members. Therefore,if a townhome homeowners' association's governing documents are silent,then two-third of the members may terminate the association under RCW 64.38.020(13) and RCW 24.03.220.