H-0506.1
HOUSE BILL 1298
State of Washington 68th Legislature 2023 Regular Session
By Representatives Hutchins, Walen, Barkis, Klicker, Cheney, Bateman,
Doglio, Gregerson, and Leavitt
Read first time 01/13/23. Referred to Committee on Civil Rights &
Judiciary.
1 AN ACT Relating to increasing the supply and affordability of
2 condominium units and townhouses as an option for homeownership;
3 amending RCW 64.35.105, 64.50.010, 64.50.020, 64.50.040, 64.50.050,
4 64.90.250, 64.90.605, 64.90.645, 64.90.665, 64.90.670, 64.90.675,
5 82.45.010, 82.45.010, 82.02.060, and 58.17.060; reenacting and
6 amending RCW 64.38.010; adding a new section to chapter 19.27 RCW;
7 creating a new section; providing an effective date; and providing an
8 expiration date.
9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
10 Sec. 1. RCW 64.35.105 and 2004 c 201 s 101 are each amended to
11 read as follows:
12 The definitions in this section apply throughout this chapter
13 unless the context clearly requires otherwise.
14 (1) "Affiliate" has the meaning in RCW 64.34.020 and 64.90.010.
15 (2) "Association" has the meaning in RCW 64.34.020 and 64.90.010.
16 (3) "Building envelope" means the assemblies, components, and
17 materials of a building that are intended to separate and protect the
18 interior space of the building from the adverse effects of exterior
19 climatic conditions.
20 (4) "Common element" has the meaning in RCW 64.34.020 and
21 64.90.010.
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 1 (5) "Condominium" has the meaning in RCW 64.34.020 and 64.90.010.
2 (6) "Construction professional" has the meaning in RCW 64.50.010.
3 (7) "Conversion condominium" has the meaning in RCW 64.34.020 and
4 64.90.010.
5 (8) "Declarant" has the meaning in RCW 64.34.020 and 64.90.010.
6 (9) "Declarant control" has the meaning in RCW 64.34.020 and
7 64.90.010.
8 (10) "Defect" means any aspect of a condominium unit or common
9 element which constitutes a breach of the implied warranties set
10 forth in RCW 64.34.445 or 64.90.670.
11 (11) "Limited common element" has the meaning in RCW 64.34.020
12 and 64.90.010.
13 (12) "Material" means substantive, not simply formal; significant
14 to a reasonable person; not trivial or insignificant. When used with
15 respect to a particular construction defect, "material" does not
16 require that the construction defect render the unit or common
17 element unfit for its intended purpose or uninhabitable.
18 (13) "Mediation" means a collaborative process in which two or
19 more parties meet and attempt, with the assistance of a mediator, to
20 resolve issues in dispute between them.
21 (14) "Mediation session" means a meeting between two or more
22 parties to a dispute during which they are engaged in mediation.
23 (15) "Mediator" means a neutral and impartial facilitator with no
24 decision-making power who assists parties in negotiating a mutually
25 acceptable settlement of issues in dispute between them.
26 (16) "Person" has the meaning in RCW 64.34.020 and 64.90.010.
27 (17) "Public offering statement" has the meaning in RCW 64.34.410
28 and in chapter 64.90 RCW.
29 (18) "Qualified insurer" means an entity that holds a certificate
30 of authority under RCW 48.05.030, or an eligible insurer under
31 chapter 48.15 RCW.
32 (19) "Qualified warranty" means an insurance policy issued by a
33 qualified insurer that complies with the requirements of this
34 chapter. A qualified warranty includes coverage for repair of
35 physical damage caused by the defects covered by the qualified
36 warranty, except to the extent of any exclusions and limitations
37 under this chapter.
38 (20) "Resale certificate" means the statement to be delivered by
39 the association under RCW 64.34.425 or chapter 64.90 RCW.
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1 (21) "Transition date" means the date on which the declarant is
2 required to deliver to the association the property of the
3 association under RCW 64.34.312 or 64.90.420.
4 (22) "Unit" has the meaning in RCW 64.34.020 and 64.90.010.
5 (23) "Unit owner" has the meaning in RCW 64.34.020 and 64.90.010.
6 Sec. 2. RCW 64.38.010 and 2021 c 227 s 9 are each reenacted and
7 amended to read as follows:
8 For purposes of this chapter:
9 (1) "Assessment" means all sums chargeable to an owner by an
10 association in accordance with RCW 64.38.020.
11 (2) "Baseline funding plan" means establishing a reserve funding
12 goal of maintaining a reserve account balance above ((zero dollars))
13 $0 throughout the ((thirty-year)) 30-year study period described
14 under RCW 64.38.065.
15 (3) "Board of directors" or "board" means the body, regardless of
16 name, with primary authority to manage the affairs of the
17 association.
18 (4) "Common areas" means property owned, or otherwise maintained,
19 repaired or administered by the association.
20 (5) "Common expense" means the costs incurred by the association
21 to exercise any of the powers provided for in this chapter.
22 (6) "Contribution rate" means, in a reserve study as described in
23 RCW 64.38.065, the amount contributed to the reserve account so that
24 the association will have cash reserves to pay major maintenance,
25 repair, or replacement costs without the need of a special
26 assessment.
27 (7) "Effective age" means the difference between the estimated
28 useful life and remaining useful life.
29 (8) "Electronic transmission" or "electronically transmitted"
30 means any electronic communication not directly involving the
31 physical transfer of a writing in a tangible medium, but that may be
32 retained, retrieved, and reviewed by the sender and the recipient of
33 the communication, and that may be directly reproduced in a tangible
34 medium by a sender and recipient.
35 (9) "Full funding plan" means setting a reserve funding goal of
36 achieving one hundred percent fully funded reserves by the end of the
37 ((thirty-year)) 30-year study period described under RCW 64.38.065,
38 in which the reserve account balance equals the sum of the
39 deteriorated portion of all reserve components.
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 1 (10) "Fully funded balance" means the current value of the
2 deteriorated portion, not the total replacement value, of all the
3 reserve components. The fully funded balance for each reserve
4 component is calculated by multiplying the current replacement cost
5 of the reserve component by its effective age, then dividing the
6 result by the reserve component's useful life. The sum total of all
7 reserve components' fully funded balances is the association's fully
8 funded balance.
9 (11) "Governing documents" means the articles of incorporation,
10 bylaws, plat, declaration of covenants, conditions, and restrictions,
11 rules and regulations of the association, or other written instrument
12 by which the association has the authority to exercise any of the
13 powers provided for in this chapter or to manage, maintain, or
14 otherwise affect the property under its jurisdiction.
15 (12) "Homeowners' association" or "association" means a
16 corporation, unincorporated association, or other legal entity, each
17 member of which is an owner of residential real property located
18 within the association's jurisdiction, as described in the governing
19 documents, and by virtue of membership or ownership of property is
20 obligated to pay real property taxes, insurance premiums, maintenance
21 costs, or for improvement of real property other than that which is
22 owned by the member. "Homeowners' association" does not mean an
23 association created under chapter 64.32 ((or)), 64.34, or 64.90 RCW.
24 (13) "Lot" means a physical portion of the real property located
25 within an association's jurisdiction designated for separate
26 ownership.
27 (14) "Owner" means the owner of a lot, but does not include a
28 person who has an interest in a lot solely as security for an
29 obligation. "Owner" also means the vendee, not the vendor, of a lot
30 under a real estate contract.
31 (15) "Remaining useful life" means the estimated time, in years,
32 before a reserve component will require major maintenance, repair, or
33 replacement to perform its intended function.
34 (16) "Replacement cost" means the current cost of replacing,
35 repairing, or restoring a reserve component to its original
36 functional condition.
37 (17) "Reserve component" means a common element whose cost of
38 maintenance, repair, or replacement is infrequent, significant, and
39 impractical to include in an annual budget.
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 1 (18) "Reserve study professional" means an independent person who
2 is suitably qualified by knowledge, skill, experience, training, or
3 education to prepare a reserve study in accordance with RCW 64.38.065
4 and 64.38.070.
5 (19) "Residential real property" means any real property, the use
6 of which is limited by law, covenant or otherwise to primarily
7 residential or recreational purposes.
8 (20) "Significant assets" means that the current replacement
9 value of the major reserve components is ((seventy-five)) 75 percent
10 or more of the gross budget of the association, excluding the
11 association's reserve account funds.
12 (21) "Tangible medium" means a writing, copy of a writing,
13 facsimile, or a physical reproduction, each on paper or on other
14 tangible material.
15 (22) "Useful life" means the estimated time, between years, that
16 major maintenance, repair, or replacement is estimated to occur.
17 Sec. 3. RCW 64.50.010 and 2020 c 18 s 23 are each amended to
18 read as follows:
19 Unless the context clearly requires otherwise, the definitions in
20 this section apply throughout this chapter.
21 (1) "Action" means any civil lawsuit or action in contract or
22 tort for damages or indemnity brought against a construction
23 professional to assert a claim, whether by complaint, counterclaim,
24 or cross-claim, for damage or the loss of use of real or personal
25 property caused by a defect in the construction of a residence or in
26 the substantial remodel of a residence. "Action" does not include any
27 civil action in tort alleging personal injury or wrongful death to a
28 person or persons resulting from a construction defect.
29 (2) "Association" means an association, master association, or
30 subassociation as defined and provided for in RCW 64.34.020(4),
31 64.34.276, 64.34.278, and 64.38.010(((11))) (12).
32 (3) "Claimant" means a homeowner or association who asserts a
33 claim against a construction professional concerning a defect in the
34 construction of a residence or in the substantial remodel of a
35 residence.
36 (4) "Construction defect professional" means a qualified expert
37 witness governed by rule 702 of the Washington state court rules:
38 Rules of evidence. An expert whose compensation is, for services
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 1 rendered under this chapter, in any way dependent on the outcome of
2 an action is not a qualified construction defect professional.
3 (5) "Construction professional" means an architect, builder,
4 builder vendor, contractor, subcontractor, engineer, or inspector,
5 including, but not limited to, a dealer as defined in RCW 64.34.020
6 and a declarant as defined in RCW 64.34.020, performing or furnishing
7 the design, supervision, inspection, construction, or observation of
8 the construction of any improvement to real property, whether
9 operating as a sole proprietor, partnership, corporation, or other
10 business entity.
11 (((5))) (6) "Homeowner" means: (a) Any person, company, firm,
12 partnership, corporation, or association who contracts with a
13 construction professional for the construction, sale, or construction
14 and sale of a residence; and (b) an "association" as defined in this
15 section. "Homeowner" includes, but is not limited to, a subsequent
16 purchaser of a residence from any homeowner.
17 (((6))) (7) "Residence" means a single-family house, duplex,
18 triplex, quadraplex, or a unit in a multiunit residential structure
19 in which title to each individual unit is transferred to the owner
20 under a condominium or cooperative system, and shall include common
21 elements as defined in RCW 64.34.020 and common areas as defined in
22 RCW 64.38.010(4).
23 (((7))) (8) "Serve" or "service" means personal service or
24 delivery by certified mail to the last known address of the
25 addressee.
26 (((8))) (9) "Substantial remodel" means a remodel of a residence,
27 for which the total cost exceeds one-half of the assessed value of
28 the residence for property tax purposes at the time the contract for
29 the remodel work was made.
30 Sec. 4. RCW 64.50.020 and 2002 c 323 s 3 are each amended to
31 read as follows:
32 (1) In every construction defect action brought against a
33 construction professional, the claimant shall, no later than ((forty-
34 five)) 45 days before filing an action, serve (a) written notice of
35 claim and (b) written defect assessment report on the construction
36 professional.
37 (i) The notice of claim shall state that the claimant asserts a
38 construction defect claim against the construction professional and
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 1 shall describe the claim in reasonable detail sufficient to determine
2 the general nature of the defect.
3 (ii) The report required in this subsection (1)(b) shall be
4 executed under oath by a construction defect professional, or an
5 equivalent reliable source, and shall state with particularity:
6 (A) The construction defect professional's qualifications,
7 training, and experience with construction defect issues;
8 (B) The manner and type of inspection forming the basis for the
9 report;
10 (C) A reasonably detailed description sufficient to identify the
11 location and nature of the defect based on the scope of the
12 inspection, and the extent of the defect;
13 (D) The recommended repair proposed to correct the observed
14 defect; and
15 (E) The construction defect professional's opinion as to the
16 applicable code or building standard implicated by the defect.
17 (2) Within ((twenty-one)) 21 days after service of the notice of
18 claim, the construction professional shall serve a written response
19 on the claimant by registered mail or personal service. The written
20 response shall:
21 (a) Propose to inspect the residence that is the subject of the
22 claim and to complete the inspection within a specified time frame.
23 The proposal shall include the statement that the construction
24 professional shall, based on the inspection, offer to remedy the
25 defect, compromise by payment, or dispute the claim;
26 (b) Offer to compromise and settle the claim by monetary payment
27 without inspection. A construction professional's offer under this
28 subsection (2)(b) to compromise and settle a homeowner's claim may
29 include, but is not limited to, an express offer to purchase the
30 claimant's residence that is the subject of the claim, and to pay the
31 claimant's reasonable relocation costs; or
32 (c) State that the construction professional disputes the claim
33 and will neither remedy the construction defect nor compromise and
34 settle the claim.
35 (3)(a) If the construction professional disputes the claim or
36 does not respond to the claimant's notice of claim within the time
37 stated in subsection (2) of this section, the claimant may bring an
38 action against the construction professional for the claim described
39 in the notice of claim without further notice.
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 1 (b) If the claimant rejects the inspection proposal or the
2 settlement offer made by the construction professional pursuant to
3 subsection (2) of this section, the claimant shall serve written
4 notice of the claimant's rejection on the construction professional.
5 After service of the rejection, the claimant may bring an action
6 against the construction professional for the construction defect
7 claim described in the notice of claim. If the construction
8 professional has not received from the claimant, within ((thirty)) 30
9 days after the claimant's receipt of the construction professional's
10 response, either an acceptance or rejection of the inspection
11 proposal or settlement offer, then at anytime thereafter the
12 construction professional may terminate the proposal or offer by
13 serving written notice to the claimant, and the claimant may
14 thereafter bring an action against the construction professional for
15 the construction defect claim described in the notice of claim.
16 (4)(a) If the claimant elects to allow the construction
17 professional to inspect in accordance with the construction
18 professional's proposal pursuant to subsection (2)(a) of this
19 section, the claimant shall provide the construction professional and
20 its contractors or other agents reasonable access to the claimant's
21 residence during normal working hours to