Division III of the Washington Court of Appeals published an opinion two days ago interpreting, for the first time, RCW 64.34.264(2), the one-year statute of limitations for challenges to the validity of an amendment to a condominium’s declaration. In Club Envy of Spokane, LLC, et al v. The Ridpath Tower Condo. Assoc. et al., No.31913-0-III, the Court held the one-year limitations period does not apply when the amendment is “void from its inception.” In other words, when the amendment was improperly passed under the Condominium Act, the one-year limitations period to challenge the amendment’s validity does not apply.
The Unique Facts of Club Envy
The facts in Club Envy are rather unique. In February 2008, the Ridpath Tower Condominium was created and the Association formed. The project was a landmark hotel, Spokane’s Ridpath Hotel, which was converted into an 18-unit condominium complex. The complex is uninhabited with no ongoing operations. In June 2008, unit 18, spanning 12 floors of the hotel tower, was divided into Units 18 and 19. Then, in August 2008, the declaration was again amended to divide Unit 18 further into Units 18, 20, and 21. This second amendment also lowered member’s voting rights and converted common elements into private ownership.
Fast forward 5 years later, the majority of members wished to develop the condominium into low-rent, micro-apartments. The owner of units 20 and 21, however, desired to develop a luxury hotel, restoring the project to its historic roots. This dispute caused one set of members (the plaintiffs) to file suit and ask the court to declare the second amendment, which created units 20 and 21 out of unit 18, invalid and thereby terminate another member’s (the defendant Ridpath Revival LLC) interest in the condominium. Essentially, the plaintiffs wanted to force out the defendants so the plaintiffs could develop the project as they desired.
The parties cross-moved for summary judgment. The plaintiffs asked the court to declare the second amendment void. The defendants argued that the challenge to the validity of the second amendment was barred by the one-year limitations period under RCW 64.34.264(2). The trial court granted plaintiffs’ motion, ruling that the one-year limitations period did not apply to an invalidly adopted amendment. The Court of Appeals affirmed.
When would the one-year limitations ever apply?
RCW 64.34.264(2) provides, “No action to challenge the validity of an amendment adopted by the association pursuant to this section may be brought more than one year after the amendment is recorded.” On appeal, the Court opined the phrase “adopted by the association pursuant to this section” necessarily means that the amendment must be valid under the Condominium Act. Consequently, according to the Court, if the amendment did not comply with the Condominium Act, the one-year limitations period to challenge the validity of the amendment does not apply.
Under the Court’s reasoning, for this one-year limitations period to apply the amendment must be validly passed in the first place. It is hard the fathom when this one-year limitations period would ever apply. Every challenge to an amendment is a challenge to whether that amendment is valid. The Court’s construction of RCW 64.34.264(2) makes any challenge to the validity of an amendment exempt from the limitations period, rendering RCW 64.34.264(2) superfluous and subjecting amendments to nullification no matter how long they had been in existence or relied upon by an association and its members.
An example: Precious Parking Rights
For example, after a condominium is created, the developer may seek to amend the declaration to create private, deeded, parking out of previously dedicated common elements. Such an amendment would violate the Condominium Act. See RCW 64.34.348 (establishing the exclusive means whereby a common element may be conveyed out of condominium ownership). Nevertheless, the developer sells deeded parking rights, along with the units, to the members. Years later, certain members are unhappy that their neighbors have dedicated parking spaces. Under Club Envoy, the amendment creating private deeded parking in the first place can now be challenged. Those with previously deeded parking rights now face uncertainty as to whether their deeded rights, held for years, are safe from challenge.
In the end, the certainty provided by the limitations period under RCW 64.34.264(2) is anything but certain. Amendments passed improperly years ago may now be subject to challenge regardless of the one-year limitations period.