Lake v. Woodcreek Homeowners Ass'n, No. 81873-8.

• Court: United States State Supreme Court of Washington
• Writing for the Court: FAIRHURST
• Citation: 243 P.3d 1283,169 Wash.2d 516
• Parties: Sandra LAKE, individually, Respondent, v. WOODCREEK HOMEOWNERS ASSOCIATION, a Washington Homeowners Association; and Glen R. Clausing, a single man, Petitioners.
• Docket Number: No. 81873-8.
• Decision Date: 15 September 2010

243 P.3d 1283
169 Wash.2d 516

Sandra LAKE, individually, Respondent,
v.
WOODCREEK HOMEOWNERS ASSOCIATION, a Washington Homeowners Association; and Glen R. Clausing, a single man, Petitioners.

No. 81873-8.

Supreme Court of Washington,
En Banc.

Argued Oct. 29, 2009.
Decided April 15, 2010.
As Amended Sept. 15, 2010.

243 P.3d 1285

Charles Edward Watts, Oseran Hahn Spring Straight & Watts, P.S., Bellevue, WA, Scott Michael Barbara, Johnson Andrews & Skinner, P.S., Seattle, WA, for Petitioners.

Marianne Kathryn Jones, Attorney at Law, Mona Kathleen McPhee, Jones Law Group, P.L.L.C., Bellevue, WA, for Respondent.

FAIRHURST, J.

169 Wash.2d 520

¶ 1 The Horizontal Property Regimes Act (HPRA), chapter 64.32 RCW, applies to the Woodcreek

169 Wash.2d 521

Condominium in Bellevue, Washington. A Woodcreek owner, Sandra Lake, invokes the HPRA to resolve a dispute between her, the Woodcreek Homeowners Association, and her fellow condominium owner Glen R. Clausing. Lake claims that the association's board of directors violated the HPRA or Woodcreek's declaration when it approved Clausing's request for permission to build a second-story addition on his townhouse-style condominium apartment. Two questions are presented. Does the HPRA or Woodcreek's declaration bar the division of a condominium's common areas? Does the HPRA or Woodcreek's declaration require the unanimous consent of condominium owners to combine a portion of the common area with the owner's apartment? We answer no to both questions.

The HPRA

¶ 2 The HPRA governs condominiums in Washington established between 1963 and July 1, 1990, as Woodcreek was. These condominiums are also regulated by select provisions of the Condominium Act, chapter 64.34 RCW, as well as the condominium's declaration and bylaws. The HPRA defines a " '[d]eclaration' " as "the instrument by which the property is submitted to provisions of [the HPRA]." RCW 64.32.010(9). Akin to a master deed, a declaration describes the condominium property and contains the covenants defining the property rights and legal obligations of the property owners. 18 William B. Stoebuck & John W. Weaver, Washington Practice: Real Estate: Transactions § 12.3, at 23 (2d ed. 2004). The declaration is incorporated into each condominium apartment's deed. See RCW 64.32.120(1). Bylaws provide for the administration of the condominium. RCW 64.32.090(11). The bylaws must accord with the declaration, which, in turn, must obey the HPRA. See Shorewood W. Condo. Ass'n v. Sadri, 140 Wash.2d 47, 54, 992 P.2d 1008 (2000).

¶ 3 The HPRA permits a condominium to comprise three kinds of property-private apartments, common areas,

169 Wash.2d 522

and limited common areas-with a condominium owner holding different kinds of property rights in each. An " '[a]partment' " is "a part of the property intended for any type of independent use ... and which has a direct exit to a public street or highway, or to a common area leading to such street or highway." RCW 64.32.010(1). When an apartment is within a building, the HPRA delineates the boundaries as "the interior surfaces of the perimeter walls, floors, ceilings, windows and doors thereof," along with "the air space so encompassed." Id. The HPRA permits an apartment to be leased, owned as a tenancy in common, or held in any other way "in which real property may be owned, leased or possessed in [Washington]." RCW 64.32.010(2). The declaration must describe "the number of apartments," RCW 64.32.090(2), as well as "[t]he apartment number of each apartment, and a statement of its location, approximate area, number of rooms, and immediate common area to which it has access, and any other data necessary for its proper identification," RCW 64.32.090(3). An apartment owner has "exclusive ownership and possession of his apartment but any apartment may be jointly or commonly owned by more than one person." RCW 64.32.040.

¶ 4 A common area, under the HPRA's catchall definition of " '[c]ommon areas and facilities,' " includes the "parts of the property

243 P.3d 1286

necessary or convenient to its existence, maintenance and safety, or normally in common use." RCW 64.32.010(6)(h). The HPRA names several specific parts of the condominium property as common areas or facilities, including the building's foundation, roof, and exterior walls; any central heating or cooling; any centralized water works; any ducts, pumps, and elevators, and more. RCW 64.32.010(6). These are the default definitions, but the HPRA allows the declaration to differ. (The Woodcreek declaration largely accords with the HPRA catchall and specific definitions, and adds, among other things, pipes, conduits, and wires, as well as the gardens and green spaces.) The declaration must describe the common areas. RCW 64.32.090(4).

169 Wash.2d 523

¶ 5 The HPRA defines a " '[l]imited common area and facilities' " as "those common areas and facilities designated in the declaration, as it is duly recorded or as it may be lawfully amended, as reserved for use of certain apartment or apartments to the exclusion of the other apartments." RCW 64.32.010(11). The limited common areas must be described in the declaration. RCW 64.32.090(5).

¶ 6 Condominium owners hold "an undivided interest in the common areas and facilities in the percentage expressed in the declaration." RCW 64.32.050(1). This includes the limited common areas. The condominium owners have a right to share in the profits from the condominium property and are obligated to cover the common expenses. RCW 64.32.080.

¶ 7 The HPRA requires that declaration amendments be allowed. The declaration itself must contain "[t]he method by which the declaration may be amended." RCW 64.32.090(13). The amendment procedure must, at a minimum, include a provision stating "[t]hat not less than sixty percent of the apartment owners shall consent to any amendment." Id. However, the amendment procedure for "any amendment altering the value of the property and of each apartment and the percentage of undivided interest in the common areas and facilities" requires the unanimous consent of the owners. RCW 64.32.090(13).

¶ 8 The HPRA also mandates that the declaration allow for modifications to the apartments, common areas, and limited common areas. The declaration must include "[a] provision authorizing and establishing procedures for the subdividing and/or combining of any apartment or apartments, common areas and facilities or limited common areas and facilities, which procedures may provide for the accomplishment thereof through means of a metes and bounds description." RCW 64.32.090(10).

I. FACTUAL AND PROCEDURAL HISTORY

¶ 9 The Woodcreek apartments were developed in several different styles, some built with two stories and others with

169 Wash.2d 524

one. The Woodcreek developer had marketed a second story as an optional bonus room, and several original purchasers paid extra money to have a second story built. After the Woodcreek development was completed, several owners approached the Woodcreek board over the years to request its permission to build second-story additions to their one-story apartments, and the board liberally granted permission.

¶ 10 Lake and Clausing own Woodcreek apartments that neighbor one another but are separated by a small greenbelt. Lake's unit was originally built with a second story. Clausing's was not, but a few years ago, he requested the Woodcreek board's permission to construct a second-story addition of his own. Without putting the matter to a vote of the condominium owners or seeking an amendment to the declaration, the Woodcreek board granted Clausing permission to go forward with his construction plans. The addition required construction of new exterior walls, which were designated as common areas under the Woodcreek declaration. Upon completion, the project increased his apartment's size by approximately 458 square feet. The Woodcreek board, without

243 P.3d 1287

changing the declaration's stated percentages that are supposed to be the method for calculating each owner's share of the common expenses, increased Clausing's monthly dues to cover the increase in maintenance costs that the Woodcreek Homeowners Association would bear.

¶ 11 Lake objected and sued Clausing and Woodcreek Homeowners Association. The relief she sought was, in the alternative, an order that Clausing remove his bonus room, an order that Woodcreek obtain unanimous consent of the Woodcreek owners for Clausing's addition, or an award of damages. Woodcreek filed a cross claim against Clausing. Lake moved for partial summary judgment. Clausing filed a response and cross-moved for summary judgment against both Lake and Woodcreek. Woodcreek joined Clausing's cross motion against Lake. Without discussing the issues, the trial court granted Clausing and Woodcreek's cross motion against Lake and dismissed her complaint.

169 Wash.2d 525

¶ 12 The Court of Appeals reversed. Lake v. Woodcreek Homeowners Ass'n, 142 Wash.App. 356, 367, 174 P.3d 1224 (2007). The court held that Clausing's second-story addition, by enveloping air space, took a common area for apartment area. Id. at 362, 174 P.3d 1224. Clausing and Woodcreek argued that as long as 51 percent of the owners voted in favor, RCW 64.32.090(10) and section 12 of the declaration authorized the Woodcreek Homeowners Association to divide a common area and combine it with a private apartment. The Court of Appeals disagreed, concluding that RCW 64.32.090(10) permitted only "combining apartments with apartments, or combining common areas with other common areas." Lake, 142 Wash.App. at 365, 174 P.3d 1224. Further, the court concluded that any combination of common area with private apartment "necessarily changes" the declaration's stated values for each apartment, the value for the condominium as a whole, and the percentages of undivided interest in the common areas. Id. at 364, 174 P.3d 1224. This automatic change, the court reasoned, triggered the requirement of RCW 64.32.090(13)...