Washington Court Says Board Has Wide Latitude to Set Assessments

The Washington Supreme Court has ruled that an HOA’s governing documents grant the board broad discretion in setting assessments. The court also ruled that the board’s decision on assessments was entitled to substantial deference — but not because of the business judgment rule.

“This is a major win for associations in Washington state and may be helpful to associations nationwide in resisting challenges to discretionary decisions of the board or the membership,” says Anthony Rafel, managing partner at Rafel Law Group in Seattle, who submitted a brief to the Washington Supreme Court in support of the association.

The case dates back to 2014. The association includes 974 lots. About 270 lots have houses, with approximately 40 as full-time residences. The association owns and maintains amenities such as platted roads, a golf course, a marina, a ferry, and a water treatment and distribution facility.

The governing documents authorize assessments against members on an “equitable basis.” Beginning in 1967, the association has levied assessments based on a uniform, per-lot basis for operating expenses not covered by use-based fees.

The board has considered alternative approaches but ultimately opted to continue allocating assessments equally among lots. This decision was ratified by a membership vote.

The owner who filed the lawsuit own numerous lots in the community, most of them undeveloped. He argued that allocating assessments on a per-lot basis isn’t equitable because not all lots are the same.

“He said those who had built on their lots got a lot more benefit, so the allocation wasn’t equitable,” Rafel says. According to the owner, assessments should be allocated based on each lot’s assessed value.

Read the full story now for all the details: Board Has Broad Discretion to Set Amendments

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Matt Humphrey
President