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Leasing Restrictions in Condominiums Are Still "Use" Restrictions



We wrote about the Filmore v. Unit Owners Association of Centre Pointe Condominium case in a prior blog post, when the Washington Court of Appeals issued its decision in the case. The court of appeals ruled that, based on the language of the Washington Condominium Act, any amendment to restrict or remove a restriction on leasing condominium units relates to a restriction on "use." The significance of the ruling meant that, under the condominium act, changes to use restrictions requires 90% of the unit owners to approve the change, even if the condominium covenants (known collectively as a declaration), provide for a lesser percentage to approve a change. The Washington Supreme Court accepted review and issued its decision on September 3, 2015.

In an interesting twist, the Supreme Court ruled that leasing restrictions in a condominium were in fact use restrictions, but not because the Washington Condominium Act says so, like the court of appeals ruled, but because the condominium declaration in that case included the lease provisions in the section of the declaration governing uses. The case turned on a drafting decision on where to place the lease provisions.

Already this case is causing some concern on legal listservs because the Supreme Court did not adopt a bright-line rule, as the court of appeals did when it ruled that the condominium act equates leasing with use. With the Supreme Court's ruling, the question on how many votes are needed to approve a change to the leasing restrictions will be answered on a case-by-case basis, and turn on the language of each condominium declaration.

It is not clear if stating in a condominium declaration that lease restrictions are not use restrictions will help avoid the 90% requirement, given the Supreme Court's ruling. Of interest to perhaps only lawyers is the continued applicability of the court of appeals' ruling. The Supreme Court did not overrule the court of appeals; it affirmed that court's decision but decided the case on other grounds. Prudent practitioners will likely assume that lease restrictions are use restrictions in all cases regardless of what the declaration states, and obtain a 90% vote to change them.

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