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Homestead Exemption & Foreclosure of Association Liens

| Dec 17, 2012 | Homeowners' Associations |

A relatively obscure Washington statute (RCW 6.13.080) now requires Homeowner Associations (“HOAs”) to mail notice to its members explaining that no “homestead exemption” will be recognized if an Association lien for unpaid assessments is foreclosed against their property. Such Homestead Exemption, which applies to the enforcement of judgments and a few other types of liens against real estate, serves to protect a homeowner’s first $125,000.00 of equity in their residence. Thus, the elimination of this exemption is very important should it become necessary to foreclose an Association lien.

Accordingly, it is advisable for all HOAs to comply with this statute by sending out notices to all members that comply with the statute. Furthermore, when the Association learns of a change of ownership, a notice needs to be sent to the new owner within 30 days from the date the Association learns of the new owner. Untimely notices are ineffective to eliminate the Homestead Exemption as to pre-notice arrearages.

On the other hand, the law is less clear as to whether Condominium Owner Associations (“COAs”) must comply with this notice requirement in order to eliminate the Homestead Exemption in lien foreclosure actions. There is an apparent conflict between RCW 64.34.364 of the Condominium Act and RCW 6.13.080 of the Homestead Act that is not easily reconciled. According, in view of this uncertainty, it is my strong recommendation that COAs, like HOAs, transmit the required notice to all unit owners to fully insure their assessment priority respecting homestead property.

We would be pleased to answer your questions or provide assistance in preparing a satisfactory statutory notice in this regard if helpful.