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Klahanie Association v. Sundance At Klahanie Condominium Association

Court of Appeals of Washington, Division 1

December 26, 2017

KLAHANIE ASSOCIATION, Respondent,
v.
SUNDANCE AT KLAHANIE CONDOMINIUM ASSOCIATION, Appellants, KRYSTLE MCCORD; RICHARD E. MILLER & EVELYN E. MILLER, and the marital community comprised therein; BANK OF AMERICA, N.A., Defendants.

          Appelwick, J.

         The trial court concluded that the condominium association's lien for assessments was not entitled to statutory priority over similar assessments made pursuant to the covenants of the homeowners association within which the condominium was organized. We affirm.

         FACTS

         Krystle McCord and Evelyn Miller owned real property in Issaquah. That property is part of two separate associations, Klahanie Association (Klahanie) and Sundance at Klahanie Condominium Association (Sundance). Klahanie is a homeowners association (HOA) created in 1985. Sundance is a condominium association created pursuant to the Washington Condominium Act (WCA), chapter 64.34 RCW, in 1995. Sundance is a condominium association on property that is within Klahanie.

         McCord and Miller fell behind on their assessments owed to both associations. On March 12, 2015, Sundance obtained an $8, 559.73 judgment against them.

         Two months later, on May 12, 2015, Klahanie filed a complaint to foreclose on its lien for $3, 596.09 in assessments owed. Klahanie moved for summary judgment on the basis that its lien was senior to Sundance's lien. Klahanie reasoned that its priority date was established when its covenants, conditions, and restrictions (CC&Rs) were recorded in 1985 (as opposed to when the owner defaulted in 2014), while Sundance's priority date was when Sundance's declaration was recorded in 1995. The trial court agreed. It granted summary judgment in favor of Klahanie, and, pursuant to the CC&Rs awarded attorney fees in Klahanie's favor.

         Sundance appeals.

         DISCUSSION

         When reviewing a summary judgment order, this court engages in the same inquiry as the trial court. Hertog v. City of Seattle, 138 Wn.2d 265, 275, 979 P.2d 400 (1999). Summary judgment is proper when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Id. All facts and reasonable inferences are considered in the light most favorable to the nonmoving party. Id. Questions of law are reviewed de novo. id.

         I. Competing Claims of Lien Priority

         Sundance, like all condominiums created in this state after July 1, 1990, organized under the Washington Condominium Act (WCA). RCW 64.34.010(1). The WCA provides for assessments to be levied against association members. See RCW 64.34.360. The WCA also gives WCA associations a statutory lien for unpaid assessments. RCW 64.34.364(1). As to those liens' priority date, RCW 64.34.364(7) states that "[r]ecording of the declaration constitutes record notice and perfection of the lien for assessments." And, the WCA gives statutory superpriority to condominium association assessment liens over other liens, with limited exceptions. See RCW 64.34.364(2).

         Klahanie was created upon the recording of its CC&Rs in 1985.[1] The CC&R's bind owners within Klahanie to pay assessments. The master plan included plans for both single family and multifamily development. Section 1.6 of the CC&Rs contemplates that later condominiums, referred to as "Living Units, " may be created on the property. Section 4.3 requires that assessment obligations pass through to each individual living unit, rather than the lots themselves. And, the CC&Rs state that the consequence of not paying assessments is a lien against the living unit "in the nature of a mortgage in favor of the Association."

         Unlike Sundance, Klahanie has no statute comparable to RCW 64.34.364(2) to rely upon for superpriority for its lien claim. But, within the WCA, RCW 64.34.364(2)(a) creates an exception to superpriority for "[l]iens and encumbrances recorded before the recording of the declaration." The priority of the respective liens here turns on whether Klahanie's non-WCA lien is a lien or encumbrance that falls within this exception for previously recorded liens or encumbrances.

         II. Exception ...


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