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Friday, January 20, 2006

Letter from the Attorney [date 09-2005]

The following is the response to the above letter which was written by the associate (Mr. Dean Pody) of the Attorney for the Association:

"Hi. I've outlined below the reasons for amending the provisions related to the easements and lien priority. I've also briefly listed several other areas of the Declaration that could be changed in a rewrite to address recent issues that have come up at Kenthill. Let me know if you'd like me to address any of these areas in greater detail. It appears from your e-mail that you have an excellent understanding of the current issues regarding the Association's Declaration.

"The most recent issue that's come to our attention that has resulted in our recommendation for the Association to amend its Declaration has to do with the current status of the Kenthill/Easthill easement for the use of the recreational facilities, including the pool. It's our recommendation that the Association amend its Declaration to clarify the Association's authority to negotiate the easement on behalf of the Kenthill owners with the owner's of Easthill and to allow the Association to subject owners to rules covering the use of the recreational facilities located on Easthill property. As currently written the enforceability of the easement by any of the parties is unknown.

"We've also recommended that the Association revise the section of its Declaration dealing with dues priority. Pursuant to Washington law an association is entitled to up to a six month “super priority” over mortgage holders for liens for unpaid assessments. However, in order to take advantage of this law the Association must first amend its Declaration. Section 12.02 Priority of the current Declaration provides in pertinent part:

"The lien for assessments shall be prior to all other liens except for (a) tax liens on apartments in favor of any assessing unit or special district and (b) all unpaid sums on mortgages of record against the apartment made in good faith and for value. . . . (emphasis added)"

"Thus, every time a unit is sold at a trustee’s sale the Association is only able to collect dues from the new owner from the date of the sale forward.

"However, if the Association amends its Declaration to be consistent with the New Act, the Association would also be entitled to collect up to six month back dues from the date of the sale. Thus, for example, if the dues were $200.00 per month the Association would be entitled to collect an additional $1,200.00 ($200.00 x 6) from the new owner after a trustee's sale.

"In addition, because the Association has priority over the lender we would be able to name the lender in any lawsuits initiated by the Association against owners to collect delinquent dues. We've found that in most cases where we name lenders for dues priority purposes the lender will either pay the six month dues priority to be dismissed from the lawsuit or be defaulted for failing to respond. If the lender pays the six months dues priority the Association may still be entitled to additional priority when/if the lender eventually foreclosed. If the lender didn't respond to the lawsuit paperwork the Association would be entitled to default the lender and the Association's lien would then be in first position.

"As you can see the cost of this amendment can be recouped in a relatively short period of time.

"Some of the other issues that have come up recently that could be addressed through a Declaration rewrite include revising the definitions of unit boundaries and maintenance responsibility, authority of the Board to adopt rules and regulations, revision of provisions pertaining to pets, clarification of voting and proxy procedures, authority to tow improperly parked vehicles, authority to revise late fee charges and responsibility for uninsured losses.Let me know if you have any questions or would like examples of additional issues that could be addressed a Declaration rewrite. Dean."