7. How are Condominium Conversions Dealt with Under the WCA?

ANSWER: The condominium conversion of apartments or co-operatives to condominiums triggers certain rights and remedies in favor of tenants and subtenants in possession of a rental unit that is being converted to a condominium. Those rights include the following:

A. 120 Day Notice to Vacate;

B. A Tenant has the right for 60 days to purchase the unit which he or she leases at a price and terms offered by the Declarant;

C. For a period 180 days, the Declarant may not sell the unit to any other person on more favorable terms without giving the Tenant and additional 10 day right to accept such terms;

D. The WCA permits cities and counties to require a housing code inspection; the correction of housing code violations before closing; a 1-year warranty on housing code violation repairs; a 1-year escrow deposit equal to 10% of the cost of housing code violation repairs; and a relocation assistance not to exceed $500 per unit payable to low-income tenants.

E. The City of Seattle has adopted its own condominium conversion ordinance consistent with the WCA (SMC 22.903). The City’s ordinance requires relocation assistance of $500 per unit for those who have income less than the monthly median income for comparably sized households in the Seattle-Everett area. The relocation assistance must be paid before the tenant vacates. The ordinance further requires that prior to the delivery of the POS or the condominium conversion notice, the Declarant must have the building inspected and correct any violations. The written inspection report is to be included in the POS and the condominium conversion notice. Further, a copy of the inspection report is to be provided to a prospective purchaser before the signing of the earnest money agreement. Prior to closing, the developer shall deliver a copy of the certification of repairs to the Purchaser.

The following documentation must be placed in the Public Offering Statement involving a condominium conversion:

A. The WCA (RCW 64.34.415) requires that the Public Offering Statement either contain a copy of a report, a “transition study”, prepared by an independent, licensed architect or engineer, or a statement by the declarant based on such report, which report or statement describes, to the extent reasonably ascertainable, the present condition of all structural components and mechanical and electrical installations material to the use and enjoyment of the condominium.

B. RCW Chapter 64.55 effective August 1, 2005 provides that the Public Offering Statement shall contain a copy of the inspection and repair report prepared by an independent, licensed architect, engineer or qualified building inspector. This report is required if there is to be rehabilitative construction of the building enclosure which exceeds five percent (5%) of the assessed value of the building.

C. The Public Offering Statement shall contain a statement by the declarant of the expected useful life of each item reported on in the transition study referred to in paragraph A above, or a statement that no representations are made in that regard.

D. The Public Offering Statement shall contain a list of any outstanding notices of uncured violations of building code or other municipal regulations, together with the estimated cost of curing these violations. Unless the purchaser waives in writing the curing of specific violations, the extent to which the declarant will cure such violations prior to the closing of the sale of a unit in the condominium shall also be included.

PRACTICE TIP: When listing an apartment or co-op which has been converted to a condominium, assure that the developer has complied with the WCA conversion requirements, including obtaining and placing the transition report, declarant’s statements (see paragraphs 7 C and D) and building design documents, if required, into the Public Offering Statement and if the conversion condominium is in the City of Seattle, have the Purchaser acknowledge in the Purchase and Sale Agreement that he received and approved a copy of the City Inspection Report prior to executing the Sale Agreement. If representing the Buyer of a conversion condominium in the City of Seattle, be sure that your Buyer receives the Inspection Report prior to executing the Sale Agreement and recommend that the purchase be conditioned upon Buyer’s approval of the Building Enclosure Design Documents, Inspection Report, and receipt of a copy of the Certification of Repairs.