Legislation to increase the supply and affordability of condominiums unanimously passed the Washington State Senate today. SB 5258, sponsored by Sen. Sharon Shewmake (D-Bellingham), would reduce costly litigation by encouraging developers and condo owners to work together and fix any defects in a building without going to court. SB 5258 would also set up a fund to support condo buyers who use downpayment assistance programs through the Housing Finance Commission.
“Affordable condominiums are a missing piece of Washington’s housing market. We’ve got regulations that are well-intentioned that don’t do much to protect consumers but do increase costs. These high costs make it so the only condos that pencil out for developers to build are the really high-end expensive ones, at a time when we need starter homes too,” said Shewmake. “Because so many people get their start in the housing market with a condo or townhome, lowering the costs to build condos means we can build more starter homes.”
The bill would ensure a “right to cure” for condominium developers. If there is a construction defect in a condo building and the owner of a unit makes a defect claim against the builder, the builder would have 21 days to respond and offer to “cure” the defect by fixing the defect themselves, paying the cost to fix it to the owner, or purchasing back the entire unit from the owner. If the builder fails to respond or disputes the defect, then the owner would still have the opportunity to bring a lawsuit against the builder.
Ensuring the opportunity to cure rather than immediately going to litigation would reduce the costs for litigation insurance for developers and help make it profitable to build lower cost condominium buildings.
The bill also creates a financial incentive for building affordable condos by making them more attractive to buyers who are part of a downpayment assistance program offered by the state’s Housing Finance Commission. These programs give low interest rate loans to qualifying buyers – mostly veterans and low or moderate-income individuals – to help them afford the downpayment on their purchase of a home. SB 5258 would deposit the real estate excise tax paid by the seller of a condo or townhome into an account that would help qualifying buyers pay off their downpayment assistance loan.
The bill now goes to the House for consideration. As a revenue-related bill, it is considered “necessary to implement the budget” if included in the final operating budget agreement, and is not subject to the cutoff dates that most bills are, so it could pass any time before the end of session, April 23.
