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Session Ends: Historic Housing Wins

The 2023 Washington State Legislature adjourned Sine Die on April 23. Washington REALTORS® entered the session with a lengthy to-do list, asking the Legislature to update and correct several real estate brokerage issues, and to make this session the year of housing policy. It is well known that Washington State ranks last in the number of housing units per family nationally, and the dream of homeownership has been moving farther out of reach for many families in our state. To urge the Legislature to address the housing crisis, Washington REALTORS® formed a partnership with Amazon and created the “Welcome Home” campaign, which prompted thousands of our members and consumers to reach out to Legislators, asking them to back REALTOR® prioritized bills.
 
Thanks to the constant advocacy of your Washington REALTORS® Legislative Team during this session, bills have been passed that will benefit your business, future clients who are on the verge of becoming homeowners, and those in desperate need of affordable housing solutions. 

Bills Concerning Real Estate Brokerage Services

Real Estate Agency Law 
SB 5191
Bill Sponsor: Stanford/Dozier
Senate 48-0, House 97-0
 
SB 5191 amends Chapter 18.86 RCW, the real estate agency law to include several new provisions that will benefit both consumers and the real estate industry. The bill requires use of a written services agreement for buyers, like the existing requirement that a seller enter into a written agency agreement with their broker. The service agreement must include items such as the duration of the agreement, whether it is exclusive or non-exclusive, and the amount of compensation. The bill also modifies dual agency relationships by using the term “limited dual agent” and requiring written consent for dual agency. The bill also clarifies that certain broker duties apply to all parties in the transaction and revises the Real Estate Agency Law pamphlet so that it reads in a narrative form that is understandable to the consumer. 

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Exemption from Landlord/Tenant Act for Sale/Leasebacks
SHB 1070
Bill Sponsor: Connors/Reeves
House 98-0, Senate 49-0
 
SHB 1070 clarifies that leaseback agreements between and sellers and buyer are not subject to the requirements under the Residential Landlord Tenant Act for three months after the transaction closes. 
 

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Limiting Lifetime Listing Agreements
SSB 5399
Sponsors: Mullet/Dozier
Senate 49-0, House 98-0
 
SSB 5399 limits agreements that provide cash to homeowners in exchange for obligating the homeowner to a future real estate listing agreement to a length of five years, without renewal or extension, and allows the homeowner to cancel the contract 10 days after signature. 

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Bills That Will Create More Housing

Allowing Middle Housing
HB 1110
Sponsors: Bateman/Barkis
House 75-21, Senate 35-14
 
HB 1110 requires certain GMA planning cities, based on size, to allow the construction of middle housing types such as duplexes, triplexes, fourplexes, and townhomes. A city with a population of at least 25,000 but less than 75,000 must allow two units per lot, four units if one unit is affordable, and four units within ¼ mile of a major transit stop. Cities over 75,000 must allow four units per lot, six units if two are affordable, and six units within ¼ mile of a major transit stop. Cities under 25,000 that are part of the UGA connected to the largest city in a county for the state’s largest counties (King, Pierce, Snohomish, Kitsap, Thurston, Spokane, Whatcom) must allow two units per lot. These minimum unit requirements can be though allowing different types of middle housing within residential zoned areas. Cities may implement middle housing on 75 percent of lots, rather than on all lots, under certain circumstances. The bill also provides exemptions from allowing middle housing types in areas served only by septic systems, if water or other urban services are not available, in environmentally sensitive areas, if there is a risk of displacement of low-income residents, or for other reasons. Extension of the timeline to allow middle housing may be approved by the Department of Commerce. Cities must implement the requirements of the bill within six months of the date required to update GMA Comprehensive Plans.
 

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Increasing Supply of Condominiums & Townhouses
SB 5258
Sponsors: Shewmake/Gildon
Senate 48-0, House 98-0
 
SB 5258 modifies several laws relating to the construction of condominiums and townhouses. The process for resolving condominium construction defect claims, and the ability of a developer/contractor to repair claimed defects (“right to cure”) is modified so that a written report from a qualified construction defect professional is required and must describe in detail the nature of the claimed defect. The timelines in the right to cure process are also accelerated to encourage repair and resolution of claims, rather than litigation. SB 5258 also increases the amount of deposits for new condominium projects, modifies impact fee schedules to include consideration of smaller unit sizes, creates a downpayment assistance pilot project for certain condominium and townhouse buyers, and requires all cities to allow unit lot subdivisions for fee simple townhouse construction. 
 

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Creation of Additional Housing Units in Existing Buildings
HB 1042
Sponsors: Walen/Ryu
House 96-0; Senate 45-3
 
HB 1042 enables the creation of housing in existing, under-utilized buildings in areas zoned for commercial and mixed-uses and provides limits on a local jurisdiction’s ability to approve and condition such projects. It also, provides direction to the State Building Code Council to waive the energy code for unchanged portions of an existing building but requiring new dwelling units compliance with the current energy code.
 

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Construction and Use of ADU Units
HB 1337
Sponsors: Gregerson/Barkis
House 85-11; Senate 39-7
 
This bill makes it easier to build Accessory Dwelling Units (ADUs) in urban growth areas. The bill requires cities and counties to adopt zoning and development regulations allowing a minimum of two ADUs which are a minimum of 1,000 square feet on zoned lots allowing single-family uses unless the lot is less than 2,000 square feet. The legislation specifies the general development requirements cities and counties are to use when permitting ADUs. In addition, there is no owner occupancy requirement and allows jurisdictions to restrict the use of ADUs for short-term rentals.

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Bills That Will Make it Easier to Build More Housing

Project Specific SEPA Exemption for Housing Development
SB 5412
Sponsors: Salomon/Liias
Senate 49-0, 95-2
 
SB 5412 broadens the SEPA exemption for infill residential housing to include all housing development within urban growth areas. Under the bill, all project actions that propose to develop one or more residential housing units within the incorporated areas in an urban growth area or middle housing within the unincorporated areas in an urban growth area, and that meet certain criteria, are categorically exempt from SEPA. The categorical exemption applies to proposed projects that do not have existing or anticipated transportation system safety or operational deficiencies. A city or county must consult with the Washington State Department of Transportation (WSDOT) to determine if anticipated transportation system safety or operation deficiencies exist in connection with a proposed project. The project action is eligible for categorical exemption only if it meets criteria so that SEPA review occurred of the project area at the GMA planning level stage. 

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Local Permit Processes
SB 5290
Sponsors: Mullet/Kuderer
House 98-0; Senate 49-0
 
This legislation provides project permit streamlining requirements, creating efficiencies and predictability for both non-profit and for-profit builders. Key components include: 1) Permit processing improvements, including timeframe for project application completeness for review and permit application review time periods; 2) Requirement for jurisdictions to submit an annual performance report for housing permit applications as listed permit types to Commerce and post on the jurisdiction’s website; 3) Options for actions to further streamline permit processes; 4) Commerce to develop a consolidated permit review grant program for eligible local governments; and 5) Commerce to convene a digital permitting process work group.
 

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Reforming Local Design Review
HB 1293
Sponsors: Klicker/Leavitt
House 94-3, 49-0
 
HB 1293 modifies the local government design review process by requiring that local design review processes can only apply clear and objective regulations, not subjective or unadopted aesthetic standards. Design review regulation also may not result in a reduction in density, height, bulk, or scale below the generally applicable development regulations for a development proposal. The design review process must be conducted concurrently, or otherwise logically integrated, with the consolidated review and decision process for project permits and may not include more than one public meeting.

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Helping Affordable Housing

Establishing Covenant Homeownership Program
HB 1474
Sponsors: Taylor/Chopp
House 52-44, Senate 30-19
 
HB 1474 increases document recording fees by $100 to fund a new state program to provide down payment and closing cost assistance to people, or heirs, impacted by racially restrictive covenants. The program is estimated to raise $75 million per year for homeownership. 
 

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Housing & Homelessness Investments
Capital and Operating Budgets
 
The State’s Capital and Operating Budgets include the largest state investment in housing supply and homelessness prevention in Washington State history. The major housing programs total over $1.1 billion dollars, not including additional funds for implementation of various housing and GMA laws. Major investments include $400 million for the state’s Housing Trust Fund; $170 million for affordable housing, shelters, land acquisition, and affordable transit-oriented development; $160 million for emergency housing and homelessness facilities at the local level; $66 million to supplement shortfalls in existing programs funded by document recording fees; $120 million for addressing homeless encampments, wrap around services, and child and youth homelessness; and $150 million for the Covenant Homeownership Program funded through a $100 document recording fee. 
 

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To sum up this session, a record number of bills have been passed that will address a range of housing issues, from greater transparency around real estate brokerage services to increasing the supply of housing units. The Legislature has made historic strides in addressing homelessness and affordability issues while also passing bills to benefit market-rate housing. Thank you to our Legislative partners and our leadership, volunteers and advocacy team, who have worked hard this session to ensure the dream of homeownership can be much more obtainable for all families in Washington State.
 
For questions, please reach out to the Government Affairs Staff at 360.943.3100 or info@warealtor.org.