What Laws Govern Cooperative Housing Developments?

There are multiple entities that can form a cooperative housing development, and thus the laws governing a particular cooperative housing development depend on the cooperative’s specific structure.  Under Washington law, a corporation or association may only use the term “cooperative” as part of a corporate or business name if it meets certain requirements.[1]  Three of these possible arrangements are relevant to cooperative housing developments.

First, a cooperative housing development may be formed and governed by the Cooperative Associations Act.[2]  The act represents the efforts of legislators to unify Washington’s previous statutory scheme which had two separate incorporation statutes expressly designed for corporations operating as nonprofit cooperatives.[3]  The act allows cooperative associations to be formed by any number of persons for the transaction of any lawful business on a cooperative plan.[4]  The act applies other statutes, such as certain portions of the Nonprofit Miscellaneous and Mutual Corporations Act,[5] and every provision of the Washington Business Corporation Act that does not expressly conflict with it.[6]

Second, a cooperative housing development may be formed and governed by the Nonprofit Miscellaneous and Mutual Corporations Act.[7]  This act applies to all corporations expressly organized under its terms, as well as any corporations that were organized under any act repealed by the Washington Nonprofit Corporation Act[8] that were not later reorganized[9].  Corporations may be organized under this act for any lawful purpose.[10]  In certain instances, a corporation formed under this act may be able to avail itself of certain rights and powers granted under the Cooperative Associations Act.[11]

Third, a cooperative housing development may be formed by any nonprofit corporation or association wherein the voting members are corporations or associations operating on a cooperative basis.  Thus, the Washington Nonprofit Corporation Act may apply to a cooperative housing development.[12]

Navigating the laws governing these various cooperative entities may prove a challenge.  If you have any questions we can answer, please feel free to leave a comment or contact us directly.  We look forward to continuing this conversation with you in our future posts!

[1] RCW 23.86.030 (Association name — Immunity from liability of association board members and officers)

(1) The name of any association subject to this chapter may contain the word “corporation,” “incorporated,” or “limited” or an abbreviation of any such word.

(2) No corporation or association organized or doing business in this state shall be entitled to use the term “cooperative” as a part of its corporate or other business name or title, unless it: (a) Is subject to the provisions of this chapter, chapter 23.78, or 31.12 RCW; (b) is subject to the provisions of chapter 24.06 RCW and operating on a cooperative basis; (c) is, on July 23, 1989, an organization lawfully using the term “cooperative” as part of its corporate or other business name or title; or (d) is a nonprofit corporation or association the voting members of which are corporations or associations operating on a cooperative basis. Any corporation or association violating the provisions of this section may be enjoined from doing business under such name at the instance of any member or any association subject to this chapter.

(3) A member of the board of directors or an officer of any association subject to this chapter shall have the same immunity from liability as is granted in RCW 4.24.264.

[2] RCW 23.86.

[3] RCW 23.86.007, Legislative Finding 1989 c 307 § 1.

[4] RCW 23.86.010 (Cooperative associations — Who may organize)

Any number of persons may associate themselves together as a cooperative association, society, company or exchange, with or without capital stock, for the transaction of any lawful business on the cooperative plan. For the purposes of this chapter the words “association,” “company,” “exchange,” “society” or “union” shall be construed the same.

[5] See, e.g., RCW 23.86.300; 86.310; and 86.32.

[6] RCW 23.86.360 (Application of Title 23B RCW)

The provisions of Title 23B RCW shall apply to the associations subject to this chapter, except where such provisions are in conflict with or inconsistent with the express provisions of this chapter. The terms “shareholder” or “shareholders” as used in Title 23B RCW, or in chapter 24.06 RCW as incorporated by reference herein, shall be deemed to refer to “member” or “members” as defined in this chapter. When the terms “share” or “shares” are used with reference to voting rights in Title 23B RCW, or in chapter 24.06 RCW as incorporated by reference herein, such terms shall be deemed to refer to the vote or votes entitled to be cast by a member or members.

[7] RCW 24.06.

[8] See RCW 24.03.920.

[9] RCW 24.06.010 (Application of chapter)

The provisions of this chapter relating to domestic corporations shall apply to:

(1) All corporations organized hereunder; and

(2) All corporations which were heretofore organized under any act repealed by the Washington nonprofit corporation act and which are not organized for a purpose or in a manner provided for by said act.

The provisions of this chapter relating to foreign corporations shall apply to all foreign corporations conducting affairs in this state for a purpose or purposes for which a corporation might be organized under this chapter.

[10] RCW 24.06.015.

[11] “In addition to any other rights and powers granted under this chapter, any mutual or miscellaneous corporation that was organized under this chapter prior to June 10, 2004, and conducts its business on a cooperative basis is entitled, by means of an express election contained in its articles of incorporation or bylaws, to avail itself of part or all of the additional rights and powers granted to cooperative associations under RCW 23.86.105(1), 23.86.160, and 23.86.170, and, if the corporation is a consumer cooperative, under RCW 23.86.030 (1) and (2).”  RCW 24.06.032(1)

[12] RCW 24.03.010 (Applicability)

The provisions of this chapter relating to domestic corporations shall apply to:

(1) All corporations organized hereunder; and

(2) All not for profit corporations heretofore organized under any act hereby repealed, for a purpose or purposes for which a corporation might be organized under this chapter; and

(3) Any corporation to which this chapter does not otherwise apply, which is authorized to elect, and does elect, in accordance with the provisions of this chapter, as now or hereafter amended, to have the provisions of this chapter apply to it.

The provisions of this chapter relating to foreign corporations shall apply to all foreign not for profit corporations conducting affairs in this state for a purpose or purposes for which a corporation might be organized under this chapter.

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What Laws Govern Cooperative Housing Developments?

There are multiple entities that can form a cooperative housing development, and thus the laws governing a particular cooperative housing development depend on the cooperative’s specific structure.  Under Washington law, a corporation or association may only use the term “cooperative” as part of a corporate or business name if it meets certain requirements.[1]  Three of these possible arrangements are relevant to cooperative housing developments.

First, a cooperative housing development may be formed and governed by the Cooperative Associations Act.[2]  The act represents the efforts of legislators to unify Washington’s previous statutory scheme which had two separate incorporation statutes expressly designed for corporations operating as nonprofit cooperatives.[3]  The act allows cooperative associations to be formed by any number of persons for the transaction of any lawful business on a cooperative plan.[4]  The act applies other statutes, such as certain portions of the Nonprofit Miscellaneous and Mutual Corporations Act,[5] and every provision of the Washington Business Corporation Act that does not expressly conflict with it.[6]

Second, a cooperative housing development may be formed and governed by the Nonprofit Miscellaneous and Mutual Corporations Act.[7]  This act applies to all corporations expressly organized under its terms, as well as any corporations that were organized under any act repealed by the Washington Nonprofit Corporation Act[8] that were not later reorganized[9].  Corporations may be organized under this act for any lawful purpose.[10]  In certain instances, a corporation formed under this act may be able to avail itself of certain rights and powers granted under the Cooperative Associations Act.[11]

Third, a cooperative housing development may be formed by any nonprofit corporation or association wherein the voting members are corporations or associations operating on a cooperative basis.  Thus, the Washington Nonprofit Corporation Act may apply to a cooperative housing development.[12]

Navigating the laws governing these various cooperative entities may prove a challenge.  If you have any questions we can answer, please feel free to leave a comment or contact us directly.  We look forward to continuing this conversation with you in our future posts!

[1] RCW 23.86.030 (Association name — Immunity from liability of association board members and officers)

(1) The name of any association subject to this chapter may contain the word “corporation,” “incorporated,” or “limited” or an abbreviation of any such word.

(2) No corporation or association organized or doing business in this state shall be entitled to use the term “cooperative” as a part of its corporate or other business name or title, unless it: (a) Is subject to the provisions of this chapter, chapter 23.78, or 31.12 RCW; (b) is subject to the provisions of chapter 24.06 RCW and operating on a cooperative basis; (c) is, on July 23, 1989, an organization lawfully using the term “cooperative” as part of its corporate or other business name or title; or (d) is a nonprofit corporation or association the voting members of which are corporations or associations operating on a cooperative basis. Any corporation or association violating the provisions of this section may be enjoined from doing business under such name at the instance of any member or any association subject to this chapter.

(3) A member of the board of directors or an officer of any association subject to this chapter shall have the same immunity from liability as is granted in RCW 4.24.264.

[2] RCW 23.86.

[3] RCW 23.86.007, Legislative Finding 1989 c 307 § 1.

[4] RCW 23.86.010 (Cooperative associations — Who may organize)

Any number of persons may associate themselves together as a cooperative association, society, company or exchange, with or without capital stock, for the transaction of any lawful business on the cooperative plan. For the purposes of this chapter the words “association,” “company,” “exchange,” “society” or “union” shall be construed the same.

[5] See, e.g., RCW 23.86.300; 86.310; and 86.32.

[6] RCW 23.86.360 (Application of Title 23B RCW)

The provisions of Title 23B RCW shall apply to the associations subject to this chapter, except where such provisions are in conflict with or inconsistent with the express provisions of this chapter. The terms “shareholder” or “shareholders” as used in Title 23B RCW, or in chapter 24.06 RCW as incorporated by reference herein, shall be deemed to refer to “member” or “members” as defined in this chapter. When the terms “share” or “shares” are used with reference to voting rights in Title 23B RCW, or in chapter 24.06 RCW as incorporated by reference herein, such terms shall be deemed to refer to the vote or votes entitled to be cast by a member or members.

[7] RCW 24.06.

[8] See RCW 24.03.920.

[9] RCW 24.06.010 (Application of chapter)

The provisions of this chapter relating to domestic corporations shall apply to:

(1) All corporations organized hereunder; and

(2) All corporations which were heretofore organized under any act repealed by the Washington nonprofit corporation act and which are not organized for a purpose or in a manner provided for by said act.

The provisions of this chapter relating to foreign corporations shall apply to all foreign corporations conducting affairs in this state for a purpose or purposes for which a corporation might be organized under this chapter.

[10] RCW 24.06.015.

[11] “In addition to any other rights and powers granted under this chapter, any mutual or miscellaneous corporation that was organized under this chapter prior to June 10, 2004, and conducts its business on a cooperative basis is entitled, by means of an express election contained in its articles of incorporation or bylaws, to avail itself of part or all of the additional rights and powers granted to cooperative associations under RCW 23.86.105(1), 23.86.160, and 23.86.170, and, if the corporation is a consumer cooperative, under RCW 23.86.030 (1) and (2).”  RCW 24.06.032(1)

[12] RCW 24.03.010 (Applicability)

The provisions of this chapter relating to domestic corporations shall apply to:

(1) All corporations organized hereunder; and

(2) All not for profit corporations heretofore organized under any act hereby repealed, for a purpose or purposes for which a corporation might be organized under this chapter; and

(3) Any corporation to which this chapter does not otherwise apply, which is authorized to elect, and does elect, in accordance with the provisions of this chapter, as now or hereafter amended, to have the provisions of this chapter apply to it.

The provisions of this chapter relating to foreign corporations shall apply to all foreign not for profit corporations conducting affairs in this state for a purpose or purposes for which a corporation might be organized under this chapter.

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