Commercially Reasonable Efforts

In Washington state, "commercially reasonable efforts" is a standard of conduct that generally requires a party to take those actions a prudent business entity would take under similar circumstances. When applied to implementing lawful Board decisions, it typically means performing the requested tasks with the diligence and resources expected within the specific industry, while balancing the objective against reasonable economic costs and risks 

Key Characteristics of the Standard

• Objective Basis: It is often measured against industry norms—what other similarly situated companies would do to achieve the same result.
• Balance of Interests: Unlike a "best efforts" standard, it does not require a party to exhaust every possible avenue or sacrifice its own business interests. A party is generally not required to take actions that would be commercially detrimental or incur unanticipated, material losses.
• Good Faith: In Washington and broadly, it carries an inherent requirement of good faith and honesty in fact.
• Context-Dependent: Under RCW 60.10.070, the fact that a better outcome (e.g., a higher price in a sale) was possible does not alone prove efforts were not commercially reasonable

Practical Implementation of Board Decisions

To meet this standard when implementing Board mandates, a manager or officer should:

• Use Sound Judgment: Act in accordance with professional business judgment rather than taking only the bare minimum or "check-the-box" actions.
• Document Efforts: Maintain records of the steps taken, resources allocated, and external factors (like market shifts) that influenced the implementation process.
• Consider Proportionality: Efforts must be proportional to the goal; one is not entitled to a "blank check" to fulfill a mandate if the cost outweighs the intended harm or benefit

When a Property Management  Company acts in a way that contradicts Washington state law (such as the Washington Uniform Common Interest Ownership Act - WUCIOA) or the specific terms of an HOA governing document:

1. The Hierarchy of Authority

In Washington, the law operates on a hierarchy. If there is a conflict, the order of "who wins" usually looks like this:

1. Washington State Law (RCWs like 64.34, 64.38, or 64.90)
2. Declaration / CC&Rs
3. Bylaws
4. Board Rules/Resolutions

2. Breach of Fiduciary Duty vs. Contract

If a property management company is following Board instructions that they know are illegal or a breach of the governing documents, several legal issues arise:

• Ultra Vires Acts: This is a legal term for "beyond the powers." If the Board makes a decision that exceeds their authority under the CC&Rs or state law, they are acting ultra vires.
• The Management Agreement: Most contracts between an HOA and a management company  include an indemnification clause. However, these clauses usually do not protect the manager if they engage in "gross negligence" or "willful misconduct

• Standard of Care: Under RCW 64.90.410, Board members must exercise the care an "ordinarily prudent person" would. If the management company facilitates a violation of this care, they may be liable for professional negligence.

3. Common Conflict Areas with Management

In Washington, management companies often run into trouble with the "commercially reasonable" standard in these areas:

Conflict Type	What "Commercially Reasonable" Looks Like	What "Contrary to Statute" Looks Like
Record Requests	Providing redacted copies within a reasonable timeframe (usually 10-14 days).	Refusing to provide records or charging "exit fees" not allowed by RCW 64.38.045.
Notice of Meetings	Sending mailers/emails as per the bylaws.	Holding "secret" meetings or failing to provide the statutory notice period.
Assessments	Following the specific collection policy outlined in the CC&Rs.	Levying fines without a noticed hearing or violating the Washington

If you believe they are acting outside the law, the "commercially reasonable" defense usually fails because it is never commercially reasonable to break the law.