Windust Meadows Community: Declaration of Governance Deadlock

Declaration of Deadlock
Following the formal financial audit impasse, and censure of a Windust Meadows board if directors,
it is evident that the Board of Directors is currently in a state of total deadlock. As a two-member board, our inability to reach a majority consensus has paralyzed essential operations, including.

This summary primarily addresses the Governance Deadlock is facing, while the Summary: Ten Critical Issues outlines ten critical governance and financial issues involving a property management company (PMC) and an HOA board, alleging breaches of fiduciary duty, misrepresentation, and violations of Washington State's RCW 64.38.

• Issue 1: Investigation of breach of fiduciary duty allegations

The most compelling reason or an HOA board of directors in Washington State is Legal Expertise and Compliance: HOAs must comply with a complex blend of federal, state (such as the Washington RCW 64.38 Homeowners' Associations Act), and local laws, in addition to their own governing documents (bylaws, CC&Rs).

Blue Mountain's (An Associa company) core competencies.

It's not the breach - it's the denial.

The worse part is not the breach, but the denial. Despite the overwhelming evidence, Blue Mountain claims the company has done nothing wrong. Or that it only follows instructions from the bosrf.

Members of the Board of Directors for Windust Meadows HOA, are bound by a Fiduciary Duty of Care under Washington law. This legal obligation requires the board to act in good faith and with the same care an ordinarily prudent person would exercise in a similar position. By refusing to investigate documented concerns regarding unilateral contract modification by Blue Mountain, failure to enforce standards of performance and quality as described in the contract and instead delegate it to the Blue Mountain contract coordinator, the

A management company should have specialized knowledge to ensure the association remains compliant, helping to avoid costly legal issues or lawsuits that could arise from inexperience or oversight.

The perception that HOA management company employees "ignore" or "don't know" the law often stems from a lack of mandatory licensing and specialized legal training in Washington state. While these companies are hired to provide professional expertise, several structural factors contribute to the knowledge gaps observed:
1. Lack of Specialized Licensing
Unlike real estate brokers, community association managers are not required to hold a specific license in Washington state. They are exempt from real estate licensing unless they are directly involved in selling or leasing property. This means there is no state-mandated educational curriculum or standardized testing specifically for HOA law that all employees must pass before being hired.

2. Ambiguity in Legal Boundaries
Managers often walk a fine line between providing "guidance" and practicing law without a license.
• Administrative vs. Legal: While boards hire companies like Blue Mountain Community Management to handle administrative tasks like keeping minutes and managing vendors, managers are not attorneys.
• Interpreting Documents: When a manager interprets complex Covenants, Conditions, and Restrictions (CC&Rs), they may inadvertently provide incorrect legal advice because they lack formal legal training.

3. High Turnover and Training Gaps
The industry frequently faces high employee turnover. New or inexperienced managers may:

• Be assigned to multiple communities simultaneously, leading to a "one-size-fits-all" approach that ignores the specific legal requirements of your HOA's unique governing documents.
• Rely on internal company "best practices" that might be outdated or not fully aligned with recent changes to the Washington Uniform Common Interest Ownership Act (WUCIOA).

4. Limited Role in Board Meetings
By law, a manager's attendance at board meetings is governed by their contract, not state law. If a contract does not explicitly require them to provide legal compliance oversight during meetings, they may focus solely on logistics (like maintenance and budgets) while ignoring legal procedural errors.

5. Accountability Issues
Because management companies are private entities hired by the Board, homeowners often find it difficult to hold them directly accountable. Common complaints include:
• Poor Communication: Delayed responses or "stonewalling" when legal or maintenance questions are raised.
• Fiduciary Misalignment: While the Board has a fiduciary duty to homeowners, the management company's primary duty is to the Board that hired them, which can lead to a lack of transparency for individual residents.

To address these issues, homeowners often advocate for the Board to hire an independent attorney to review the management company’s actions or attend key meetings, as lawyers are trained to ensure strict adherence to state statutes like the Homeowners Association Act.

Blue Mountain/ Windust Meadows HOA contract: "Agent will undertake commercially reasonable efforts to implement the lawful decisions of the Board"

• Breach of Duty: Failure to exercise reasonable diligence or ignoring potential financial harm to the Association is a violation of our role.
• Loss of Immunity: The "Business Judgment Rule," which normally protects board members from personal liability, may not apply if it is determined that we acted in bad faith or with "willful ignorance" of our duties.
• Personal Exposure: Refusal to act could lead to a lawsuit by homeowners to compel action, where we may be named individually and held personally responsible for damages

Contract unilaterally altered by Board Resolution

Para. 3.3 Contract

Board resolution

A very long discussion to have Blue Mountain agree they were not following the contract but a Board Resolution which unilaterally modified the contract: Blue Mountain never agreed to having erred in the process

Unilateral Price Increase

While Blue Mountain may update Exhibit A, it is only valid 30 days after notification to the association.

• Issue 2: Undisclosed conflict of interest, later claimed to be a contractual agreement in Appendix B - its not

Conflict of Interest

Potential Conflict of Interest: Request for Information

Hi Joseph,

Exhibit B is an addendum to the contract that is updated each year. If the board does not want to proceed with project management with AOC, please let me know. Thank you!

Mahalo,

Korin Umbay, CMCA

Community Manager

Blue Mountain Community Management -An Associa? Company

Associa? – Delivering unsurpassed management and lifestyle services to communities worldwide.

www.Bluemountaincommunity.com

Office: 503-332-2047

Dear Board of Directors,
C.c Blue Mountain
C.c. Windust HOA

Under RCW 64.38.045 for Washington, I am requesting access to the following records regarding the Association’s relationship with Associa OnCall (AOC):

The signed contract between Windust HOA and Blue Mountain does not mention in-house maintenance or AOC: Are there any any clauses or addendums regarding the use of affiliated businesses or "In-House" maintenance?

• Any written conflict of interest disclosures provided by Blue Mountain regarding their ownership/affiliation with AOC.

• Documentation of the competitive bidding process that demonstrates AOC provided the most cost-efficient bid.

I am requesting these to ensure the Association is maintaining its fiduciary duty to the homeowners by prioritizing cost-efficiency and contract compliance. Please let me know when these documents will be available for review.

See Exhibit A for context;

Xxx

its a classic "conflict of interest" loop that often plagues managed communities, when a management company (Blue Mountain) uses its own subsidiary (Associa OnCall) as a vendor, the lines between oversight and profit become blurred.

If Associa OnCall (AOC) is being treated as an untouchable fixture rather than a replaceable vendor, the HOA Board may be failing in its fiduciary duty to seek the best value for the homeowners.
Key Areas of Contractual Friction
• The "Arm's Length" Requirement: Most management contracts imply (or explicitly state) that any affiliated vendors must be competitive with market rates. If AOC is refusing to abide by the primary contract terms, they are technically in default of their vendor agreement.
• The Power of the Board: Contractually, the Management Company works for the Board. If the Board has not authorized a "preferred vendor" status that bypasses competitive bidding, Blue Mountain cannot legally force AOC upon the association if more cost-efficient alternatives exist: which there appears to be. See below
• Scope of Work Violations: If AOC is ignoring specific performance standards outlined in the Windust HOA contract, these instances should be documented as "Notice to Cure" item

The "Hidden" Hurdle
Often, management companies like Blue Mountain make it "convenient" to use AOC by waiving administrative fees that they might otherwise charge for managing outside vendors.

To move forward with this, we need to establish whether the previous Board of Directors knowingly waived their right to competitive pricing in favor of the convenience offered by Blue Mountain/Associa.

Since Associa OnCall (AOC) is an affiliate, their use typically requires a specific Conflict of Interest Disclosure or a specific addendum in the management agreement. If the previous Board didn't formally documented this "self-dealing" arrangement, they may be in breach of their fiduciary duties.

• The Master Management Contract: Specifically the sections regarding "Affiliated Services" or "Vendor Selection."
• Disclosure Statements: Any written disclosure from Blue Mountain regarding their financial interest in Associa OnCall.
• Meeting Minutes: The minutes from the Board meeting where the use of AOC was approved over other independent bidders.
• The "Request for Proposal" (RFP) Log: Records of any competing bids solicited before AOC was awarded maintenance tasks.

The Associa-to-Associa loop had not been fully revealed. When a request for information was filed, Blue Mountain produced Exhibit B, claiming the Exhibit B is part of the contract. It's not. Have not received "Documentation of the competitive bidding process that demonstrates AOC provided the most cost-efficient bid."

Undisclosed conflict of interest (Appendix B) and Blue Mountain's refusal to uphold the agency relationship, the board is potentially exposing itself and the Association to significant legal and financial liability.

• Issue 3: Scope of financial audit

According to Blue Mountain an audit i just to make sure the books balance - not about flagging potential problems.

Feb 15, 2026: Audit issues

Purpose of an audit - follow-up.

As discussed yesterday, I do not want an audit to rubber stamp the status quo.
I prefer to point to the elephant in the room and document it for future HOA Board of Directors.

Below is what I think the purpose of an HOA audit is. it's not an indepth audit but to document Associa's conflict of interest and how to move forward;

An HOA property management financial audit serves several critical purposes, primarily focused on
legal compliance, financial transparency, and fraud prevention, under Washington state law (RCW 64.38.045)

Key Purposes of an HOA Financial Audit
1. Legal & Bylaw Compliance:
• Fraud & Mismanagement Prevention: Audits serve as a safeguard against the misuse of funds by identifying discrepancies, unauthorized payments, or errors in financial records and or conflict of interest

2. Building Community Trust: Independent verification provides homeowners with confidence that their dues are being managed responsibly by both the board and the property management company

3 Financial Health & Planning: A professional review identifies areas of inefficiency, such as overspending on contracts or underfunded reserve accounts, allowing for more accurate future budgeting.

4 Fiduciary Protection: Audits help board members fulfill their fiduciary duties by proving they are acting in good faith and managing association assets responsibly.

5 Management Transitions: Transitioning to a new property management company or from developer to homeowner control often triggers an audit to ensure the incoming board starts with a clean financial record.

• Issue 4: Financial Visibility Gap

• Issue 5: Call for special meeting

• Issue 6: Board meeting agenda

• Issue 7: Budget approvals

Unilateral 2026 Budget Rollover

As I objected to the 2026 proposed budget, Blue Mountain decided to roll over the previous budget

• Issue 8: Rule enforcement.
• Issue 9: Inability to modif8y CC&Rs to align with City of Camas Parking Regulations
• Issue 10: Inability to update governing documents to comply with WUCIOA and expand board to five members to avoid current deadlock

• Issue 11: Health and Safety Responsibility: Failure to Address Maintenance as a Breach of Duty."The Board’s continued inability to resolve the sanitary nuisance and maintenance deficiency regarding pet waste—despite documented evidence of the current strategy's failure—constitutes a breach of the Duty of Care under RCW 64.38.025. This statute requires directors to act as an 'ordinarily prudent person' would in similar circumstances. Ignoring a recurring health hazard while deadlocked on administrative trivialities fails this standard.
• Issue 12: Train new board members using case study - the BOD us not a social club. Donations are likely illigal!

Ultra Vires Acts

Under standard homeowners association (HOA) law and general nonprofit principles in Washington State, such a donation is likely improper and potentially illegal, primarily because HOA assessments are restricted funds.

1. Restriction on Use of Funds
• Mandatory Purpose: Assessments collected from homeowners must generally be used for the "common expenses" of the association, such as maintenance, insurance, and utilities.

• Donation Prohibition: Most legal guidance indicates that an HOA cannot use funds from dues or reserves to make charitable donations because such a gift does not qualify as a common expense.

3. Board of Directors (BOD) Fiduciary Duty
• Standard of Care: BOD members have a fiduciary duty to act in the best interests of the association.
• Personal Liability: While bylaws often include indemnification clauses, these typically do not protect directors from "intentional misconduct" or "knowing violations of law".
• Ultra Vires Acts: Actions taken outside the scope of authority granted by the HOA's governing documents are considered "ultra vires" and can be challenged by homeowners.

Recommended Actions
• Review Governing Documents: Check the specific Windust Meadows Bylaws and CC&Rs to see if there is any rare provision allowing for such expenditures.
• Demand Transparency: Homeowners have the right to inspect association books and records under Washington law to verify how funds were transferred.
• Legal Consultation: Given the amount (equivalent to two years of dues), it may be necessary to consult an attorney specializing in Washington HOA litigation.

TownSq

The relationship between
Blue Mountain Community Management (an Associa company) and TownSq is a direct business partnership that may present a conflict of interest if not transparently disclosed to the HOAs they manage.
Memo written March 2, 2026

All the Blue Mountain managers I've dealt with for the last two years argued that blast emails were close to impossible, but couldn't explain why.

Disclosure of TownSq being in the Associa ecosystem as shown in Appendix B, might explain it.

To address the potential conflict of interest regarding Blue Mountain Community Management and TownSq, the board must focus on transparency and data. In Washington, managing agents must provide detailed financial and operational records to the association upon request.

I'm hereby requesting email blast be used when specified by nonconflicted board members, without any type of censorship and respond to the following at your earliest convenience.

The following questions are designed to uncover financial incentives and compare the actual effectiveness of TownSq versus blast email. Expect to hear from you by the end of the week.

The following questions are designed to uncover financial incentives and compare the actual effectiveness of TownSq versus blast email. Expect to hear from you soon

Incentive & Partnership Disclosures
• Direct Financial Benefit: "Does Blue Mountain or its parent company, Associa, receive any referral fees, rebates, or per-unit kickbacks from TownSq for our community's subscription?"
• Affiliation Clarity: "Can you provide a written disclosure of the corporate relationship between Associa and TownSq to ensure compliance with our board’s conflict-of-interest policy?"
• Cost Savings: "If the board chooses to use a third-party email blast service instead of TownSq, will Blue Mountain reduce its management fee to reflect the lack of TownSqll integration costs?"
• Resale & Document Fees: "What portion of the fees collected for resale certificates or document disclosures through TownSq is retained by Blue Mountain versus TownSq?"

Communication & Engagement Data
• Adoption Metrics: "What is the current percentage of registered households in our community on TownSq compared to our total email distribution list?"
• Engagement Proof: "Can you provide a report for the last three months comparing the open rates of TownSq push notifications versus our traditional blast emails?"
• Opt-Out Reasons: "If you are 'discouraging' blast mail, can you provide specific data showing that our residents are missing critical information via email but receiving it via the app?"
• Redundancy Policy: "Will Blue Mountain agree to continue 'dual-track' communication (both TownSq and email) until the app reaches a 90% household adoption rate?"
Operational Efficiency vs. Resident Reach
• Staff Efficiency: "Is the push for TownSq primarily to streamline Blue Mountain's internal accounting and task management, or is it based on a documented increase in resident satisfaction?"
• Alternative Testing: "Is the management company willing to run a 30-day 'A/B test'—sending the same urgent notice via both TownSq and email—to determine which method yields a faster response from our residents?"

Blue Mountain Construction Coordinator

Blue Mountain can't confirm quality of service for "Your request for enhanced communication for work and projects will absolutely be honored when we have AOC coordinated projects. However, for situations with your chosen vendors (In this case, NLS), I cannot always guarantee a clear line of communication when it comes to their schedule" what's the difference

(Associa-to-Associa loop) refuses to abide by the contract: The HOA legally owns all the bids and sets performance and quality standards

After the project coordinator claimed original bids were none of the BOD's business, Blue Mountain was compelled to produce one after reminding them bids were legally owned by the association.

Bid manipulation

Contract specifically states the BOD determines quality and performance standards

Original quote from Resperia, after Blue Mountain was notified legally belonged to the Windust Meadows HOA and not Blue Mountain or Associa project coordinator, turned out to have identical numbers as the bid the project coordinator presented to the board as a combination of Rssperia and PNWS (SP)

Censorship

While the contract is very clear about the communications hierarchy, Blue Mountain chooses to ignore it.

Repeated calls to collect the record ignored

Blue Mountain as enabler

Donation most likely illigal : Ultra Vires Acts

Under standard homeowners association (HOA) law and general nonprofit principles in Washington State, such a donation is likely improper and potentially illegal, primarily because HOA assessments are restricted funds.

1. Restriction on Use of Funds
• Mandatory Purpose: Assessments collected from homeowners must generally be used for the "common expenses" of the association, such as maintenance, insurance, and utilities.

• Donation Prohibition: Most legal guidance indicates that an HOA cannot use funds from dues or reserves to make charitable donations because such a gift does not qualify as a common expense.

3. Board of Directors (BOD) Fiduciary Duty
• Standard of Care: BOD members have a fiduciary duty to act in the best interests of the association.
• Personal Liability: While bylaws often include indemnification clauses, these typically do not protect directors from "intentional misconduct" or "knowing violations of law".
Ultra Vires Acts: Actions taken outside the scope of authority granted by the HOA's governing documents are considered "ultra vires" and can be challenged by homeowners

Selective CC& R enforcement

Blue Mountain enabling Selective parking violations in public steets and wasting attorney's fees by asking for a legal opinion as to whether the Association can issue citations to homeowners for illegal parked cars NOT owned by homeowners.