Ladder Properties, LLC v. City of Snoqualmie: Addressing Accessory Dwelling Units and Condominium Conversion

In a recent decision, the Washington Court of Appeals offered some clarity on a land use question MRSC has seen Washington cities grappling with: In short, whether the conversion of an accessory dwelling unit (ADU) to a condominium, which can then be sold separately from the primary residence, results in a change of use and potentially a violation of local development regulations. See Ladder Properties, LLC v. City of Snoqualmie (2026).

Citing the Washington Uniform Common Interest Ownership Act (WUCIOA), Chapter 64.90 RCW and the Growth Management Act (GMA), Chapter 36.70A RCW, the Court of Appeals held that conversion of an ADU to a condominium is not a change in use, and state law prohibits local governments from regulating based solely on a property's ownership form.

This blog will provide a summary of the key facts and holdings of the case and briefly consider its impact on local land use regulation.

Facts

The property at issue in Ladder contained two residences on one lot: a “principal dwelling unit” (using terminology from the city code) and a rear ADU. These were permitted uses under the city’s code.

The residences had been in existence since the 1940s, and the ADU had been rented and occupied for over 20 years. The two structures shared a single side sewer and water meter with one water connection.

After purchasing the property, Ladder Properties (the developer) converted the two existing residences into separate condominium units under the provisions of the common ownership statute (WUCIOA) and sold them to different owners. Importantly, the conversion involved no structural change to the buildings or the use of the property. Likewise, no changes were made to the utility connections.

The City of Snoqualmie (city) brought a code enforcement action against the developer, alleging that the condominium conversion resulted in the conversion of the principal dwelling unit and ADU into two separate dwelling units in violation of the city code. The community development director interpreted this conversion as resulting in a multifamily residential use, in violation of the underlying zoning designation.

The city conceded the owners did not attempt to subdivide the property, nor does the city code require an owner submit a condominium declaration upon conversion.

The city also issued code violations related to the sewer and water codes, indicating that the two separately owned units were now in violation of sewer and water code connection requirements. The city wastewater supervisor testified that the filing of a condominium declaration altered the side sewer by changing its physical use from one owner to two owners, triggering a new permit requirement.

The city’s building official testified that while the existing water meter satisfied the requirement for a single-family home and an ADU under the code, it was insufficient for two single-family dwellings if there were four or more toilets. The building official did not have evidence that any plumbing was added or modified in either residence.

The hearing examiner upheld the community development director’s zoning code interpretation but did not agree with the water/sewer violations. The superior court upheld the hearing examiner’s decision, in part, but reinstated the water/sewer code violations.

The Washington Court of Appeals Holding

The Court of Appeals reversed all the violations. It held the city’s code enforcement action violated state law, specifically RCW 64.90.025 and RCW 36.70A.681.

The common ownership statute (WUCIOA) prohibits local governments from treating identical structures differently based on ownership type. RCW 64.90.025(2) provides, in relevant part:

A zoning, subdivision, or other land use statute, ordinance, or regulation may not prohibit the condominium or cooperative form of ownership or impose any requirement upon a condominium or cooperative or miscellaneous community that it would not impose upon a physically identical development under a different form of ownership…

The court held the city’s code enforcement action also violated the GMA, which in 2023 established certain restrictions on the local regulation of ADUs. See RCW 36.70A.680 -.681.

The court specifically cited RCW 36.70A.681(1)(k), which provides:

A city or county may not prohibit the sale or other conveyance of a condominium unit independently of a principal unit solely on the grounds that the condominium unit was originally built as an accessory dwelling unit.

The court noted that:

[T]he City’s restriction against the separate ownership of the ADU as a condominium unit directly frustrates the legislature’s intent to promote ADUs as a source of affordable homeownership as advanced by the statutory restriction on the local regulation of ADUs under RCW 36.70A.681(1)(k) of the GMA.

Why the Decision Is Important

This is a case of first impression regarding the interaction of local land use controls, condominium ownership, and legislative promotion of ADUs. The decision establishes that a local government cannot use zoning or utility regulations to prohibit or penalize otherwise lawful housing merely because it is held in a condominium form of ownership.

While it’s possible the ruling could be appealed, local governments should nevertheless review their local codes and policies to ensure that they are not imposing different requirements on identical structures based on ownership type.