Nevada Lawmakers Discuss Homeowners Assoc. Bills

A commission on common interest communities had set caps on those fees, but Copening said Governor Brian Sandoval lifted those caps when he took office. "The governor put a cap on all regulations, so it never went into effect."

Copening is not alone in her effort. Republican Assemblyman John Hambrick.

"We have all heard of horror stories of huge fees," said Hambrick. "A $20 late bill, turning into a $5,600 penalty and all that money goes to the collective agencies. Those stories need to stop."

Copening wants a $1,950 cap on homeowners association fees. However, Hambrick said he isn't prepared to put a number on it. "I would like to see a cap, but I don't want to put a specific dollar amount on it yet."

From Fred Fischer: Nevadans share horror stories of HOAs.

Nevadans Share Horror Stories of HOAs

When HOAs are created to satiate government bureaucrats, rather than homeowners, it shouldn't be surprising that many HOA communities are neither well-crafted nor homeowner-friendly. But, the solution to the HOA problem is not more government intervention. It is less. The first step is for government to stop mandating and subsidizing the creation of HOAs. Nick Dranias, Goldwater Institute

State legislators for many years have been getting an earful from property owners over housing association contract governance yet they fail to understand the root causes of the conflicts and act accordingly. It’s the same issues that faced early colonial America until they finally acted and abandoned charter Board governance in favor of something better where “we the people” have a place and vote at the creation table and legislators should do the same.

Privatizing services is one thing but privatizing housing is a whole other animal and without a doubt most likely unconstitutional. Because it first represents the delegation of inalieable rights to others which clearly violates constitutional law. Second it gives the developer and industry member professionals who sit at the contract creation table the right to dictate what they want the behavioral and social standards of the eventual owners to be. Even though they themselves most often do not, will not or ever live in the housing association that they create with voting standards so high that it assures that changes by eventual owners will not likely occur !!!

Mr. Drains is correct that the substantial reforms needed concerning these contractually-created associations probably won’t come from State legislation for two primary reasons. 1) The housing association trade group lobby, which is fully funded by the housing association members has the most access and greatest economic influence upon State legislators. The initial CID legislation of forty years ago that includes a large number of today’s accompanying housing association legislation was authored by the housing association trade members and supported by municipalities. Consequently neither party has an economic or social incentive to either abandon or move away from what they have exclusively created and control for their own benefit. In fact the more conflicts and problems that occur with their created “corporate product” the more the industry prospers economically and politically. 2) The very foundation of the CID housing model is its governance which is based on private contracts. Except are housing associations valid contracts when mandated and created by others as compared to if owners voluntarily create them after development build out ? When did “a meeting of the minds” between the developer and the buyers occur to create the contract? Why are the contracts (declarations) devoid of important disclosures of information that potential buyers into these nonprofit corporations are in titled to know ? When potential buyers consider signing a housing sales contract, is the attached HOA contract genuinely voluntary since refusal to accept its provisions and authority leaves the buyer with only one choice, to walk away? How can this be a “voluntary act” when neither the association nor the homeowners had actual notice or meaningful reflection to accept or reject such a contract given the fact that it was drafted by the developer as required by municipal mandate and then imposed upon the association before the homeowners existed or took control of the Board ?

The endless and “fundamentally unworkable” issues that surround privatized housing when under the authority of private contract governance created by others will continue. Until the property owners have a place, voice and vote at the governance creation table and their constitutional property and other rights returned. Because when housing is privatized, owners are reduced to being renters and only owners in name and this needs to change since contract governance is not the only or best way to govern CID housing !!

Thanks, Fred Fischer

BBC News - South Africa: Toxic water 'threatens Johannesburg'

BBC News - South Africa: Toxic water 'threatens Johannesburg': "Rapidly rising acidic water in the abandoned gold mines under Johannesburg in South Africa could leak out early next year, the water ministry warns."
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Thanks to David McKenzie for the link. Water pollution and water scarcity will be enormous problems in many places in the years to come. Phoenix and Las Vegas, for examples...

FT.com / FT Magazine - Aerotropolis

FT.com / FT Magazine - Aerotropolis: "“[The Koreans] tracked us down, wanted us to build a city in the ocean, and no one else was interested. What was going on here?” Gale said. “Their vision scared everyone else away. It wasn’t until I saw the airport that I understood where they wanted to go with this.” The answer: to China. The sales pitch to prospective tenants is simple: move here and you’re only a two-hour flight away from Shanghai or Beijing. You’re four hours away at most from cities you’ve never heard of, such as Changsha, which happens to be larger than Atlanta or Singapore. Nearly one billion people are a day trip away.

“China alone needs 500 cities the size of New Songdo,” Gale told me, and he hopes to break ground on the next one in Chongqing sometime this year. How many will be umbilically connected to the nearest airport? “All of them.” "
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Thanks to David McKenzie for this link.

Investors snap up cheap homes, new buyers miss out - Yahoo! News

Investors snap up cheap homes, new buyers miss out - Yahoo! News: "WASHINGTON – Home sales are starting to tick up after the worst year in more than a decade. But the momentum is coming from cash-rich investors who are scooping up foreclosed properties at bargain prices, not first-time home-buyers who are critical for a housing recovery.

The number of first-time buyers fell last month to the lowest percentage in nearly two years, while all-cash deals have doubled and now account for one-third of sales."
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And I hear that condo units are popular with this type of buyer. They form a syndicate and buy up many units in the same building so they can control the association and do whatever they want with the property.

When Will the Housing Recession End? A Graphical Illustration Why the Downturn Will Persist Through 2013

This is an interesting web site that offers a pointed opinion on the causes of the current "affordable mortgage depression," as the author calls it.

Condo deals die in shadows of financially distressed buildings

It's not just the borrower who has to be up to snuff, it's the building, too, and in the Chicago area there are plenty of buildings that lenders won't touch.

Among the deal killers: too many renters in a building, pending litigation, inadequate association reserves and delinquent assessments. Those are some of the criteria lenders must look at in order to sell the loan to Fannie Mae or Freddie Mac, the troubled, government-sponsored entities, and the Federal Housing Administration, the first choice for many first-time homebuyers. Combined, the three agencies account for about 90 percent of the secondary loan market.
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But the problem is not that the GSE's won't buy or insure the loan. The problem is that developments like this are in trouble, and the lenders know it, and the buyers should have sense enough to realize that, but they want to buy anyway. Who in his or her right mind would buy a condo unit in a building that has no reserves?

California Proposed legislation

This just in from Marjorie Murray:

SB561/Corbett Targets Illegal Debt Collector Contracts

California Senate Majority Leader Ellen Corbett has introduced SB 561, a bill designed to
protect both homeowners and association boards during the assessment collection process.

HOA debt collectors routinely strike contracts with associations – or their agents -- that void the
board’s assessment collection DUTIES under EXISTING law. The debt collector then coerces the homeowner into signing a payment plan that voids his RIGHTS under EXISTING law.

SB561 targets both practices. Voiding either board duties or homeowner rights via these
contracts puts the association at legal risk.

How do these debt collection contracts work?

The debt collector coerces the homeowner into “agreeing” that, when s/he makes a payment,
the debt collector can pay himself instead of paying down the assessments owed, as required
by EXISTING law (Civil Code 1367(a). Because the debt collector is paying himself first, the
association typically gets paid last. This is irrational, given that the purpose of hiring the debt
collector in the first place is to recover assessments and give them to the HOA.

Not applying the homeowner payment to the assessment debt --obviously -- puts the owner at
risk of foreclosure.

CCHAL has documented numerous cases in which the homeowner was forced into a
payment plan, because homeowner “consent” is a condition of getting one. SB 561 clarifies
that these practices are prohibited by EXISTING law.

SB561 further specifies that the association cannot foreclose if the foreclosure is based on such
contracts. The bill says: “A waiver by an owner of his or her rights or a waiver by an association
of the association’s responsibilities under the act is void as contrary to public policy, and would
prohibit a foreclosure proceeding from being initiated or proceeding if it is based on an
agreement that is void.”

SB 561 applies to “Any debt collector, agent, or third party acting to collect payments or
assessments on behalf of an association.” This element of the bill is crucial, since debt
collectors often subcontract with other vendors during the collection process; the bill clarifies
that these parties too are bound by California’s assessment collection laws.

CCHAL urges all homeowners, board directors, and advocates to carefully read Senator
Corbett’s legislation at http://leginfo.ca.gov/pub/11-12/bill/sen/sb_0551-
0600/sb_561_bill_20110217_introduced.pdf

Reading and understanding the bill will enable homeowners and board directors in California’s
49,000 associations to counter any campaigns mounted by opponents of SB561 that distort
either its language or intent.

In 2010, the Community Associations Institute (CAI) built its statewide opposition campaign
against the Brownley bill (AB2502) around the fraudulent statement that the bill REQUIRED
homeowners wanting to negotiate a payment plan with the board to meet with the board in an
open meeting to discuss – or dispute – their debt. (AB2502 also dealt with the business
practices of association debt collectors.)

The bill said no such thing.

What AB2502 said was “IF REQUESTED BY THE HOMEOWNER, (this bill would)
require a meeting to discuss a payment plan to be held in an open session.” In other words, if
the homeowner wanted SUNSHINE shed on the negotiations, then s/he could request an open
session; if not, then the homeowner could meet privately with the board in executive session.

It was the HOMEOWNER who made the decision, but CAI claimed AB2502 forced the
negotiations out in the open.

Not true.

A Fact Sheet on SB561 -- prepared by Senator Corbett’s office -- is posted on the CCHAL
website: http://www.calhomelaw.org/doc.asp?id=1312. Use this as a guide to the bill, especially
if you are a board director, so you know what the bill says – and does.

But again, there is no substitute for reading the legislation itself. You can study it at
http://leginfo.ca.gov/pub/11-12/bill/sen/sb_0551-0600/sb_561_bill_20110217_introduced.pdf

Letters of support for the bill can be faxed to Senate Majority Leader Ellen Corbett, fax
916.327.2433. Please also thank Senator Corbett for carrying SB561 because it protects both
homeowners and associations.

Do fax (510.272.9830) a copy of your letter to CCHAL or email a pdf of it to
info@calhomelaw.org

SB561 is co-sponsored by the Center for California Homeowner Association Law (CCHAL) and
the California Alliance for Retired Americans (CARA).

SB561 specifically calls out the devastating effects of the debt collector’s predatory practices on
seniors. These cases have been documented in many NewsBriefs on the CCHAL website, e.g.
Curry v Association Lien Services; Fuller v Association Lien Services; Dacumos v Sunrise
Assessment; Santaella v Angius & Terry, etc.

A contract that one homeowner was forced into signing is on the CCHAL website:
http://www.calhomelaw.org/doc.asp?id=1156. Actually, the debt collector didn’t even demand
that the homeowner sign it: the plan says that just mailing a payment meant the homeowners
was ”consenting” to the debt collector’s plan to collect his profits first before paying down the
assessments.

A downloadable flyer of homeowner rights under EXISTING Californbia law during assessment
collection is on the website at http://www.calhomelaw.org/doc.asp?id=1315. It also lists legal
resources for homeowners.

We will keep CCHAL members posted on SB561 as it goes through the policy committees in
Sacramento.

CCHAL NewsBrief
February 27, 2011
© 2011

L.A. Mayor Antonio Villaraigosa Wants a Six-Foot Security Wall Erected Around His Mansion

It's called the Getty House, and apparently, its stumpy rectangular bushes -- all manicured and Tudor-styled -- are not sufficient protection from the, er, elements of the surrounding neighborhood, described by Wikipedia as "small, historic and wealthy."

But no 'hood is small or wealthy enough to protect his royal highness. Much to the dismay of the Windsor Square Association, whose residents generally abide by the city's 42-inch yard-wall limit, Villaraigosa just applied for a six-footer:
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This lefty man of the people (he even went to People's College of the Law, after which he failed the bar exam four times) has decided that living in a ritzy community isn't enough. He needs a six foot fence to keep out the proletariat.

Nevadans Share Horror Stories Of HOAs

CARSON CITY, Nev. -- Heather Spaniol said she loved living in a neighborhood with a homeowner's association. But she described the past three years as harassment. Her car was towed twice and she was penalized for putting the trash cans out too early.Spaniol was among dozens of witnesses who testified before the Nevada Senate Judiciary Committee on Friday. She and others characterized association boards as "The Gestapo" and "cartels."At least 19 bills addressing homeowner associations have been requested this session.
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Reforms are also under consideration in Arizona where longtime HOA reform activists George Staropoli and Pat Haruff are once again working to counter community association industry lobbying efforts. In California, two bills that would overhaul the Davis Stirling Common Interest Development Act have been introduced.

The (mandatory) green grass of Privatopia

Homeowners who suffer from brown lawns are being told to dye their lawn green. If they don't, they are in violation of the homeowners association's rules and restrictions, and there could be consequences.

Neighborhood resident Bev McLain said, "We were very surprised that we would have to do this. I've never heard of dying your lawn green. This is our second notice; with the third they threaten to take you to court."
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As the perfessor said, you can't make this stuff up. It really happens. Looks like another HOA -- this one in Arizona -- is going to get its turn in the harsh glare of negative media coverage.

News Brief from California Center for Homeowner Association Law re foreclosure prevention workshop

This just came in from Marjorie Murray at the California Center for Homeowner Association Law:

Hi, Evan: Please post CCHAL’s NewsBrief on its foreclosure prevention workshop held Thursday at the University of California Riverside. We had a great turnout!



More than 60 homeowners, Legal Services and private bar attorneys, homeowners, housing counselors and federal officials from the U.S. Department of Housing and Urban Development (HUD) came to CCHAL's workshop “Protecting Homeowners from Association Debt Collectors and Foreclosure” on Thursday. Also in attendance was an attorney from one of the biggest association industry law firms in the state -- Fiore Racobs Powers.

The workshop focused on the nuts-and-bolts of the association lien: who records it and why. The association lien has now become an obstacle to homeowners attempting to get a loan modification on their first mortgage. Big lenders like Chase and Bank of America are telling homeowners that unless they get the assessment lien removed, they can’t even get in line to request a loan modification.

A key tool for getting the lien removed can be an affordable payment plan. But one HUD housing counselor reported that she couldn’t get the association lawyer to respond to her multiple requests for a payment plan, much less to give the homeowner an affordable one.

CCHAL routinely gets requests for one-on-one tutorials in the assessment lien from housing counselors and Legal Services attorneys working with HOA homeowners. The goal of Thursday’s workshop was to educate both homeowners and counselors as a group in strategies for removing the lien and/or negotiating an affordable payment plan.

Assessment liens are also an obstacle to short sales [Keyword: SHORT SALES on the CCHAL website.]

What few people understand – whether homeowners or counselors – is that the assessment lien may come to haunt the owner even if the bank forecloses. Workshop trainer Attorney Dan Mulligan explained that, if left unpaid, the assessment debt becomes a personal debt of the homeowner long after the home has been lost.

CCHAL sent a NewsBrief recently about the homeowner sued by Angius & Terry Collections for $11,000 in assessments and collection costs on a home she lost to foreclosure two years ago. The bulk of the figure is actually collection costs – not assessments due the association.

Association debt collectors routinely levy collection costs that are 5-10 times the amount of the assessments owed. There are no statutory caps on collection costs and assessment debt collectors are not regulated.

We hope that the attorney from Fiore Racobs Powers brings this message back to the HOA industry as a whole: its collection practices are injuring homeowners and creating more obstacles to economic recovery. If they themselves don’t reform their business practices, then somebody else might do it for them.

The workshop was held at the University of California Riverside Extension Center. We will soon be posting photos from the workshop on the CCHAL website: www.calhomelaw.org in the photo gallery.

CCHAL foreclosure defense workshops are made possible through the support of the California Attorney General's office.

CCHAL NewsBrief
February 20, 2011

Annandale civic association elects dog as president

Annandale civic association elects dog as president:
Dogs have many good qualities. Most of them are loyal, like people, and are housebroken. Can the same be said for all the humans who serve on boards like this?

I wish the Hillbrook-Tall Oaks Civic Association a good year under their new canine overlord. Woof.

Homeownership loses its luster

The economic downturn and stricter mortgage standards are driving much of that decline, but economists say there's also a growing belief among many that they can live better by renting rather than straining their finances to buy a house.

Adding to that is a sense among many younger adults that they will need to move for their careers, making them hesitant to buy lest they be forced to sell at a loss.

"We're becoming more of a renting/sharing society," said David Sleeth-Keppler, a psychologist who tracks consumer sentiment for Strategic Business Insights. "People are staying less bogged down, in case something bad happens."
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The pundits are saying people are so traumatized by the enormous volatility in residential real estate during the previous decade that they see homeownership as too risky an investment. However, as long as mortgage interest remains income tax deductible, that tax policy will provide an abiding incentive to own rather than rent and a hedge against downside investment risk.

Nevada PAC wants cap on HOA collection fees

A Nevada organization called CHAMP (Concerned Homeowners Association Members PAC) describes itself as "a broad-based group of concerned Nevadans that includes homeowner associations, residents, investors, credit counselors, business organizations, labor unions, chambers of commerce, minority groups, and many others" and advocates a cap on fees charged by HOA collection companies.

The name CHAMP seems familiar and the organization may not be a new one. It appears connected to an issue that exploded this past summer in Las Vegas, where investors looking for good deals on foreclosed properties within HOAs complained they were being hit up with excessive collection fees levied by HOA collection companies for delinquent assessments unpaid by the erstwhile owners. The fight is in the courts as noted on this blog in September.

Nevada HOA inmates rally against "bully boards," call for legislative curbs

Used to be some odd symbol of “belonging”—or for some, status—to be a part of an HOA (no trailer trash here!) neighborhood. What with all the cookie cutter neatness, lack of individuality and security gates, it’s the facade of a picture perfect community. And a mere facade it’s seemingly become for some folks in Nevada—with a rather ugly behind-the-scenes picture.

An article in the Las Vegas Review-Journal shares what basically boils down to a case of schoolyard bullying—only the playground is now the development, and the bullies are the HOA boards. Those who feel they’ve been bullied (e.g., one homeowner was unjustly fined for the transgression of erecting a fence for which the HOA had previously approved the plans) have now joined voices, if not forces, to rally last Monday against HOA “bully boards”. They’re mad as hell and they want the folks in Carson City to do something about it.

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After several years of silence, Silver State HOA inmates are letting their voices be heard in Carson City. I imagine Phil "The Ghostbuster" Testa, who organized a similar revolt a dozen years ago, is cheering them on from the grave.

HOA reform group targets law that allows Texas associations to repossess homes over HOA rules

Activists seeking to retool the way homeowner associations operate in the state headed to Austin today to do their thing like so many other special interests do.

But this group is particularly cohesive and adamant about current state laws that allow associations or lenders to repossess a home for infractions of association rules.

“And we now have our first lobbyist, Robert Doggett, who is helping us pro bono,” Beanie Adolph, who has been a tireless solider in the battle, said in an interview with Texas Watchdog. Among the things that the group is fighting for this session is to make HOAs subject to the state’s open records and open meetings laws.

The state effort is part of a national move to police HOAs, which activists allege have become political fiefdoms and sometimes profitable machines for real estate and development companies.
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For the rest of the story by Texas Watchdog and to learn the identity of the HOA inmate activist sued by a community assocation industry plaintiff and solon, click here.

Modesto Neighborhood May Hire Armed Guards To Cut Down On Crime « CBS Sacramento

Modesto Neighborhood May Hire Armed Guards To Cut Down On Crime « CBS Sacramento: MODESTO (CBS13) – Residents in a Modesto neighborhood are so concerned about crime they may bring in armed security guards.

The residents are members of the College Area Neighborhood Alliance.
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I gather that this "alliance" is a voluntary neighborhood association. Normally this sort of thing fails because of the free rider problem: not enough people contribute to pay for the services. The free rider problem gets solved in HOAs by mandatory membership, the power to assess for common expenses, and the sometimes-Draconian assessment collection methods. That solution, however, leads to all the abuse of power issues that we see so often.

Philly Homeowner Declares He's 'Foreclosed' on Wells Fargo - The Consumerist

Philly Homeowner Declares He's 'Foreclosed' on Wells Fargo - The Consumerist:
Thanks to Mystery Reader for this "man bites bank" story. We need more of this.

Facing Foreclosure Without Missing A Payment: One Couple's Housing Nightmare

Facing Foreclosure Without Missing A Payment: One Couple's Housing Nightmare: "No one, the Parkers say, told them their loan had been sold. With no word from the new servicer, New Jersey-based PHH Mortgage, the Parkers sent their first payment to the original bank, which mailed the check to PHH, according to documents the Parkers provided to The Huffington Post. But that check went missing. The Parkers say that despite the fact that they made every other payment, that missing check led to foreclosure proceedings, and a wrecked Kendra Parker's credit rating.

Soon, the mortgage company informed the Parkers that they were three months past due and owed over $3,000."
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Nice system we have in place here. Maybe we could prevent things like this by making it a crime to foreclose without cause and putting some of these bankers in jail. Just a thought.