Nevada high court makes key ruling on HOA liens | WashingtonExaminer.com

Nevada high court makes key ruling on HOA liens | WashingtonExaminer.com: LAS VEGAS (AP) — The Nevada Supreme Court has ruled that a lien held by a homeowners association can override a deed of trust involving a first mortgage on the property.

Real estate investors in Las Vegas who have been buying foreclosed property at bargain prices claimed a victory in the ruling on Thursday.

The state Supreme Court overturned an earlier Clark County District Court decision and ruled in favor of SFR Investments Pool 1, the Las Vegas Review-Journal reported (http://tinyurl.com/pupczsg).

Homeowners associations can place liens on properties within their communities for unpaid fees. Unpaid association dues land in a super-priority lien that must be paid off first when a foreclosed home is sold.

Ayn Rand-style libertarian paradise fails to produce bliss

http://www.salon.com/2014/09/16/ayn_rands_capitalist_paradise_lost_the_inside_story_of_a_libertarian_scam_partner/

Well, I'm just shocked--shocked, I tell you--to hear that Galt's Gulch didn't pan out.
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"In Rand’s novel the great, throbbing “motor of the world” (it’s made of executives, remember?) retreats to an Atlantis-like idyll known as “Galt’s Gulch.” Without their ingenuity and drive the nation descends into chaos, leading many long pages later to their triumphant return and anointment as leaders of a new libertarian order. Which gets us to the fraud charges now swirling around a venture called “Galt’s Gulch of Chile.” Its website is currently down, but it’s still being promoted as a real-world retreat for the world’s movers and shakers. “Yes, you read that right,” the organizer chirps cheerily. “Those who become one of GGC’s Founders will be paid back … within three years of the consummation of their Founders Club participation (please contact GGC for the fine print and T&Cs). In what should be an unsurprising outcome, it didn’t turn out very well.  That news comes (via Metafilter and Gawker) from a blogger named Wendy McElroy, who writes that she bought some property in Galt’s Gulch with her husband and then learned that it never had legal rights to the property in the first place. A visit to Chile revealed that many of the area’s local vendors had also been defrauded by the Galtians."

Illinois Supreme Court: Contract? What contract?

Spanish Court Two Condominium Association v. Carlson:  Spanish Two sued a unit owner for failure to pay assessments. In Illinois, condo associations can do that in landlord-tenant court, and evict the owner without needing to foreclose. The owner alleged an affirmative defense of failure to maintain and repair the common elements and asked for a set-off, something that tenants do in landlord-tenant disputes over rent. The trial court struck the defense, but the Appellate Court reversed, saying unit owners could avail themselves of the same failure to maintain defense against condo associations, just as tenants do against landlords.  The Illinois Supreme Court reversed the Appellate Court, saying the trial court was right--

"Where a condominium association brought a forcible entry and detainer action against a unit owner for failure to pay assessments, the affirmative defense of alleged failure to repair and maintain common areas was properly stricken as not germane to that summary statutory proceeding."

http://www.state.il.us/court/Opinions/SupremeCourt/2014/115342.pdf

It is interesting to read the language where the Supreme Court dances around the claim that the association-unit owner relationship is based on contract, something we hear all the time from advocates of strictly enforcing the DD&RS:  It's a contract, they say, and if you didn't like it you shouldn't have entered into it.  But now the shoe is on the other foot--an owner wants the rights that go with a contract:  the party claiming back assessments hasn't lived up to its part of the bargain, so the owner, like a tenant, should have the benefit of that breach.  But no, the court says, now that contract language isn't to be taken so literally.  You see, it's more accurate to say that it is largely based on statute.  From the IL SC opinion:

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Spanish Court maintains that the appellate court’s recognition of a nullification defense rests on an ill-fitting analogy, namely, that the association-unit owner relationship is, for purposes of the forcible statute, analogous to the landlord-tenant relationship. See 2012 IL App (2d) 110473, ¶¶ 16, 26, 46. We agree with Spanish Court. 

¶ 20 The relationship between a landlord and tenant is contractual. See generally 24 Ill. L. and Prac. Landlord and Tenant § 1, at 157 (2009). Although aspects of that relationship may be governed by state and local landlord-tenant laws, the relationship is created through the agreement of the parties. When a landlord breaches the terms of the agreement (the lease) by failing, for example, to comply with the implied warranty of habitability, cases have traditionally applied contract remedies, including damages, rescission, reformation, or abatement of rent. Glasoe v. Trinkle, 107 Ill. 2d 1, 15-17 (1985). Cf. Mohanty v. St. John Heart Clinic, S.C., 225 Ill. 2d 52, 70 (2006) (“Under general contract principles, a material breach of a contract provision by one party may be grounds for releasing the other party from his contractual obligations.”). 

¶ 21 Although contract principles have sometimes been applied to the relationship between a condominium association and its unit owners based on the condominium’s declaration, bylaws, and rules and regulations (1 Gary A. Poliakoff, The Law of Condominium Operations § 1:23 (1988 and Supp. 2012-13)), the relationship is largely a creature of statute, defined by the provisions of the Condominium Act (765 ILCS 605/1 et seq. (West 2008)). Under that Act, the board of managers, through whom the association of unit owners acts (765 ILCS 605/2(o) (West 2008)), has the duty “[t]o provide for the operation, care, upkeep, maintenance, replacement and improvement of the common elements.” 765 ILCS 605/18.4(a) (West 2008). The Condominium Act also addresses the “[s]haring of expenses” among unit owners, and establishes that: “It shall be the duty of each unit owner *** to pay his proportionate share of the common expenses.” 765 ILCS 605/9(a) (West 2008).2 Although these duties may also be reflected in the condominium declaration and bylaws, as they are in this case, they are imposed by statute and exist independent of the association’s governing documents. Accordingly, a unit owner’s obligation to pay assessments is not akin to a tenant’s purely contractual obligation to pay rent, which may be excused or nullified because the other party failed to perform. 

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More details revealed in Las Vegas HOA fraud case

http://m.reviewjournal.com/news/las-vegas/new-details-revealed-hoa-fraud-case

What this massive fraud reveals is how vulnerable HOAs and condo associations are to being taken over or manipulated into becoming ATMs for fraudsters. Insurance companies were taken to the cleaners. I haven't even tried to list all the embezzlement cases. I have a notebook three inches thick of press clippings reporting them. Then there were the developer and converter frauds.  Here in Chicago at least 200 fraudulent condo conversions shoveled millions of dollars from banks into the pockets of crooks, cost investors a fortune, and victimized  hundreds of tenants who were paying rent to somebody who didn't own the building.  

And all that criminality is in addition to the non-criminal practices of underfunding reserves that  exposes owners to enormous risk, and vendors charging ridiculous fees for doing nothing and locking  associations into terrible adhesion contracts.

Why is it so hard to put all this together and reach the obvious conclusion that the money side of CIDs is not working?  The media have a frame for reporting on the social control conflicts that happen in associations--flags, pets, political signs, religious symbols--but they can't seem to see the pattern when it comes to the enormous financial problems that leave millions of Americans vulnerable to major economic loss.

It makes no sense to put untrained, uncompensated, and often unqualified volunteers in charge of billions of dollars, based on a bogus ideology of privatism.

DURHAM: City threatens to cut off water to apartment complex - WNCN: News, Weather

DURHAM: City threatens to cut off water to apartment complex - WNCN: News, Weather: The president of the homeowners group, Greg Jones, said he learned of the possible disconnection from the city via email. From there, he said, he spoke with the tenants association, which prompted the letter left on doors.

Jones said Bentwood Park started getting behind on payments in December because some of the units' 90 different owners began falling behind in paying their dues, in particular one who owns multiple units.

"I have two small kids in here that go to school every day, and we need water to bathe and to drink," said renter Latoyia Edwards. "They need to find the man that created this problem and make him pay for it, or somebody just has to deal with it."

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Conflicts of interest abound when the HOA becomes a super landlord but doesn't pay the water bill.

Condo president buys car, pays himself, with association funds

http://www.local10.com/news/community-president-buys-car-pays-self-salary-with-neighborhood-money/27853208
"Ed Ryan, a long-time condominium president in Fort Lauderdale, has been violating the law for years by paying himself tens of thousands of dollars -- and even buying himself a car -- out of neighborhood funds, according to state records. In September, the Department of Business and Professional Regulation alleged Ryan was illegally managing the association without a license and issued a cease and desist order to stop him from paying himself after he'd received $45,000 in the first nine months of the year alone. But Ryan, president of Georgian Court North Apartments, hasn't missed a beat, admitting to Local 10 News that he's still paying himself. "
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One of the cool parts about volunteer private government:  having access to all that money!

Bill addresses watering in homeowner associations - SFGate

Bill addresses watering in homeowner associations - SFGate: SACRAMENTO, Calif. (AP) — Homeowner associations would be prohibited from requiring residents to pressure-wash their driveways or other areas when droughts are declared locally or across California, under a bill sent to Gov. Jerry Brown.

Republican Sen. Jim Nielsen of Gerber says some homeowners are caught in bind. They face fines under state regulations that prohibit washing driveways, as well as fines from their associations if they don't follow its rules.
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Government already regulates many private sector industries. The community association industry fine machine is now getting a greater degree of regulation.

Drought debate: Homeowner fined for replacing grass with drought-tolerant plants - Inside Bay Area

Drought debate: Homeowner fined for replacing grass with drought-tolerant plants - Inside Bay Area: SAN RAMON -- Fran Paxson figured to get a little credit and admiration when she replaced the old lawn around her suburban San Ramon home with drought-resistant plants.

Her public water supplier is even rewarding her with a rebate.

But her homeowners association -- drought and a new state law be darned -- is punishing her with a fine.

Paxson's plight is turning up the heat in the conflict between the aesthetics and the thirst of water-hungry green lawns as California struggles through a third year of drought.
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Another perennial story in the litany of bad press for Privatopia: enforcement actions over flying flags, holiday lights and this recurring story of HOAs at odds with local governments over watering restrictions.

Fox sets up plan to create utopia

http://variety.com/2014/tv/news/fox-gambles-on-big-bold-and-expensive-vision-of-utopia-1201288541/

Well, if anybody can create utopia it would be Fox. Rupert Murdoch has it all figured out.

Hoa fines owner for lawn removal during drought

http://m.sfgate.com/news/science/article/Lawn-removal-in-parched-California-draws-fine-5706307.php

With the state of California authorizing fines for wasting water, this Hoa is fining people for not wasting water keeping their lawns green. 

'Remove flags or be fined' homeowner told by HOA | AccessNorthGa

'Remove flags or be fined' homeowner told by HOA | AccessNorthGa: GAINESVILLE - A Gainesville woman has been told by her homeowners' association that she must remove the Israeli and American flags on display in her front yard or face a fine.
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Flag flap No. 583,762 in Privatopia, Georgia sector.

Scottsdale HOA sues property management company - CBS 5 - KPHO

Scottsdale HOA sues property management company - CBS 5 - KPHO: SCOTTSDALE, AZ (CBS5) -

Some North Scottsdale homeowners are angry and they want answers.

Their property management company is accused of embezzling more than $3.4 million.

The Edge at Grayhawk Condominium Association has filed a lawsuit in Maricopa County Superior Court against Eagle Property Management.

The lawsuit claims that Eagle Property Management committed fraud and embezzled millions of dollars in HOA money.

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Alleged graft in Privatopia, Arizona Sector. The cops are on the case. Film at 10 on CBS5, Phoenix.

Pay for your own sidewalks?

http://wlfi.com/2014/08/07/sidewalk-scuffle-homeowners-surprised-by-city-code/

I'd be surprised, too. 

IRS ruling highlights schizo nature of hoas

http://www.forbes.com/sites/peterjreilly/2014/08/05/homeowner-association-irs-ruling-highlights-schizophrenic-nature-of-associations/

Featuring a long quote from yours truly.

ALEC Offshoot Takes Aim at Local Government | PR Watch

ALEC Offshoot Takes Aim at Local Government | PR Watch: "Early reports suggests that ACCE will pursue similar policy objectives as ALEC. According to The Guardian, "An early draft of the agenda for [the] meeting revealingly listed ACCE’s very first workshop under the simple title: 'Privatization' – though in the final version the wording had been sanitized into: 'Effective Tools for Promoting Limited Government'." Privatization has been a long term goal for many ALEC member firms, and ALEC model bills have called for the creation of a special state commission to privatize public services. Other ALEC bills call for the privatization of Social Security, Medicare and Medicaid, public schools, state pensions and more. Another workshop at the inaugural ACCE meeting is titled "Releasing Local Governments From the Grip of Collective Bargaining," which fits into ALEC's long-standing antipathy towards unions."

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The American Legislative Exchange Council is a corporate-funded group that puts state legislators in the same room with corporate lobbyists, who hand our elected officials pre-drafted bills for them to introduce and pass back home. It's anti-union, anti-environment, anti-consumer, pro-gun, etc. Now, with the American City County Exchange, they are lowering their sights and trying to hamstring and plunder local government the way they have done so effectively in a number of states. Privatization for all, which means taxpayers bear the risk and get turned into fee-paying consumers, and private corporations keep the profits. Thanks to Mystery Reader, who first flagged this story.  If you don't know who these people are, you can read more here.

California Assembly Bill AB 968 - Bill Analysis

AB 968 Assembly Bill - Bill Analysis

This bill is intended to clear up the existing ambiguity regarding responsibility for maintenance, repair, and replacement of limited common elements in CIDs. The bill passed the Assembly 73-1, made its way through the Senate committee system,  clearing the Commitee on Transportation and Housing by a 10-0 vote, and is now awaiting a third reading on the Senate floor. The bill is opposed by Donie Vanitzian  and also by Marjorie Murray and the Center for California Homeowner Association Law.

  The full text of the bill is here.

The normal situation is that the association is responsible for the common elements, and the owners are responsible for their separate interest.  But what about limited use common elements, such as condominium decks and patios, that are part of the common elements but that can only be used by the individual owner?  The existing section that governs this is  Section 4775 of the Civil Code.  It currently reads as follows (my emphasis), and it is unclear on that subject:

Section 4775.  

(a) Unless otherwise provided in the declaration of a
4common interest development, the association is responsible for
5repairing, replacing, or maintaining the common area, other than
6exclusive use common area, and the owner of each separate interest 7is responsible for maintaining that separate interest and any 8exclusive use common area appurtenant to the separate interest.

Note that the words "repairing" and "replacing" do not appear in the language about "exclusive use common area," i.e., limited use common elements. So, if the documents don't specify, whose job is it to repair and replace limited common elements?

AB 968 would repeal the existing section 4775 and replace it with this language (again, my emphasis):

Section 4775 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

14

begin insert4775.end insert  

(a) (1) Except as provided in paragraph (3), unless
15otherwise provided in the declaration of a common interest
16development, the association is responsible for repairing, 17replacing, and maintaining the common area.

18(2) Unless otherwise provided in the declaration of a common
19interest development, the owner of each separate interest is 20responsible for repairing, replacing, and maintaining that separate 21interest.

22(3) Unless otherwise provided in the declaration of a common
23interest development, the owner of each separate interest is 24responsible for maintaining the exclusive use common area P3    1appurtenant to that separate interest and the association is 2responsible for repairing and replacing the exclusive use common 3area.

4(4) The governing documents may define which items or actions 5constitute maintenance and which constitute repair and 6replacement.

7(b) The costs of temporary relocation during the repair and
8maintenance of the areas within the responsibility of the
9association shall be borne by the owner of the separate interest
10affected.

11(c) This section shall become operative on January 1, 2016.

Let's make this less abstract. Imagine that I own a condo unit, which means I own an airspace and the whole building is common elements.  My unit has a deck that is mine and mine alone to use--it is a  limited common element.  Under the proposed new law, unless my association's declaration says otherwise, I am responsible for maintaining my deck, and the association is responsible for repairing and replacing the deck.

But wait, you say--what if the coating of my deck is worn out and it is leaking. Is that maintenance, which is my responsibility, or repair, which the associaiton would have to pay for, so that the cost is shared by all owners?  The bill doesn't define that distinction.  Instead, this bill in section (4) says the governing documents may (not must) define "which items or actions constitute maintenance and which constitute repair and replacement." For most associations, there is no such specificiation in the declaration, so they would need to amend their documents if they wanted to clarify that.  

Donie Vanitzian says that section (4) doesn't just allow the association to define what it maintenance versus repair and replacement, but also allows the association to amend the documents and reclassify various building components as limited use common elements, and then assign responsibility for them to individual owners.  From the column: "AB 968 allows boards to expand, redefine and concoct their own rendition of what 'exclusive use common area' is and then assess the owner to maintain, insure and assume liability for it. If the association has a reserve account, this new obligation does not exempt owners from continuing to fund it. Exclusive use components that associations may add are infinite. Some examples: indoor/outdoor pipes, sprinkler systems, wiring, parking stalls, doors, screens, windows, steps to entryways, outdoor light fixtures, walkways, hallways, fences, mailboxes, balconies, porches, roofs, air conditioners, heating systems, outdoor stairs, patches of dirt touching your property's stucco and more."  

 Here's how the legislative analyst summarizes the opposition. They say (my emphasis): 

ARGUMENTS IN OPPOSITION  :    Opponents believe that this bill's  

          lack of definitions for maintenance, repair, and replacement  

          does a huge disservice to associations and residents by forcing  

          associations to devise definitions when even this bill's sponsor  

          cannot.  In addition, opponents argue that this bill imposes  

          significant new financial obligations on homeowners.  First,  

          this bill newly assigns the repair and replacement of separate  

          interests to homeowners.  Second, having associations define  

          this bill's terms creates an opportunity to foist new  

          maintenance duties onto homeowners.  These issues are  

          exacerbated by the lack of clarity in some governing documents  

          over what is considered exclusive-use common area.  

It appears that the opponents see potential for abuse here that the legislature doesn't, given the virtually unanimous votes it has received so far.  The bill is subject to amendment before the third reading, and if anybody knows what amendments are being considered, please comment or email me.

Update 8/3/14: the Executive Council oh Homeowners supports the bill.

http://www.echo-ca.org/hoa-advocacy/ab-968-exclusive-use-common-area

Marjorie Murray tells me the Public Interest Law Project and Consumer Attorneys of California oppose the bill. I can't find any reference to the bill on their websites. I will link to their statements directly if and when I can. 

Someone call the HOA!

Crop circle in Germany attracts many visitors 


 


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There must be something in the CC&Rs that prohibits crop circles.

Mesa residents still fighting HOA, claim former board members misspent money - ABC15 Arizona

Mesa residents still fighting HOA, claim former board members misspent money - ABC15 Arizona: Mesa, AZ - We've been following the legal battle between Superstition Lakes Condominium Association and its former leadership.

We met with former resident Kathleen Daurio last year. As she dug through board records and said she found nearly $40,000 used for items and meals that she said didn't benefit homeowners. Homeowners accuse board of misspending funds.

"I mean, they bought laundry detergent and almonds and vodka and baby wipes and just about every time they bought air fresheners," said Daurio.

Another resident, Jan Stuart, sued that former board last year. It ended in a settlement agreement that allowed a vote resulting in three members being recalled, and a new board put in place.

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Your HOA assessment dollars at work -- or not. Trouble in Privatopia, Arizona sector. Film at 10 on ABC 15.

PQED: How should people respond to open-carry gun-rights activists?

PQED: How should people respond to open-carry gun-rights activists?:

"The question that concerns me now is how we bystanders should react when people come into a store with guns. There really is no legitimate way of determining intent. Even if the people with guns are carrying a sign claiming to be activists (which they do not do), they could be lying, just setting us all up for slaughter. And since there is no way to know what is on their minds, all we have are our instincts, but as we all should know, our instincts are often racist, classist, and frequently mistaken. So, what should we do?

My proposal is as follows: we should all leave. Immediately. Leave the food on the table in the restaurant. Leave the groceries in the cart, in the aisle. Stop talking or engaging in the exchange. Just leave, unceremoniously, and fast.

But here is the key part: don’t pay. Stopping to pay in the presence of a person with a gun means risking your and your loved ones’ lives; money shouldn’t trump this. It doesn’t matter if you ate the meal. It doesn’t matter if you’ve just received food from the deli counter that can’t be resold. It doesn’t matter if you just got a haircut. Leave. If the business loses money, so be it. They can make the activists pay."

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A philosopher proposes a brilliant way for us to respond to gun bullies.

Poor doors: the segregation of London's inner-city flat dwellers | Society | The Guardian

Poor doors: the segregation of London's inner-city flat dwellers | Society | The Guardian:

"A Guardian investigation has discovered a growing trend in the capital's upmarket apartment blocks – which are required to include affordable homes in order to win planning permission – for the poorer residents to be forced to use alternative access, a phenomenon being dubbed "poor doors". Even bicycle storage spaces, rubbish disposal facilities and postal deliveries are being separated."

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Thanks to Mystery Reader for another example of the rich separating themselves from the hoi polloi while enjoying the planning benefits that are supposed to go with mixed income developments. The same thing is happening in New York.