Abandoned...

Monday's New York Times had an article on the continued (and apparently increasing) tendency of lenders to walk from properties, rather than foreclose on them.

This article, however, reveals a new twist to the problem: the owners, who think their homes have been foreclosed, are being charged by municipalities for the clean up, and sometimes the demolition of, these residences. So it's not just community associations that are facing non-responsive lenders, but also the owners of those units. Previous posts on this blog have advocated vigilance in the monitoring of units in this day and age; this gives another reason. And just because a lender threatens foreclosure, don't assume it will be completed.

Pet, or Service Animal? (Again...)

A new Florida Federal District Court case has some good reasoning and guidance dealing with the pet vs. service animal distinction, and how an association should respond to requests for a service animal accommodation.

The case, Hawn v. Shoreline Towers Phase 1 Condominium Association, involved the Davis C. Hawn's assertion that his Labrador retriever, Booster, was a service animal who was "dually trained to help [Mr. Hawn] both physically and psychologically.

Booster was originally introduced to the association's board as a "pet", and Mr. Hawn sought a six month trial period "to give folks a chance to prove that they love their pets as onel would love any other family member." There's no evidence that the association did anything in response to this letter, but about a year later, Mr. Hawn sought permission to keep Booster as his "service animal". His letter asserted physical and psychological disabilities, supported by a letter from a psychologist and a chiropractor.

The association thereafter attempted on two different occasions to get more information regarding Mr. Hawn's alleged handicap; no further information was provided. As a result, the association sent a letter stating "at this time, we must deny your request..."; Mr. Hawn responded by filing a complaint with the Florida Commission on Human Relations (FCHR). The FHCR ultimately found in favor of Mr. Hawn; following that, he filed his claim in the Florida Federal District Court, alleging violation of the Federal Fair Housing Act and the intentional or reckless infliction of emotional distress.

The defendants moved for summary judgment, contending that Haws had failed to meet his burdens. The court, while assuming that Hawns was handicapped, found for the association based upon the fact that the association had no knowledge or reason to know that he was, in fact handicapped. The court noted that the association had never denied the accommodation, but rather had twice requested -- unsuccessfully -- to obtain additional evidence of the handicap and/or the need for the accommodation.

The court, in its opinion, reviewed and relied extensively upon a Hawaii case of several years ago, Prindable v. Association of Apartment Owners of 2987 Kalakaua, 304 F.Supp.2d 1245 (D. Hawaii 2003), affirmed, Dubois v. Association of Apartment Owners of 2987 Kalakaua, 453 F.3d 1175 (9th Cir. 2006). The Prindable/Dubois case, like this case, involved a patient association which sought, unsuccessfully, to receive medical evidence to support the need for an alleged service animal.

Haws provides strong support for associations' rights to request competent evidence for the need for a requested service animal. In those instances where the need for a service animal is not obvious, associations can and should insist upon adequate and appropriate medical evidence, so that legitimate requests for accommodation are granted, and unwarranted requests are denied.

Live Blogging -- The Fair Debt Collection Practices Act

Several of my colleagues in the office are gathered in the conference room, listening excitedly to a seminar on the Fair Debt Collection Practices Act (the "Act"). Since I know that so many of you are interested in the subject, I'm going to live blog it.

The presenter, J. Scott Watson, is regaling the audience by letting us know that he knew (and worked for) Mr. Lieberman (presumably not Joe), who was the defendant in the leading case which established that lawyers are "debt collectors", under the Act.

A creditor, collecting its debts in the name of another, will be responsible for its conduct in connection with the collection of debts. In other words, an association whose representative uses a name other than the association, may be imposing the association and himself or herself to liability.

All debt collectors, including attorneys, are precluded from contacting debtors who are known to be represented by counsel. This is a non-issue to lawyers, as the Rules of Professional Conduct otherwise preclude such conduct.

The speaker suggests "reading the act in its entirety..."

A case called Foti established that a message on a voice mail, without the purpose of the call, violated the Act. On the other hand, identification of the reason for the call would be a violation, assuming a third party answered the call. The suggestion.

The speaker offers no suggestions; my suggestion -- don't leave messages on voice mail machines.

Never discuss a debt with anyone other than the debtor. If you are seeking someone's location from a third party (which is allowed under a specific exemption), don't disclose the reason for your inquiry. If someone contacts you purporting to be counsel for a debtor, request confirmation in writing, before proceeding.

Calling a deadbeat (er, I mean debtor) at work can be a real problem.

If a debtor requests that the debt collector cease collection activities, the debt collector must stop; the only exception will be the pursuit of judicial proceedings.

Perhaps the most troublesome aspect of the Act is the "least sophisticated debtor"; that requires that communications cannot be confusing to the least sophisticated debtor. That is, needless to say, a pretty low standard.

A new trend in litigation, according to the speaker, is suits arising from efforts to collect an amount that the debtor is not entitled to. For this reason, associations and managers must use extreme caution in referring collections to make certain that the information conveyed is accurate.

The recent Hicks case, from Florida, involved Section 1692; the debtor alleged that the voice mail messages were improper, in that they did not disclose the debtor's identity, and the purpose of the call. The message said, "this is in regard to a personal matter...." The court certified a class action, based upon the assumption that the auto-dialer had most likely called a large number of individuals.

Campuzano involved a letter being sent, with the necessary warnings; it made an "offer" of a discount, for a quick call. The plaintiff suggested that it was deceptive in that the officer who had purportedly signed the letters had not actually been involved; the court noted that the officers of the company did not need to have personal knowledge of the letters in order to avoid liability. The court noted that the executives were not lawyers, suggesting a different standard for lawyers.

In McKinney v. Cadleway Properties, Inc., the court addressed the status of a successor who had acquired a debt; the successor will be treated as a debt collector.

Romano case involved an attempted call to Ruben Romano; he was speaking to Ruben, Sr., rather than Ruben, Jr. The discussion with the father disclosed the debt to the son. Either the speaker didn't say, or I didn't catch, what the court did under those facts. I'll track it down, and supplement.

Fogel involved the collection of student loans from a law school graduate (oops!); the lawsuit was filed in the district of the primary Rutgers campus, which was in a different county than the law school, and the residence of the graduate. Again, I'll follow up with the result.

Interesting question for the end of the seminar: If you have two debtors, should you send a letter to both? The speaker advises yes. That, of course, leads to another question; if you do so, can you bill for both?

What's a Short Sale?

I'm live blogging today from the UCCAI Manager's Munch; the topic of the day is -- you guessed it -- the economy. More specifically, "The Effects of Short Sales and Foreclosures on Homeowners' Associations".

The speaker is Paul Newton, Backman Title Services.

Paul's beginning with an explanation of "race notice" -- the concept that the first to record their property interest will have priority.

Utah's Condominium Act provides priority to mortgage holders over association liens in condominiums; in the HOA setting, there was no law prior to 2004. Nonetheless, most declarations (in HOAs and condominiums) provide similar protections to lenders.

Backman's office was opening 150 foreclosure files a month in 2007; now it's a thousand per month.

Paul appropriately points out that the language of a declaration is critical respecting the association's rights; some declarations give priority to first mortgages; others give priority to all mortgages. Needless to say, at least for a while, that's a significant issue.

Another good point arises with respect to the "due date" of assessments in non-condominium associations. Most declarations have assessments on an annual basis. If assessments become due on the first of the year, but are billed monthly thereafter, the association may have priority relating back to January 1. Careful lenders avoid this predicament by receiving a payoff, and assuring that assessments are current at the time of transfer.

Paul says that their company appreciates the filing of a new lien, even post-foreclosure, so that the title companies know whom to contact. John Morris questions whether the filing of a lien against lenders may create a "selective enforcment" issue. That's a good point; a solution to that may be an amendment to the association's debt collection policy; a policy distinction which is reasonable should eliminate that argument.

John Richards inquired about how to pursue lenders who don't take care of their property; Paul recommends contacting the lender at the address on the deed, and the trustee who conducted the sale. (There are a lot of very busy foreclosure lawyers who will really enjoy that additional mail.)

A short sale, as defined by Paul, involves a proposal for a sale where not all lienholders will be made whole; the first lienholder will dictate who gets what, and the title company must close within those parameters. Obviously, the frequency of these short sales is increasing.

What's a Short Sale?

Mortgage Cram-Down Update

Last night, the U.S. House of Representatives passed H.R. 1106, allowing for bankruptcy court intervention in renegotiating the terms of certain mortgages. The bill does not directly refer to association's, but CAI's Public Affairs team was (and is) encouraging community association leaders to follow the legislation, and share your concerns about the potential of interference with community association assessments. Here's a snippet of the info sent from CAI this morning:

On Thursday, March 5, the House of Representatives passed HR 1106 with some technical amendments by a vote of 234 to 191. Although the concerns raised by CAI and others have not yet been fully resolved, your efforts in expressing concern have helped us get Congress’s attention, and members of the Judiciary Committee have committed to work with us to clarify and address these issues.

CAI continues to have concerns that the legislation will have a negative impact on associations in states with priority assessment liens, and that the grant of authority to bankruptcy courts, absent clearer direction and limitations, may be used to modify a homeowner’s assessment obligations to his/her community association. Again, thanks to your efforts, Congress is now aware of these issues and we will continue to work with legislators as the bill moves into the Senate.

Your efforts will help us ensure that this legislation will not have negative unintended consequences for common interest communities across the country and the residents who are current in their assessments. A well-crafted plan, that helps those in distress while protecting those who are current, will benefit us all.

I'll post updates here on this blog, and on the www.utahcondolaw.com parent page, and on our new collection site, www.caalrs.com

The End of the Line...

...as far as we go...

regular TRAX riders will understand that reference. I invite the rest of you to take a ride on TRAX, so you can catch it.
The End of the Line



Julie Ladle and I had a meeting out at Daybreak today; while we were there, I wanted to visit the terminus of the rails of the new Mid-Jordan TRAX line to Daybreak.

When completed (currently anticipated to be sometime in 2011-12), the spur will travel from Daybreak to the Fashion Place (6400 South) Station, where it will connect to trains running to Downtown, and ultimately to West Valley City, the Airport, and the University of Utah.

The course to Daybreak will be rather indirect, but it will allow many other residents to avoid the need to fight traffic and dump carbon into the atmosphere. This link will take you to the latest information on the progress of this extension.

No More Non-Judicial Foreclosures?

Those who know me, and those who follow this blog, are aware that I've never been an advocate of non-judicial foreclosures of community association assessment liens. And at the the CCAL Law Conference last month, the pundits were agreeing.

I've had a number of reasons to dislike nonjudicial foreclosures; I think they usually take longer than a letter followed (when necessary) by a complaint; I think they are unduly aggressive in a number of situations; I think they unduly impose excessive costs on the association and ultimately the unit owner, and I've always questioned their legality under Utah statutes. And now, there's published evidence that confirms that a Utah trial court has found them problematic, and an appelate court won't review that decision, at least for now.

The case, McQueen v. Jordan Pines Townhomes Owners Association, Inc., involved challenges on a number of grounds to the legitimacy of a condominium non-judicial foreclosure; the trial court essentially held that ambiguities and omissions in the Utah Condominium Act would not justify the absence of a "trustee" in a nonjudicial foreclosure, and hence the attempted sale by the association's counsel was set aside. The association's counsel appealed, but that appeal was very quickly rejected by the Utah Court of Appeals, based upon the absence of a "final ruling" from which the association was appealing. Remaining controversies between the parties preclude consideration of the appeal at this time; I strongly suspect that the costs of further litigation will preclude further litigation and the eventual appeal.

I think it's a very important case; we'll be exploring it in more depth in connection with an upcoming CAALRS collection seminar. Keep an eye on this blog, and/or Utahcondolaw.com for information on the date, time and other subjects to be covered.

CAALRS, Utahcondolaw.com and this blog are all sponsored by the law firm of Hobbs & Olson, L.C.

UCIOA Consideration Postponed

Marla Mott-Smith Bowers, Chair of the Utah Legislative Action Committee (ULAC), has advised that the Utah Legislature will not be considering the adoption of the Uniform Common Ownership Interest Act this session, as had been hoped and anticipated. From her press release:

Due to the magnitude of UCIOA and Legislative Research time restraints, Senator Greg Bell will not submit UCIOA this session. Instead, he will submit it during the interim session to be held sometime in May or June, 2009.

Senators Michael Waddoups and Greg Bell recognize the need in Utah for the type of comprehensive act we have proposed and remain committed to the passage of UCIOA.

Get Your Pools and Spas Fixed NOW!

Last Friday's uccai meeting addressed pool safety and the need to modify your pools pursuant to the Virginia Graeme Baker Pool and Spa Safety Act; seven months ago I suggested in this post that you shouldn't even have waited for the law to take effect before modifying your pools and spas. (The law took effect in December.)

Now, unfortunately, there's news of another unfortunate death due to a pool drain. Five-year-old Linnea Rose Oldham of Snyderville, Utah was killed in a tragic drain-related incident while vacationing in Mexico; according to the article in the Park Record, the family wants the story to get out, in hopes that it will prevent other similar tragedies.

Please, if your association's pools and spas have not been modified, shut them down and get them fixed now.

My thoughts and condolences to Linnea's family and loved ones.

It's Happening Here, Too!

No, this is not an alarmist blog entry about Jon Huntsman's support of civil unions for gay couples. That's not the subject of this blog.

What I'm referring to is the stripping of units that are being foreclosed, which I blogged about last month, when I was live blogging from Palm Springs.

KSL is reporting that some foreclosed homeowners in Utah are stripping and/or vandalizing their foreclosed homes. According to the article, "Michael Leavitt, a home inspector, says the bigger problem comes when people buy foreclosed homes at an auction and don't actually see the house."

(The article didn't say, but I don't think that's our former governor Michael Leavitt, although sources do say that he recently lost his job...)

Apparently here, as in Florida, both theft and/or vandalism occasionally follow foreclosures. Once again, vigilance and observation of foreclosed units seems to be prudent.

Housing Tax Breaks

Yesterday's New York Times has an article on the proposed housing and other tax breaks under the proposed stimulus plan; for homes purchased after April 9, 2008 and before July 1, 2009, "first time homebuyer" couples can receive up to $7,500 tax credit. "First Time Homebuyers" are defined broadly; there are phase outs for higher income categories.

All of this is subject to change, of course, as the House and Senate work to reconcile their bills.

Interesting Planning Meeting in Park City

Wednesday night's meeting of the Park City Planning Commission ought to be a little more interesting than most; on the agenda is consideration of the proposed Treasure Hill Development, a rather large (as you can see) proposed development in Park City.

Time and energy permitting, I plan to attend. If I do, I'll let you know what happens.

Here's a link to the 360 page agenda for Wednesday's meeting. (Note that a mere 170 pages deal with this proposed project.)

New Legislation Watch

I've added a new Utah Legislature Watch Widget; the top left corner of this blog will be devoted, at least through the duration of the legislature, to monitoring the progress of bills related to condominiums and other types of community associations. I'm going to skip the liquor bills and the "message bills"; you can watch those elsewhere.

The list should be updated automatically; we'll see how it works.

And if there are any other bills that are related to the industry and which you think should be posted, please let me know.

Congratulations to the New Utah CMCAs.

The National Board of Certification for Community Association Managers (NBC-CAM) has announced that five Utah association managers became certified as Certified Managers of Community Associations during the latter half of 2008.

The new Utah CMCA recipients include:

Kevin Flewell | West Jordan, UT
Jeffrey Holt | Kaysville, UT
Jennifer Jones | West Jordan, UT
Kathie Savage | Park City, UT
Cheryl Wagoner | Lehi, UT


The CMCA signifies that a manager has passed NBC-CAM's national exam and met the requirements for managing condominium, cooperative and homeowner associations.

To obtain CMCA certification, managers must complete a 16-hour classroom course, the Essentials of Community Association Management, and pass the NBC-CAM CMCA Examination. (Since these recipients were all students of mine, I can personally attest that they were good students, and well instructed in their 16-hour course.)

Certified managers must adhere to the CMCA Standards of Professional Conduct and take continuing education courses for recertification. CMCA recipients who don't comply with the Standards of Professional Conduct are subject to disciplinary action, up to and including suspension or revocation of the credential.

NBC-CAM is the first and only national organization created solely to certify community association managers and to help consumers identify managers who have demonstrated fundamental competency and knowledge in this profession.

Get Your Butts Out of Here!

The city of Belmont, California passed an ordinance in November of 2007, which is becoming effective this month; the ordinance prohibits smoking in:

(3) Multi-unit residence common areas; except that a landlord or common interest development may designate a portion of the outdoor area a smoking area. A designated smoking area:
(i) must be located at least twenty (20) feet from any operable window or door used by the public of an indoor area of a multi-unit residence where smoking is prohibited;
(ii) must not include, and must be at least twenty (20) feet from, outdoor areas primarily used by children including, but not limited to, areas improved or designated for play or swimming;
(iii) must be no more than twenty-five (25) percent of the total outdoor area of the premises for which it is designated;
(iv) must have a clearly marked perimeter;
(v) must be identified by conspicuous signs; and
(vi) must not overlap with any area in which smoking is otherwise prohibited by this chapter or other provisions of this Code, state law, or federal law.
(4) Individual units of multi-unit residences, if such units share at least one common floor or ceiling with another such unit.

A copy of the ordinance is available here.

So, unless you are in a single family residence in Belmont, you'll need to get your butt outside, if you want to have a smoke.

I Saw This One Coming...

A Sacramento woman has been ordered not to bring her "service pit bull" to classes at the American River College; she says he gives her "protection" and a thirty minute advance warning of epileptic seizures; she also alleges "he's been certified through the county as a service animal". County officials dispute that, saying that they don't certify service animals.

My source is this story; if I find more on this controversy, I'll post it.

Saving Beaver County

The Utah Supreme Court issued an opinion yesterday in the case of Save Beaver County v. Beaver County, which confirmed the rights of the citizens of Beaver County to challenge, by referendum, the County's approval of the proposed Mount Holly Club.

The Supreme Court opinion succinctly described the proposed Mount Holly Club:

As planned, Mt. Holly is a gated club with an 18-hole golf course, a private ski resort, and up to 1,204 residential units.

A private ski resort ?!?!?!

The proposed plan met with some opposition, but Beaver County proceeded to adopt an ordinance to the land code, and published its "Notice of Adoption of Ordinance" on May 12, 2007. That same day, twelve residents requested applications for referendum petitions. These petitions were filed, seeking a vote by the residents in the November 2008 election. 845 signatures were obtained; more than enough to support the referendum.

The opinion sets forth a lengthy analysis as to whether the County was acting administratively or legislatively, but ultimately held that the County's action was legislative, thereby triggering the citizens' right to a referendum, which the Court appears to consider rather important:

Because the power of the people to legislate directly through referenda is a constitutionally guaranteed right, it is the responsibility of this court to “defend it against encroachment and maintain it inviolate".

Hence the voters will get to decide, in the end, whether Mount Holly Club will be allowed. (Although my strong suspicion is that the current economic conditions may have already doomed Mount Holly Club.)

Alphabet Soup

This afternoon's discussion, continuing in the economic theme, is a discussion on lending in the community association industry. Several representatives of private project approval companies, a representative of FannieMae, and a developer's attorney (who explains that he has inadvertently become a banker's attorney are discussing the current state of financing in the U.S.

Historically, FHA was the first government-related association to assist in condominium funding; that was ultimately followed by the VA, then FNMA and FMAC. These entities all had underwriting standards relating to which projects they would lend upon; community associations could seek and obtain approval, once that approval was obtained the approval would be posted, and would be permanent, in the absence of litigation, or certain other significant adverse actions.

In November of 2007, however, FNMA stopped granting approvals and deferred the approval decision to lenders. That caused great consternation, as lenders did not know what they were doing, and loan availability suffered.

Recently, FNMA has indicated that it will resume the project approval program, with several different options.

An attorney, who is the past president of CAI, is suggesting that a price protection plan for homes will solve the World economic problem. Simplified greatly, he's proposing that new homeowners be assured of a repurchase of their home, at the original purchase price, after a two year period.

One drafting suggestion to the practitioners is that association governing documents allow board modification of provisions relating to secondary mortgage markets.

Several of the panelists are reminding attendees that the agencies will, even in otherwise noncompliant projects, grant exceptions in appropriate circumstances.

CCAL Case Review -- Part 2.

Back to the case review:

The first case of the morning's discussion is Pacific Hills Homeowners Association v. Prun, a case involving an association's five-year long pursuit for the removal of a fence. The lawsuit came five years after the first letter; the unit owner defended based upon laches, and waiver.

Park Ridge Condominium Association, Inc. v. Callais involved an association that refused to produce records based upon a contention that the request was designed to harass; the production was required, and fees were awarded.

Ritter & Ritter, Inc. Pention and Profit Plan v. The Churchill Condominium Association, involved a dispute between a unit owner and an association, relating to required repairs to slab penetrations between units. The court reaffirmed the board's fiduciary duty, but then analyzed the decision on the business judgment rule. Judicial deference applied to the board, but not the association; the association owed a duty to the members, and the association had to repair the problem. In other words, the board was not liable for deciding not to make the safety repairs, but the association had a duty to make them.

Thompson v.Toll Dublin, LLC involved a builder's effort to force an association into arbitration in connection with its construction defect; the developer knew of the defects, resulting in fraud claims against the developer. The Court rejected the effort to force non-statutory claims into arbitration; the court also found the arbitration provisions to be unconscionable.

A California case, Treo @ Kettner Homeowners Association v. The Superior Court of San Diego County involved a condominium provision which purported to take away the unit owners' right to a jury trial in a construction defect case. The Court denied the enforceability of the provision, based upon the absence of meaningful negotiation in connection with the declaration's provisions.

An Arizona case, The Lofts at Fillmore Condominium Association v. Reliance Commercial Construction, Inc. held that a builder was liable rof breach of the implied warranty of habitability, even where the seller was not the builder. The implied warranty arose between the builder and the ultimate buyer, even in the absence of contractual privity.

Lake Buckhorn Property Owners Association, Inc. v. Townsend involved architectural restrictions in a declaration which were supplemented by a more restrictive regulation respecting the size of a septic tank. The court restated the black letter law that an association's regulations which are inconsistent with a declaration are invalid.

Miller v. Savana Maintenance Association, Inc. is a fair housing case which affirms an association's right to insist upon medical records to substantiate a claimed handicap under the Fair Housing Act.

Chesler v. Conroy involved outrageous behavior among the residents of a three unit condominium; the parties clearly treated each other inappropriately; nonetheless, the court held that this particular case did not rise to a federal fair housing claim, based upon disability. The Court did reaffirm the potential, in appropriate cases, of a hostile environment fair housing claim.

Bloch v. Frischholz was a religious discrimination case; it involved a woman who challenged an association rule based upon its interference with her right to mount a mezuzah (a religious symbol) on her door, in a common hallway. The Court held that the religious discrimination prohibitions in the fair housing act does not require a religious accomodation, and facially neutral restrictions were permissible.