airbnb Addresses Taxation. Covenants Next?

November 11, 2015

Disrupting industries comes with a cost.  For hotel disruptor airbnb, one of those costs has been increased scrutiny by local taxation authorities keen to recapture hotel taxes lost to users of the site.  It appears attention has begun to focus on “power users” who account for a great majority of airbnb revenues–much more than the occasional casual house-letter.

The site has responded to criticism by providing more transparency about its users and by announcing the following policy:

  1. We are committed to treating every city personally and helping ensure our community pays its fair share of hotel and tourist taxes.
  2. We are committed to being transparent with our data and information and we will help cities understand the home sharing activity in their community while simultaneously honoring our commitment to protect our hosts’ and guests’ privacy.
  3. In cities where there is a shortage of long-term housing, we are committed to working with our community to prevent short-term rentals from impacting the availability of long term housing by ensuring hosts agree to a policy of listing only  permanent homes on a short-term basis.
From the point of view of my clients who see “commercial-type” use in their neighborhoods in a few rare instances abusing the law and the assets of their community, it would be nice to see some attention given to people who abuse their residential status to run a bed and breakfast business in an association where no commercial use is permitted.
Perhaps differentiating between “casual users” and other users is the first step to getting associations back some protections from a residential home in an association being turned into a regular motel.
http://publicpolicy.airbnb.com/wp-content/uploads/2015/11/Airbnb-Community-Compact.pdf
http://techcrunch.com/2015/11/11/airbnb-city-compact/

Idaho Supreme Court weighs in on Rental Restrictions

June 24, 2015

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We often are asked about adding rental restrictions to CC&Rs via amendment.  This involves balancing the power to amend and an owner’s right to rent.  This is a question that has split a lot of jurisdictions.  But now we have some good guidance in Idaho about what is permitted.

The Idaho Supreme Court recently ruled that associations can add rental restrictions to CC&Rs by using their amendment process.

http://law.justia.com/cases/idaho/supreme-court-civil/2015/42192.html

More analysis is here:

http://vf-law.blogspot.com/2015/06/new-idaho-hoa-decision-from-supreme.html

Racist Covenant Clauses From 1950s Get Press

January 20, 2015

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Last night in honor of Martin Luther King Day, local Boise Channel 6 news ran a story about overtly racist 1950s CC&R provisions in an old Boise subdivision.  However, the story did not provide details about the covenants, but instead quickly pivoted to coverage about the ongoing “Add the Words” campaign.  This is a lobbying campaign to add equal rights protection for sexual orientation to Idaho state law.  So far, these protections are found in Boise City Code and the codes of a few other cities, but not in Idaho’s human rights law. The courts recently legalized gay marriage in Idaho, but in order to get a law like this passed, you still need a certain amount of public interest.

It seems to me that there must not be any recent or interesting stories of discrimination in Idaho based on sexual orientation, if the “Add the Words” coverage has to dig into old CC&Rs covenants to get a news story to tie to the legislative efforts.  If there were even one recent or ongoing story about discrimination based on sexual orientation, the campaign and supportive media would be using it to drive interest in passing the new law.  Or perhaps Channel 6 was just looking for something relevant to say about MLK Day?  That doesn’t happen, does it?

Meanwhile, the lack of news about recent discrimination in HOAs is a hopeful sign that current HOA boards in Idaho are already using common sense in reading their CC&Rs to avoid discriminating against anyone, whether Idaho law explicitly requires it yet or not.  Hopefully that will continue.

Florida Tardis Scuffle

January 7, 2015

TARDIS-time-machine-1415

Apparently, the CC&Rs explicitly prohibit any improvements that are larger on the inside than on the outside…

http://www.baynews9.com/content/news/baynews9/news/article.html/content/news/articles/bn9/2015/1/4/parrish_tardis_time.html

http://www.themarysue.com/florida-homeowners-association-tardis/

http://www.wtxl.com/news/florida_news/florida-couple-told-to-remove-tardis-from-driveway/article_dc0ec42a-95c3-11e4-922b-0bfcb7ac4f6b.html

FHFA Reacts to Super-Priority Homeowner Association Lien Statutes

December 30, 2014

http://www.fhfa.gov/Media/PublicAffairs/Pages/Statement-of-the-Federal-Housing-Finance-Agency-on-Certain-Super-Priority-Liens.aspx

Basically, some states have passed laws that allow homeowner association liens (or other types of liens) to take priority over Fannie Mae liens.  This means that an HOA will get its lien paid before the feds do.

Homeowner association liens are based on a declaration of restrictions that pre-date any particular Fannie Mae lien.  HOA liens also have good reason to take precedence because they represent ongoing maintenance of affiliated common interest property.  On the other side, the feds claim priority by statute.

It will be interesting to watch this play out.  Here’s what the feds think:

FHFA is aware that, in certain jurisdictions, liens for unpaid homeowner association (“HOA”) dues may be deemed to be senior to preexisting mortgage liens on a homeowner’s property.  As a result, on December 5, 2014, FHFA and Fannie Mae filed an action in federal court in Nevada, seeking a determination that a HOA’s foreclosure sale is invalid and contrary to federal law to the extent that it purports to extinguish Fannie Mae’s property rights.  Federal National Mortgage Association v. SFR Investments Pool 1, LLC, No. 2:14-cv-02046 (D. Nev. December 5, 2014).  FHFA has also intervened in Saticoy Bay, LLC Series 1702 Empire Mine v. Federal National Mortgage Assoc., No. 2:14-cv-01975 (D. Nev.), seeking a declaration that a prior HOA foreclosure sale is invalid to the extent that it purports to extinguish Fannie Mae’s property interests.

​​These FHFA actions are based on federal law which precludes involuntary extinguishment of liens held by Fannie Mae or Freddie Mac while they are operating in conservatorships and bars holders of other liens, including HOAs, from taking any action that would extinguish a Fannie Mae or Freddie Mac lien, security interest or other property interest. Specifically, Title 12 USC Section 4617(j)(3) states that “[no] property of the Agency shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the Agency, nor shall any involuntary lien attach to the property of the Agency.”  FHFA is authorized, as conservator, to bring this suit because Enterprise lien interests in collateral constitute property protected by this provision.

FHFA has an obligation to protect Fannie Mae’s and Freddie Mac’s rights, and will aggressively do so by bringing actions to void foreclosures that purport to extinguish Enterprise property interests in a manner that contravenes federal law.

Some commentary is starting to appear from banks and community associations:

http://communityassociations.net/fhfa-issues-warning-super-priority-liens/ 

http://www.housingwire.com/articles/32426-fhfa-issues-warning-on-super-priority-liens 

http://financialreform.wolterskluwerlb.com/2014/12/fhfa-warns-of-states-creating-super-priority-liens.html

Worth reading for the Griswold references

December 19, 2014

http://www.natlawreview.com/article/airport-clark-home-owner-s-associations-and-holiday-decorations 

Leasing Limits Conflict with HUD Lending Rules

December 11, 2014

Today this Connecticut-area condo lender posted some interesting analysis about HUD Lending and Lease restrictions.   The gist of the article is that the lender has seen some situations where the FHA has held that condo leasing restrictions violate HUD’s restrictions on free transfer of property.  Because these HUD guidelines are federal, they would apply across the country, even here in Idaho.

The entire post is worth reading.  It outlines why sometimes a condo association’s leasing restrictions can overstep what is permitted and thereby jeopardize the HUD-financing availability for an entire project.   For that reason, it suggests sticking to the specific limits authorized by HUD, and asserting nothing more:

In 2011, FHA announced that certain leasing restrictions are allowed.  This was made permanent by the Condominium Project Approval and Processing Guide (page 26).  Basically, it allows associations to

  • Set minimum and maximum lease terms
  • Require copies of leases and that they be in writing
  • Request the names of the tenants
  • Require that the leases conform to the legal documents, and
  • Set a maximum number of units that may be leased at any time.

I think I’ll keep an eye out for updates from this blog.  Good post!

Common Area Car Charging

November 7, 2014

Straight from Detroit, we have some news angst aimed at the association of a Chevy Volt owner.   It looks like the owner was plugging her car into common area electricity every night.  The board decided to charge her for her presumably higher-than-average electricity load.  A dispute ensued, with some reporter harassing the board repeatedly to get this snarky quote:

Action News contacted the HOA president. After hanging up on us twice, he would only confirm that the HOA board voted 4-1 to kill Forte’s power to her garage, forcing the woman to charge her electric hybrid from her condo from 100 feet of extension cord.

I can’t help but feel sorry for this vilified board.  They didn’t run to the media when one of their owners started taking advantage of a common resources.  But here they are fielding repeated phone calls from the press.  I can’t help but think that if it had been a Nissan or other Japanese plugin car the Detroit media would not have been as aggressive in their reporting.  That’s what you get for living in Motor City, I guess.

Clearly, a plug-in car uses much more electricity than envisioned when electric outlets were placed in a common car port.  As plug-ins grow in popularity (assuming our current oil price dip is temporary), other boards may have to make similar decisions about how to handle the increased load.  Maybe if it became very common for people to use electricity for their primary transportation, associations would agree to pool the cost.  Somehow I doubt it.  Extension cords to the individual condo units sounds like a reasonable solution to me.2011-chevrolet-volt-power-adaptor_100190237_m

Virginia is for lovers of HOAs

November 6, 2014

5456d6dcd74b5.imageSo two things jumped out at me from this article by Ted Strong in Richmond.  First,  it’s a great article on HOAs.  It isn’t often that someone captures the quasi-governmental role that associations end up playing in modern communities:

associations are nearly ubiquitous for new residential housing in the Richmond area, embraced by developers as a way to handle long-term care of common amenities and by local officials as “mini-governments” that can help maintain order and property value.

Second, the underlying dispute was regarding an in-home day care center.  It looks like the HOA took a position in the county conditional use permit hearings, but did not take any legal action based on its covenants alone.  I don’t know if this is the case in Virginia, but here in Idaho the association could have done both.  So it is possible the HOA decided to back down.

I have had a number of boards ask me about this type of situation.  It can be difficult to definitively define the line between residential and commercial use.  Day cares are one tough call.  Frequent “AirBNB” landlords can be too.  A case of low income housing was just in the news too.  The Board would need to carefully review the specific language in their restrictions and probably look at other uses in the community as well before deciding.

Anyway, this Virginia case isn’t going anywhere, but HOA news lovers should be watching that Volt case in Waterford CA.  I’ll comment when it all plays out a bit more.

Indiana Flag Fight

October 31, 2014

5431094_GFrom www.myfoxchicago.com

These flag disputes are common enough that they don’t usually deserve individual comment from Boise.  However, in this Indiana incident, the county prosecutor has gotten involved, and the press articulates the legal issue fairly well.  Other HOA boards should be aware of this interpretation and position:

“According to the board’s letter dated Oct. 18, the board takes the position that it has authority under the ‘time, place, or manner’ provision of the Freedom to Display the American Flag Act of 2005,” the letter reads. “In relying on ‘time, place, or manner,’ the board interprets its authority much too broadly.”

The Flag Act, Griffin wrote, actually prevents homeowners associations from enforcing most kinds of regulations regarding display of the American flag unless a “substantial interest” exists.

The picture shows a rather prominent flagpole on the lawn.  I’m sure the HOA was mostly concerned with the pole’s construction and location, not with the flying of Old Glory.  However, that probably won’t prevent the application of the Freedom to Display Act by the prosecutor.