Archive for October, 2014

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.

Delaware Adopts HOA Ombudsman Approach

October 21, 2014

Delaware recently adopted a new law that establishes a position of ombudsman for homeowners and homeowner associations and other shared ownership schemes in Delaware.  The purpose of the law was to resolve disputes:

These communities are created by legal documents drafted by the developer and are intended to be managed by those living in these communities. This system can create difficulties for those living in these communities, especially when disputes arise.

As discussed in local coverage, the Delaware office would resolve disputes between boards and homeowners.  However, the office outlined in the law not only resolves disputes, it also provides education, provides election monitoring, accepts complaints, instigates investigations, and even publishes rules and procedures for the state.

It is an interesting approach.  I’m not sure if it would ever fly here in Idaho.  It is difficult to know if the idea would be seen as “big government.”  However, an ombudsman certainly could allay fears (justified or not) that HOAs have too much power, and could help keep minor neighborhood disputes out of court.  Perhaps this is why some other Western states have also opted for ombudsman positions.  For instance, in Nevada the ombudsman is copied on association lien filings as a form of review. In Arizona, the ombudsman plays a dispute resolution role. Colorado has an ombudsman as well, although it seems to be more advisory.  An hoa blog tried to collect comments on the practice, here, but did not end up with a definitive list.

Delaware Sources:

http://legis.delaware.gov/LIS/LIS147.nsf/93487d394bc01014882569a4007a4cb7/e0c652a7baefac6485257c39006eb432?OpenDocument

http://www.delawareonline.com/story/news/local/2014/10/20/ombudsman-weigh-homeowner-association-disputes/17639817/

Superliens and HOA foreclosure in the news

October 16, 2014

A pair of Wall Street Journal bits today– a blog and a paywall-protected article– discuss HOA foreclosures.  An association can, in Idaho and most states, foreclose on its assessment liens.

What is unusual is that the blog actually looks at the rationale behind HOA foreclosures instead of taking the usual populist anti-HOA tone.  In doing so, the blog reports an argument that we have had to make many times in our own office:

“The problem is that [some] lenders aren’t doing what they need to be doing. They’re not fulfilling their obligation. All they need to do is fulfill their obligation in paying the assessments or to exercise their right to foreclosure in a timely manner,” says Ms. Bauman.

Most of this WSJ coverage is about states where HOAs have a “super-lien” that allows an HOA to get its money from foreclosure before the banks even get paid.  We don’t have that here in Idaho, where most CC&Rs explicitly subordinate the HOA’s liens to purchase price mortgages.  However, HOAs in Idaho also face the same banks and the same problems with foreclosure.  An idaho HOA in extreme cases may even see advantages to foreclosing subject to a mortgage, just to help the process move along.

The blog:

http://blogs.wsj.com/developments/2014/10/14/why-homeowners-associations-want-to-foreclose-on-homes/ 

The article:

http://online.wsj.com/articles/foreclosure-dispute-pits-mortgage-lenders-vs-investors-1413321865

PS, Ballard Spahr posted about similar super-liens in Colorado, recently:  http://www.jdsupra.com/legalnews/implications-of-a-homeowner-association-92787/