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/

Post-Bankruptcy Assessments

September 11, 2014

We sometimes have to have a difficult conversation with a former owner who has gone through both bankruptcy and foreclosure but still owes assessments. The conversation usually goes something like this California attorney’s article from the U-T San Diego.  I still run into bankruptcy attorneys that want to debate the point, soit is good to see at least one other HOA lawyer taking this view of it.

http://www.utsandiego.com/news/2014/aug/30/hoa-assessments-bankruptcy/

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Kelly G. Richardson CCAL is Managing Partner of Richardson Harman Ober PC, a law firm known for community association advice.

Post Falls American Flag Flap

July 10, 2014

It’s the season of the Fourth of July, so of course we had to have an HOA versus American Flag story. Unfortunately, this year we had one right here in the Gem State. Post Falls, Idaho, to be exact.

It is never a good idea for an HOA to try to interfere with a homeowner’s right to fly Old Glory. This applies doubly when he’s a dapper veteran like Mr. Benham of Post Falls.
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The local news picked up the story and the HOA wisely sounded the retreat. The President made a personal apology to defuse what was quickly becoming a heated problem. Allie Norton puts it thus:

Although Benham wasn’t complying according to Fieldstone rules, which he agreed to when he bought the house. the board let it go. Benham is happy that they did, but would also like a written apology so he can show all veterans.

Ms. Norton does not mention if the HOA’s threat to use fines was legal under Idaho’s new fine laws.

http://www.kxly.com/news/north-idaho-news/vet-gets-apology-from-hoa-over-american-flag-flap/26753948

New HOA Fine Law Is In Effect

July 3, 2014

So, Idaho’s new fine law is in effect, and hopefully our local HOAs are complying. We have had a spate of coverage regarding the new law. I noticed this on KBOI news the other night, but just got around to finding the link online. As usual, the comments are a mix. A ton of people rant about HOA problems, and one or two post thoughtful posts about how HOAs help their property value.

http://www.kboi2.com/news/local/New-law-to-tame-down-HOAs–265157441.html

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Boise State Public Radio covers Idaho Fine Law

May 28, 2014

http://boisestatepublicradio.org/post/new-idaho-law-aims-curb-power-homeowners-associations

Help With Idaho Fine Law Available

May 20, 2014

So, we’ve been busy responding to the new Idaho fine law I keep posting about. We’re trying to get the word out.

We put up a new site: http://www.IdahoFineLaw.com . It has contact information for Idaho associations that might need help with the new law, I.C. 55-115.

Also, Jessica Muri put together a piece for NPR that should air this Thursday morning. I’ll post a link when I find one. Thanks, Jessica!

Governor Otter Signs Idaho’s HOA Fine Bill Into Law

March 20, 2014

Yesterday, Governor Otter signed SB 1310 into law.
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The law will take effect this July as Idaho Code Title 55, Section 115 (I.C. 55-115).
A brief legislative history of the bill is available here.

However, it is interesting to see how quickly a bad experience of one homeowner can result in a new law if the conditions are right.

Here is a timeline of events a little more thorough than the legislative history.

August 2013, according to Senator Rice’s testimony before the House, an owner in Caldwell, Idaho has a lawn that went yellow. She made some effort to fix the problem, but still got fined.

On Monday, November 4, 2013, Senator Rice posts on his blog that he had “been receiving complaints about homeowner associations and specifically management companies abusing homeowner associations in subdivisions.” He asks for comments/input from the community.

Up until February 2 , 2014, Senator Rice meets with constituents and the National Association of Realtors working on his Bill.

When it was ready for the Idaho Senate, Senator Rice includes the following statement of purpose:

RS22743C1
Currently Home Owners Associations enforce covenants and restrictions in subdivisions by fining
individual home owners for violations of such covenants and restrictions. Frequently, these fines
are levied despite home owner attempts to comply with the covenants, and without any process
other than a letter informing the home owner that they will be fined. The fines are then enforced
through liens on the home owners real property. This bill puts reasonable requirements in place
that protect the home owner from arbitrary and capricious actions by the home owners association
and provides a set of standards that courts can use if there is a dispute regarding the validity of the
fine in a subsequent lien foreclosure action.

On February 7, 2014, Senator Rice’s Bill is presented to the Senate Commerce and Human Resources Committee. It passes easily.

On February 27, 2014, Senator’s Rice Bill passes on the floor of the Senate with a unanimous vote.

Local media is supportive of the bill.
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A poll of newspaper web readers in Idaho shows a 60-40 split on whether HOA’s add value to property. I like comments made by a local board member.

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March 7, 2014, the House Commerce and Human Resources Committee reads and passes the bill on to the House floor.

March 12, 2014, the Bill passes on the house floor.
1310 Vote

March 19, 2014, Governor Otter signs the bill.

Now the clock is just ticking until the law goes into effect as our new Idaho Code S. 55-115. That leaves just over three months for all of Idaho’s HOAs to get their fines into compliance before the law is effective. I’m sure we’ll be busy here at VF Law with our HOA clients. We had a good turnout at today’s lunch among managers interested in discussing the law, and next week Vial Fotheringham Boise is hosting a free training for Board members (Thursday 7 pm) at our office. Drop by if you’d like.

Event Details are here

The Realities of CCRs (Local op-ed)

March 14, 2014

A local HOA president has written with great perspective about SB 1310, which recently was voted into Idaho Law.
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In particular, I liked these thoughts:

In my experience, getting people to step up and serve has been a real problem. Homeowner associations are required to have an annual meeting to go over issues concerning the community, the budget and to elect officers. It is very difficult to get the required 10 percent of homeowners to show up. Time is valuable, so it is easier to pass the responsibility off to someone else and say rules are unfair.

Our subdivision maintains over 5 acres of so-called common areas for these purposes. We are taxed internally and pay to maintain these common areas by our HOA dues. What would happen if the city had to maintain it?

SB 1310 passes Idaho House by vote of 61-1-8

March 12, 2014

1310 Vote

I’ll add a summary and recap when this new HOA fining bill is signed and becomes Idaho law.