IAC Housing Policy News Links June 2016

Shared By Deborah Goonan, Independent American Communities


A collection of important news affecting federal and state housing policy, as well as legislative reform for Common Interest and Association Governed Housing.


Construction Defect Debate to be Heard by Colorado Supreme Court
6/23/2016 by Amy Hansen, Richard Murray, Ryan Warren | Polsinelli

The construction defects case of Vallagio at Inverness Residential Condominium Association, Inc. v. Metropolitan Homes, Inc., et al. has garnered national attention since the Colorado Court of Appeals’ decision in May 2015, and the subsequent petition for certiorari review to the Colorado Supreme Court. Developers, contractors, homeowner associations and others on both sides of the construction defect reform debate have been keeping a close eye on the final outcome of this precedent-setting case.

On Monday, the Colorado Supreme Court granted the petition to review the Court of Appeals’ decision. The Court will decide the following question: “Whether the court of appeals erred by holding as a matter of first impression that Colorado’s Common Interest Ownership Act (CCIOA) permits a developer-declarant to reserve the power to veto unit owner votes to amend common interest community declarations.”

Read more here.

This case will determine whether or not a developer can absolutely prevent associations and owners from filing a lawsuit for construction defects by requiring mandatory arbitration in the Covenants and Restrictions, and also prohibiting owners from deleting the arbitration clause after turnover. 



Senate to consider wide-ranging bill to address zombie foreclosure “crisis”
Bill would establish new rules for lenders and servicers

June 24, 2016 Ben Lane

Mortgage lenders and servicers could soon have a whole new set of responsibilities for maintaining foreclosed homes, as Sen. Bob Menendez, D-NJ, introduced a new bill on Friday that would address what his office calls the “zombie foreclosure crisis.”

Zombie foreclosures are homes that are vacant or abandoned during the foreclosure process, and in the last several years, several states have undertaken efforts to stem the rising tide of abandoned homes.

Read more here.

New rules would require additional disclosures designed to prevent homes in foreclosure from long-term vacancy. The most important part of the bill is a call for Government Accountability Office (GAO) to study the impact of zombie foreclosures on communities. 



AB 1799 on Community Association Elections is Halted 
JUNE 27, 2016

Saturday Assembly Member Mayes (R-Yucca Valley) pulled AB 1799 from committee. This means the bill is no longer active and halts the progress of the bill into law for this session.

This bill would have corrected an illogical and expensive process in an uncontested community association board election where there is no contest to vote on, yet a ballot is required. It also clarified the eligibility process for office on boards and specified the notification process to members. AB 1799 would have improved the voting process for all community association members.

Read more here.

See also

CALIFORNIA – AB 1799 Elections Bill pulled by author
JUN 27

By Marjorie Murray
June 27, 2016
Sacramento lawmakers listened to homeowners who protested a bill that would take away voting rights and the right to run for a board seat. Homeowners had sent emails, faxes, and called Senate offices to protest the bill. Story at:

AB 1799 is a consumer-unfriendly bill that would have given an Association Governed Housing board an easy way out of conducting an annual election. CCHAL opposed the bill. CAI lobbied in favor of it. 



New Alabama law sets out rules for homeowners associations
By Maria McIlwain, Special to The Star Jun 15, 2016

A law regarding these groups, known as the Homeowners Association Act, took effect Jan 1. Under the law, homeowners associations must register as nonprofit groups with the Alabama Secretary of State’s office or their local probate judge. Associations must also provide or direct potential buyers to public records containing information such as the homeowners’ association covenant, the current operating budget and a list of all common areas, according to the law.

Read more here.

The Homeowners Association Act required all HOAs to register with the state and to provide certain pre-sale disclosure documents to potential homebuyers. 



Brown’s Bill to Address Private Community Violations Approved by House

6/24/2016 HARRISBURG – Rep. Rosemary M. Brown’s (R-Monroe/Pike) legislation to grant the power of investigation and mediation of complaints from planned communities, cooperatives and condominiums to the Office of Attorney General’s Bureau of Consumer Protection passed the House on Tuesday.

Nearly one quarter of Pennsylvania residents live in these types of self-governing communities, including a significant portion of people in the 189th District. Communities formed under Title 68 are operated under a set of governing bylaws that creates a micro government. When disagreements or incidences of fraud occur in these communities, residents and unit owner boards feel they have nowhere to turn for assistance in resolving these complaints.

Read more here.

Pennsylvania is taking the lead with this proposal to extend the authority of the Attorney General to investigate and mediate consumer complaints against their homeowners, condominium, or cooperative associations. 



Legislation easing FHA loan restrictions on condos remains in holding pattern

A bill that would make it possible for more condo buyers to get financing through the Federal Housing Administration (FHA) has run up against inertia in the U.S. Senate after gaining unanimous support in the U.S. House.

Capitol DCH.R. 3700, which passed in the House 427-0 in February, has yet to be introduced in the Senate. The National Association of Realtors (NAR) last week put out a call to action among its 1.2 million members to pressure the Senate to introduce and move along a companion bill in time to get it passed this year. NAR is specifically supporting Title III of the bill, which eases restrictions on condominiums.

The FHA has a hard rule that disqualifies buyers from seeking FHA financing if less than 50 percent of the condominium units are owner-occupied. The bill would lower that requirement to a 35 percent owner-occupied ratio.

The rules also would compel FHA’s overseer, the U.S. Department of Housing and Urban Development, to rewrite its rules to make it easier to recertify a condo building’s eligibility through a streamlined process. FHA also would have to relax a hard rule against allowing the condominium associations to collect transfer fees when a condo is sold. FHA would allow transfer fees that are used to support community improvements, a policy that is consistent with Fannie Mae and Freddie Mac’s existing policy.

Read more here.

The U.S. Senate has not introduced HR 3700, indicating that Senators might be listening to consumer advocates and the housing finance industry. Reducing owner-occupancy thresholds, increasing commercial occupancy limits, and allowing transfer fees pose additional financial costs and risks to condo buyers. National Association of Realtors (NAR) is lobbying in favor of easing FHA condominium mortgage certification standards. 



Chart Book: Federal Housing Spending Is Poorly Matched to Need
Tilt Toward Well-Off Homeowners Leaves Struggling Low-Income Renters Without Help
JUNE 8, 2016
The federal government spent $190 billion in 2015 to help Americans buy or rent homes, but little of that spending went to the families who struggle the most to afford housing. As the charts below show, federal housing expenditures are unbalanced in two respects: they target a disproportionate share of subsidies on higher-income households and they favor homeownership over renting. Lower-income renters are far likelier than homeowners or higher-income renters to pay very high shares of their income for housing and to experience problems such as homelessness, housing instability, and overcrowding. Federal rental assistance is highly effective at helping these vulnerable families, but rental assistance programs are deeply underfunded and as a result reach only about one in four eligible households.

Read more here.

The report takes a comprehensive look at how federal housing tax dollars are allocated in relation to household income levels. The wealthiest taxpayers reap the largest tax benefits, and affordable housing remains scarce. (Note: this will not bode well for the HOME Act – a legislative proposal to allow IRS tax deductions for HOA assessments.) 



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