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.
Durango’s proposed construction defects law tweaked
By Mary Shinn Herald staff writer
Rules to govern lawsuits over construction defects were refined this week by the Durango City Council.
A state law that exposed developers to more lawsuits over defects has slowed condominium development statewide, but municipalities have passed laws to protect builders in hopes that it will reverse the trend and encourage the state to act. Durango will likely join the ranks of these other cities soon.
The city’s law would require a majority of the members of a homeowners’ association to approve a lawsuit against a developer as opposed to just a vote of the associations’ board.
This article appears to be a news release written by and for Colorado home builders, who are obviously in favor of reducing their liability and accountability for construction defects. It appears city council is more interested in increasing the property tax base than protecting consumer rights to safe, well-built housing. In order for a member vote to be useful in the decision-making process of whether or not to pursue litigation, developer-owned units and lots would have to be excluded from voting on the matter. However, the current proposal does not specify such an exclusion.
Significant win in Supreme Court of Virginia for local association with statewide benefit
SADDLEBROOK ESTATES COMMUNITY ASSOCIATION, INC. v. CITY OF SUFFOLK
TRIAL AND APPEAL HANDLED BY INMAN & STRICKLER
On June 1, 2016, the Supreme Court ruled on a case decided by a Suffolk Circuit Court Judge regarding the taxation of open space in a homeowners association. The Court unanimously overturned the Circuit Court ruling finding that the judge misinterpreted the law by upholding the City’s taxation of the Association’s open space. This decision provides an interpretation of a statute that applies to all POAs which have open space designated on their subdivision plats, whether leased to a third party or used by the association members for recreation or otherwise.
In Virginia, a City can no longer tax open space of a Property Owners Association, but must allocate the respective proportional value of that open space to members of the association.
Waivers of implied warranty strengthened for condo, home builders in Illinois
7/6/2016 b yJames Oakley
In two recent builder-friendly decisions, the First District and Supreme Court of Illinois have ruled that the standard conspicuous waiver of the implied warranty of habitability found in most builders’ sales agreements: 1) is effective even where not verbally “called-out” to or initialed by the buyer; and 2) binds both the buyer of a new home and all subsequent purchasers of the home.
Highlights Illinois Court decisions that, while beneficial for home builders, are definitely not consumer-friendly. The effect of this decision makes it easier for builders to avoid or defend claims against their buyer warranties. A builder can include an express warranty (with a shorter time period) in the fine print of the sales contract, in hopes that a buyer will not notice. Even if the buyer of a new home happens to be an affiliate of the builder, and waives full rights of implied warranty, a subsequent buyer’s rights are automatically waived, too.
HAM RADIO TOWERS AND ANTENNAS IN YOUR COMMUNITY – A LEGISLATIVE UPDATE (CAI)
Dawn Bauman – 7/15/2016
On July 13, the U.S. House Committee on Energy and Commerce gave its stamp of approval to a compromise version of H.R. 1301, the Amateur Radio Parity Act.
Community Associations Institute opposed H.R. 1301 as introduced, which preempted association restrictions on HAM radio and drastically limited association architectural control of amateur radio antennas. With approval of the committee, the amended version of H.R. 1301 will be referred to the U.S. House of Representatives for a vote – possibly in September.
CAI’s Federal Legislative Action Committee was able to secure key changes to H.R. 1301. These amendments include:
HAM radio operators are required to obtain the prior consent of the association to install an outdoor antenna
HAM radio operators are prohibited from placing antennas on common property, and
Associations may establish written rules concerning outdoor HAM radio antennas.
Look for future HAM Radio disputes in HOAs based on subjective rules that dictate where and how equipment may be installed. For example, federal law governing display of the American flag in HOAs still results in disputes over whether or not residents can install a flag pole on their private properties, whether the flag can be displayed in the front yard rather than the back yard, and the size of the flag itself. This kind of “compromise” legislation doesn’t specifically forbid HAM radio equipment installation, but still allows significant restrictions that could make it difficult for Amateur Radio Operators to achieve satisfactory functionality.
New FHA proposal puts reverse mortgages above HOA super liens
*See relevant excerpt on page 31772 of Federal Register/Vol. 81, No. 97/Thursday, May 19, 2016/Proposed Rules
FHA’s lien priority proposal is a defensive move based on recent court decisions in several states that have enabled buyers of homes and condos at Association foreclosure sales to extinguish the first mortgage lien. Opposition to FHA proposals for HECMs is already heating up. Note that the Reverse Mortgage Industry and Community Associations Institute (CAI) oppose new HECM rules, but for different reasons. Reverse Mortgage Lenders oppose rate caps, and CAI opposes making HECM liens superior to liens for HOA assessments. reversemortgagedaily.com/2016/07/11/reverse-mortgage-industry-voices-concerns-over-fhas-hecm-proposals/
GOP Grills Castro on Changes to Nonperforming Loan Sales
HUD has sold 106,000 nonperforming loans — only 2,000 of which have been bought by nonprofit groups — but House Financial Services Committee Chairman Jeb Hensarling argued a recent decision to expand such sales is a big mistake.
HUD “will offer lower-priced preferential bidding options to nonprofits and local governments or, as many of us believe more accurately, to known political allies,” Hensarling said at a hearing Wednesday.
Democrats fired back by claiming the GOP lawmakers are more interested in ensuring hedge funds and Wall Street investors can monopolize sales rather than helping borrowers to stay in their homes.
So far, 98% of the FHA nonperforming loans have been sold to “private investors — the big boys on Wall Street,” said Rep. Maxine Waters, D-Calif. This hearing is being held to “maximize Wall Street profits at the expense of struggling homeowners.”
Read more here:
On one hand, history has shown us that for-profit investors seem relatively uninterested in preventing foreclosure for homeowners who have been caught in a combination of predatory lending activity and a deep economic recession. On the other hand, HUD’s solution is to offer to sell nonperforming mortgage debt to nonprofits and local governments at even lower prices than being offered to Wall Street investors. Although liquidation of HUD’s debt is replenishing its mortgage insurance fund, it’s unclear how the sale of that debt truly helps consumers. New mortgages are still relatively difficult to obtain. And there’s no guarantee that nonprofits and governments would be any more successful at keeping owners in their homes. Neither approach encourages or forces lenders to modify existing loans or reduce principal balances to coincide with post-crash market values.