October 2011

Kenneth R. Harney, a columnist for the Washington Post, on Friday published an illuminating column on the impact the new FHA guidelines are having on the condominium market. Mr. Harney characterized this chilling effect when he wrote: “This, in turn, has abruptly shut off loan money for would-be buyers and refinancers, forcing them to pursue conventional bank loans requiring much higher down payments – sometimes 20 percent higher compared with FHA’s 3.5% minimum – which they often cannot afford.” Continue Reading Washington Post Sheds Light on FHA Debacle

As if the Federal Housing Administration hasn’t done enough already to tank the market for condominium units in the United States, it seems they are now contemplating a prohibition on transfer fees in order for a condominium association to qualify for FHA-insured loans.  Here is a report from Community Associations Institute on the issue: 

"As part of a series of training sessions on the revised, Federal Housing Administration’s (FHA) condominium mortgage guidelines, FHA informally announced that it would be issuing new regulatory guidance to address the issue of deed-based transfer fees. FHA indicated that it would likely disqualify any condominium association with deed-based transfer fees from access to FHA-insured mortgages. This news comes as condominium associations across America are still reeling from the July 2011 FHA Guidance which imposed new and confusing underwriting guidelines that conflict with condominium business practices, state law and common sense. In response to this sudden announcement by FHA, CAI has dispatched a letter warning FHA of the dire consequences to the condominium market if it follows through on its announcement.Continue Reading CAI Cautions FHA on Transfer Fees, Calls for Waiver

I have been teaching a series of workshops in the mountains focused on the Responsible Governance Policies (commonly referred to as “SB 100 Policies”) which homeowners’ associations (“HOAs”) in Colorado are required to adopt under the Colorado Common Interest Ownership Act (“CCIOA”). This week we talked about the role of directors in governing their communities with an emphasis on fiduciary duty. We reflected on the fiduciary duty of directors and how directors sometimes unintentionally – or with the best of intentions – breach this duty. 

As Suzanne Leff wrote in a blog posting entitled Fiduciary Duty of Board Members: An Overview , directors of HOAs have the following duties to their associations: (1) Duty of Care; (2) Duty of Loyalty; and (3) Duty to Act Within the Scope of Their Authority. Continue Reading Reflections on a Director’s Duty of Loyalty

My Fox Houston just reported on a story where a homeowner in a patio home community replaced a brick wall in front of his home with a wrought iron fence.  Van Tru admitted he took this step without receiving approval from his HOA because of safety concerns.  Mr. Tru reported that as his daughter went out to the family car, a man was hiding behind the brick wall and followed her. Tru believes his daughters screams caused the man to run away.

The Mission Bend Subdivision is not happy with the changes Mr. Tru made to the brick wall and have given him 90 days to restore the wall.  Legal counsel for the HOA contends that Tru could have utilized other security safeguards like an alarm system or surveilance cameras to address his concerns. Continue Reading Safety Concerns v. Architectural Approval – You Decide

Do you remember the childhood fable about the infamous Henny Penny who had an acorn fall on her head and was convinced the sky was falling? Our dear little Henny Penny freaked out telling the King and every other animal who would listen to her (including Cocky Lockey) that the "sky is falling!" Ms. Penny and her cohorts, on a quest to warn anyone who would listen about the fate of the universe, met with an untimely demise when a fox invited them into his lair and ate them all. The moral of the story: Do not believe everything you are told.

I couldn’t help but reflect on poor Henny Penny, when I read  an article published in the Green Valley News entitled HOA NUGGETS: Deal with problems early on. The article recounts a real life tale about a “previously very important person” in a Fortune 100 Company who moves into a well run high-end retirement community and convinces residents the community is going down the drain as a result of wasteful spending. He proceeds to bully folks into believing his story, gets elected to and is appointed President of the Board. From that point on, things really do go downhill for this community. Four years later, residents of the community were so fed up with this fellow’s reign that they threatened a recall. The “previously very important person” quietly resigned. Continue Reading Don’t Be A Henny Penny!

Recently, I wrote an article that was published in the October 2011 edition of the CAI Rocky Mountain Chapter’s Common Interests magazine. Colorado HOAs: At a Legislative and Regulatory Crossroads focuses on the evolution of legislation in Colorado beginning with passage of Senate Bill 100 back in 2005 through the 2011 legislative session. 

In my opinion, based upon the legislative trends in Colorado and the anticipated report from the Division of Real Estate which will be published in December summarizing complaints received about HOAs, there is no question we are at a legislative and regulatory crossroads in Colorado. Lawyers like me can pontificate on what we expect to see during the 2012 legislative session. However, the fact is that not one of us has a crystal ball. Instead, we will have to wait and see what the legislative and regulatory fall out will be from the Division’s report. In addition, there’s little doubt that HOAs will be a legislative focus in what promises to be a highly charged session rife with election year politics.

 Continue Reading Anticipating the 2012 Legislative Session for HOAs

The Community Association Institute has an annual Law Seminar that many of our attorneys like to attend.  It allows us to get out of the office, meet with colleagues in a less formal environment, and earn our annual continuing legal education credits with courses specific to our field.  This year, the Law Seminar was in Las Vegas, at the Venetian.  One thing I noticed was the presence of cameras everywhere.

 Apparently, in Las Vegas, everything is under surveillance.  A Las Vegas-area homeowner recently received a violation notice for a car parked in front of her property.  The only problem – it wasn’t her car.  The management company alleged that they had her home “under surveillance” and had seen someone park the offending car and enter the property.

Continue Reading HOA or Big Brother? They’re Both Watching You!