HOA Law Blog

April 11, 2011

Is a Kid’s Lemonade Stand a Prohibited Commercial Activity?

Post by David Swedelson, Partner, SwedelsonGottlieb

We are often asked to assist California community associations dealing with unauthorized homeowner commercial activities when prohibited by the association’s governing documents. Usually, the issue is whether the commercial activity will or is impairing the residential character of the community.

So, for example, we have been called upon to deal with a hair stylist, an employment headhunter, a psychologist, and other service-oriented businesses that had a number of clients and/or employees coming into a gated community or locked building. Once, we dealt with a refrigerator repair service where customers were coming into the association to drop off or pick up their refrigerator. Another time, it was an auto repair business being run out of a garage. And of course, lately we have been dealing with more then one marijuana growing facility. You get the picture.

April 8, 2011

CAI Announces Mortgage Matters Program

by David C. Swedelson

Blog post by David Swedelson, Partner, SwedelsonGottlieb

As we all know, the Great Recession has changed the way we live and do business. Getting a home loan is not easy these days, and the federal government is instituting some pretty major changes to the mortgage finance system. This is complicated by the fact that regulators and legislators do not really understand community associations.

Because the decisions that Congress and federal agencies make now will impact how or if owners will be able to get loans, CAI has developed Mortgage Matters, “a comprehensive response to mortgage challenges at the federal level.” CAI states that “[t]he common thread for Mortgage Matters is to ensure that potential homebuyers have access to affordable mortgage products and that the criteria used to determine eligibility for loans in community associations are realistic measures of an association’s financial health.”

March 31, 2011

FHA Issues-CAI Needs Your Help; Survey

by David C. Swedelson

Posted by David Swedelson, Partner, SwedelsonGottlieb

Community Associations Institute (CAI) is petitioning Congress to host oversight hearings examining the Federal Housing Administration (FHA) and its management of the FHA condominium insurance program. If your condominium association has applied for FHA approval, CAI would like you to take a short survey. The survey will help CAI collect data on issues with the FHA’s administration of the program. CAI will share the summary results of the survey with members of Congress in their effort to highlight many of the problems we are hearing from condominium associations across the country. The survey will close on April 6, 2011.

CLICK HERE TO TAKE THE SURVEY

March 22, 2011

CAI Reports That FHA Issues Waiver on Leasing Restrictions

by David C. Swedelson

Blog Post by Sandra Gottlieb and David Swedelson from a CAI Alert

When it comes to the FHA and its lending guidelines, describing their guidelines as a moving target would not be an exaggeration. If you asked us two days ago regarding the FHA’s stance on rental percentages language in association governing documents,we would have told you that they were restrictive. FHA got the word and again revised their guidelines. The following comes from a Community Associations Institute report:

Attached are the new FHA guidelines which allow for a Waiver on Leasing Restriction provisions found in association CC&Rs. Although the new requirements do not give associations’ automatic guarantees to obtain FHA approval if your governing documents allow for rental restrictions for most associations, compliance has just become easier.”Leasing restrictions have been one area of the FHA condominium guidelines that has caused problems for associations seeking to get FHA approvals. Community Associations Institute (CAI) has brought this issue to FHA’s attention and has petitioned FHA to review these criteria. On March 18, 2011, FHA issued a waiver that will provide greater flexibility on leasing restrictions under the FHA condominium insurance program. This means that many condominium associations whose FHA approval was rejected due to rental restrictions may now qualify under the FHA waiver.
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March 17, 2011

Assessment Collection In 2011: We Still Have A Rocky Road Ahead

by David C. Swedelson

A Blog Report By Association Lien Services and SwedelsonGottlieb

Many of our clients have been asking for our forecast as to when their assessment collection nightmares are going to end. While we don’t have a crystal ball, we do monitor what the experts are saying. And this very question was addressed in an article in the March/April 2011 edition of CAI’s Common Ground magazine. The article, entitled “Foreclosures, Rocky Road” (and thus the motivation for this blog post) states what we all know, that “the housing crisis has been a turbulent ride.” The article went on to state that “as we enter year four, experts predict we may finally hit rock bottom. That would be welcome news for homeowners and associations alike.” The problem is that rock bottom is so far down, it is going to take years to get back to normal.
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March 17, 2011

Bankruptcy Basics – What You Need to Know

by David C. Swedelson

By David Swedelson, Esq. and Alyssa Klausner, Esq.

It should be no surprise to anyone that the Great Recession has caused a significant amount of people to fall into serious debt, and many have filed bankruptcy. This is having a significant impact on many community associations’ efforts to collect delinquent assessments.

Just how big of an issue is bankruptcy in California? The Central District of California (CDC) is among the busiest bankruptcy courts in the U.S. The CDC serves over 18 million people in southern and central California, the largest federal judicial district by population. The CDC’s mission statement is “To provide, efficiently, justice to all parties affected by bankruptcy in the most populous and diverse district in the country.” A whopping 142,407 bankruptcy cases were filed in the CDC In 2010 (a 31% increase from 2009), greatly outnumbering the 14,330 bankruptcy cases filed in the Southern District of New York in 2010. The percentage of bankruptcy filings increased nationally by 13.8% from 2009-2010. It is no wonder we are seeing so many requests from our clients seeking assistance with a bankruptcy matter of a delinquent owner and to obtain relief from the bankruptcy automatic stay so that the collection process can continue, something we were rarely asked to do before the recession. Because the recession is not really over for California community associations, as there is still a significant amount of homes that are or will be in foreclosure for some time to come, it is important that board members and association management understand the basics of what bankruptcy is all about.
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March 15, 2011

Should Delinquent Condo Owners Lose Internet, TV Service?

by David C. Swedelson

By David C. Swedelson, Partner, SwedelsonGottlieb

Community Association Institute’s (CAI) Fast Track News Bulletin reports that Florida condominium association residents who are delinquent on their assessments could run the risk of losing their cable and internet service if a new bill passes.

According to the March 1, 2011, edition of the Orlando Sentinel, the legislation, which would go into effect July 1, 2011, would give condominium associations the right to cut off cable and internet service of residents who are 90 days overdue. In Florida, associations are already allowed to ban delinquent residents from common amenities such as pools, gyms and the like, and the bill would have cable and internet counted as common amenities as well. While the list of what’s considered common amenities seems to keep growing, this proposal makes it clear that associations will not have the power to shut off residents’ water or electricity.
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March 15, 2011

Locking in for a Lower Price: Long-Term Contracts

by David C. Swedelson

By Sandra Gottlieb, Esq.

Understandably, service providers such as cable or satellite dish companies will regularly seek long-term contracts of five years or more with homeowner associations. They explain that this is because their up front costs related to getting their systems set up within the association are significant, and they want to be reasonably sure that they can earn a profit.

Long-term contracts can provide potential cost savings to many homeowner associations, and a proper contract prepared by an attorney experienced in common interest development law can ensure that the association gets what it pays for. However, some boards of directors are unaware of provisions in their governing documents that may limit the board’s ability to enter into long-term contracts. Sometimes, CC&Rs or Bylaws will not allow the board to enter into any contracts with a term in excess of a certain number of years (usually one year) without the vote and approval of the members (usually a majority of the voting power). Some more recent CC&Rs or bylaws provide for certain exceptions for laundry room leases or contracts, cable television or telecommunication services.

March 11, 2011

NRA Shoots Down Homeowner Association Gun Ban Plan

by David C. Swedelson

From Community Association Management Insider

A community in El Dorado County, California has historically allowed some sport shooting. However, when one board member wanted to change that, he started the process to change the governing documents to completely ban the discharge of firearms and air-guns and eliminate all target and other shooting throughout the gated equestrian community.

One member of the community, who is also a National Rifle Association (NRA) member, brought this issue to the attention of the NRA’s California attorneys. And they assisted him and other neighbors in defeating the attempt to do away with shooting in the community.

March 8, 2011

State lawmakers are being urged to scale back the number of laws they propose; they should start with those that impact California condominium and homeowner associations

by David C. Swedelson

By David C. Swedelson, SwedelsonGottlieb Partner

There was an interesting article on new legislation in the March 6, 2011 edition of the Los Angeles Times about the 2,323 new bills that have been introduced in the California legislature, and this includes several that impact California community associations (more on that below). As reported in the Times:

In addition to addressing the state’s $25-billion deficit this year, the Legislature is making time for some other less-pressing matters: Caffeinated beer. Spaceships. How to properly describe a dog pound.

Proposals on those subjects are among the 2,323 bills lawmakers have introduced this year. Others would revise the definition of olive oil and regulate the reflectivity of pavement to help curb global warming. There’s a measure to create a “Parks Make Life Better” month.
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