I Will Appear on Local Radio Show Brashenomics Thursday Afternoon!

I had the privilege of guesting on local radio show Brashenomics this morning.  I joined a panel of local professionals to discuss issues related to the Puget Sound real estate market.  The show airs on Thursday, October 25 at 4:00 on 1150 AM.   

UPDATE: My Brashenomics segment can be viewed here. 

HUD Announces Changes to FHA's Condominium Approval Policies

The U.S. Department of Housing and Urban Development (HUD) recently announced changes to the Federal Housing Administration's (FHA's) condominium approval policies. Among other adjustments, HUD altered its policies governing the maximum levels of delinquency and leasing in FHA-approved condominiums.

Under the new FHA standards, no more than 15% of the total units in a condominium can be more than 60 days past due on assessment payments. This percentage includes units that are occupied, bank-owned, or vacant. HUD warned that it will not grant exceptions to this rule. 

The new FHA standards retain the requirement for completed condominiums that are over a year old to be at least 50% owner-occupied. For condominium projects that are proposed, under construction, or less than a year old, however, HUD now requires a minimum owner-occupancy percentage equal to 30% of the condominium’s declared units.

HUD's letter describing the complete set of changes to the FHA condominium approval policies can be found here.

Seattle's Energy Tracking Program Deadline is Approaching!

The City of Seattle's new Energy Benchmarking and Reporting Ordinance requires community associations with properties of five units or more to begin tracking their energy use by October 1, 2012. Tracking will be done using the EPA's portfolio manager tool, which is free and available online here.  Once community associations have established their portfolio manager profile, energy tracking and annual reporting to the City of Seattle will be done automatically.   

More information about the City of Seattle's Energy Benchmarking and Reporting Ordinance can be found at its website or by calling the City of Seattle's Energy Benchmarking Helpline at (206) 727-8484.

Why Washington Condominium and Homeowners Associations Need Attorneys

Washington condominium and homeowners associations encounter a number of legal issues each year.  Many of those issues arise when owners fail to comply with the association’s governing documents. Other legal issues relate to the association’s compliance with local, state, and federal laws, many of which impose affirmative duties on community associations. For example, Washington state law requires condominium associations to periodically approve budgets, hold meetings, obtain reserve studies, purchase insurance, and maintain records.  Associations that are not represented by attorneys are not likely to consistently fulfill those legal obligations.  It is therefore highly advisable for community associations to regularly seek guidance from attorneys who are familiar with this area of the law.

Associations should not expect their property managers to draft legal documents for them or to provide them with legal advice.  As a Florida court once pointed out, property managers who draft documents which establish an association’s rights or who advise associations about what the law requires in specific situations can be sanctioned for practicing law without a license. Improperly drafted, approved, or executed documents and incorrect statements of legal requirements can also create expensive headaches for associations.  Associations should instead instruct their attorneys to draft or review documents which affect their rights and seek advice from their attorneys regarding how to conduct the association’s affairs in accordance with current legal requirements.       

Association boards should not be under the false impression that working with attorneys necessarily costs a lot of money.  The attorneys who practice in the area of community association law have different methods, opinions, and personalities.  Some of them, including myself, place a high value on providing concise advice and minimizing legal fees to the extent possible.  If your association works with the right attorney, then the benefits reaped as a result of that relationship will far outweigh the costs associated with it.                  

How to Pursue Delinquent Owners in Small Claims Court

Owners in condominium and homeowners associations unfortunately do not always pay their assessments.  When that occurs, associations have many collection options available to them.  Most of those options involve hiring an attorney, but Seattle-area community associations can also pursue delinquent owners on their own by filing small claims in King County District Court.

If your association wants to file a small claim against a delinquent owner, then the first step in that process is to submit a notice of small claim form to the court.  The fee for filing a small claim is currently $35.  The court will add a case number and trial date to the notice of small claim and send two copies of that document back to the association.  Trials are typically scheduled between 40 and 90 days after the claim is filed.

The second step in the small claim process is to serve the completed notice of small claim on the delinquent owner.  Process service must take place at least 10 days before the scheduled trial date, and this can be accomplished by the sheriff's office, a professional process service company, or by certified mail with return receipt requested (as long as the owner signs the return receipt). 

The third step in the small claim process is to appear in court on the trial date.  If a mandatory mediation does not result in a settlement, then the trial will proceed.  A member of the association's board of directors must present its case at the trial.  Consulting an attorney in advance can help to ensure that the association's position is presented properly. 

While the small claim process can be a useful collection tool, associations should also be aware that it has significant drawbacks.  First, small claim judgments cannot exceed $5,000.  Second, associations’ ability to collect judgments will be limited by the amount of owners’ personal assets and wages that can be located and garnished.  Third, judgments will not prevent owners from continuing to reside in or lease their homes without paying assessments.  Fourth, board members must take time out of their busy schedules to travel to court and appear on the association’s behalf.  Despite those drawbacks, pursuing a small claim can be the best course of action in certain circumstances, particularly when the debt and the association’s legal budget are small.  Discussing the available collection options with an attorney can help associations decide if the small claim process is the right way to seek collection of unpaid assessments.          

The King County District Court’s website is an excellent resource if your association wants to learn more about pursuing small claims.