Year: 2014

December 30, 2014

SUPER BATTLE.  The condominium super lien appears to be under attack. First came the ‘Drummer Boy’ decision (Drummer Boy Homes Association, Inc. vs. Carolyn P. Britton et.al.), in which a Massachusetts appeals court ruled that associations can’t have multiple liens in place. Rejecting the successive rolling liens that associations have used traditionally to ensure the collection of unpaid common area assessments and attorneys’ fees when delinquencies span multiple six-month periods, the court ruled recently that [Read More...]

December 16, 2014

NEW ESCROW REQUIREMENT.  Federal bank regulators have proposed regulations that would require automatic escrowing of the premium payments on flood insurance policies. Federally regulated mortgage lenders are already required to make sure borrowers living in designated flood hazard areas purchase and maintain flood insurance. The new regulations would intensify efforts to ensure that borrowers don’t let their policies lapse. The Federal Reserve, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Farm Credit [Read More...]

December 10, 2014

‘Twas six weeks before Christmas, but in all areas common, The voices of residents already were hummin’ With gripes about what should be hung on the walls, Installed or removed from the floors and the halls. In one lobby corner, Mrs. Jones with great care, Had placed a large Santa, inflated with air. A few feet away several elves vied for space, With symbols of Kwanzaa on a ledge draped with lace. On the opposite [Read More...]

December 1, 2014

PULLING TEETH. What’s worse than a trip to the dentist? Spending time with a financial adviser, according to respondents to a recent survey, 17 percent of whom said that given the choice, they’d rather spend the time in a dentist’s chair. The poll results suggest that their finances need as much work, if not more, than their teeth. Nearly 60 percent of the respondents said they are barely making it from paycheck to pay check; [Read More...]

November 25, 2014

The newly enacted “retainage” law calls to mind the adage about not wanting to see laws or sausage being made. The sausage, at least, is likely to be digestible and maybe even tasty. It’s not clear that either can be said about this new law. Long sought by the Associated Subcontractors of Massachusetts and ultimately supported by the Associated General Contractors, who had initially opposed it, the “Act Relative to Fair Retainage Payments for Private [Read More...]

November 12, 2014

RETHINKING LOW DOWN PAYMENTS. Conventional wisdom holds that low-down payment mortgages approved for borrowers who really couldn’t afford home ownership costs, and who ultimately defaulted on their loans, contributed much to the implosion of the financial markets. But the Urban Institute compared default rates on loans with down payments of 3-5 percent and 5-10 percent, and found that there wasn’t much difference between them. Credit history is a far more accurate indicator of a borrower’s [Read More...]

October 29, 2014

FHA RISING. The Federal Housing Administration (FHA) has almost succeeded in rebuilding its insurance fund, which has been stuck for several years below its federally-mandated capital levels. A recent report by Moody’s analytics concludes that the fund will have “close to” the 2 percent reserve cushion it is required to maintain. Huge losses, attributable primarily to the FHA-insured reverse mortgage (HECM) program, forced the agency to accept federal funds last year (a $1.7 million infusion) [Read More...]

October 14, 2014

SECURITY LAPSES. It seems that the Consumer Financial Protection Bureau (CFPB), which enforces data security and consumer privacy requirements for financial institutions, has some lapses of its own in those areas. The Government Accounting Office (GAO) has identified 11 steps the CFPB should take to strengthen its privacy and data security practices and policies. Among other problems, a GAO audit found, the CFPB lacks “written procedures and comprehensive documentation” for several procedures, including those related [Read More...]

October 12, 2014

An owner in your condominium community has begun renting his unit to vacationers, who occupy it for short periods – a day or a few days ─ at a time. The owner is delighted with this new source of income, but his neighbors are less pleased with the revolving door of people they don’t know cycling in and out of the building. How will the board respond to their concerns? That question is arising with [Read More...]

September 30, 2014

FEELING MUCH BETTER.   As the effects of the “Great Recession” recede, community association managers and board member are feeling a lot better about the communities they oversee. Almost 90 percent of the 1000 respondents to CAI’s annual “State of Associations” survey described the overall health of their associations as “excellent,” and more than half (55 percent) expect their associations to be in even better economic shape five years from now. VAPORIZING.  The companies selling [Read More...]

September 17, 2014

BETTER OR WORSE.  It’s either getting easier or more difficult to obtain a mortgage, depending on which of any number of competing studies you want to choose. The Federal Reserve’s most recent survey of senior loan officers found that nearly 24 percent of banks have eased their credit standards in the past three months – at least as they apply to borrowers “with solid credit and incomes,” according to the Wall Street Journal. But Ellie [Read More...]

September 9, 2014

For condominium boards trying to anticipate future challenges, here’s a prediction that bears considering: Fair housing accommodation requests are going to multiply. This prediction doesn’t require a crystal ball; a general knowledge of demographic trends will tell you what you need to know. Baby boomers are getting older and many of these aging boomers are choosing to age in place, remaining in the condominium units they have occupied for years and sometimes for decades. Grab [Read More...]

August 31, 2014

PET FRIENDLY.   Renters are finding more pet-friendly apartments ― a good thing for them, since nearly half of all households own at least one dog or one cat. Nearly three-quarters (72 percent) of renters responding to a recent survey said they are pet owners. That’s down slightly from 75 percent in 2013, but still way ahead of the 43 percent responding positively in 2012. This doesn’t mean that pet restrictions have disappeared, however. Only [Read More...]

August 21, 2014

GUILTY OF MURDER.  The Dodd-Frank Financial Reform law killed the housing market! That is the less-than-subtle conclusion of an article written by two Bank of America Merrill Lynch analysts, who blame the myriad mortgage-related rules spawned by the legislation for the sluggish housing recovery. “We think persistently low mortgage application volumes and [the] extremely weak new home sales reports for May and June are natural outcomes of the legislation,” analysts Chris Flanagan and Adam Katz, [Read More...]

August 7, 2014

In a case handled by MEEB, the Supreme Judicial Court (SJC) has made it easier for condominium associations to win compensation for construction and design defects and has eliminated some of the uncertainty surrounding those claims. The state’s highest court upheld an Appeals Court ruling (Wyman v. Ayer Properties) holding that the economic loss rule limiting recovery in tort actions should not be applied to community association claims for defects in the original construction and [Read More...]

August 5, 2014

RETHINKING FHA CERTIFICATION.   Since the Federal Housing Administration (FHA) tightened the criteria condominium communities must meet to obtain FHA certification (a requirement for borrowers who want to use FHA financing to purchase condominium or refinance an existing mortgage) the number of condominiums seeking certification has slowed to a trickle. The Washington Post reported recently that only about 10,000 of an estimated 140,000 condominium developments nationally have obtained FHA certification. California Realtors have launched a campaign [Read More...]

July 18, 2014

Although the population of smokers is declining, community associations continue to struggle with disputes between smoking and non-smoking residents. A California jury recently found a homeowners association negligent for failing to resolve one such conflict. Kim and Kai Chauncey complained to the board of their Trabuco Canyon Condominium community that their neighbors ─ tenants renting an adjacent unit — smoked “incessantly” on their patio and on the sidewalk in front of their unit. They said [Read More...]

July 18, 2014

NO IDLE THREAT.   Massachusetts Attorney General Martha Coakley, who had threatened to sue Fannie Mae and Freddie mac, has made good on that threat. She recently filed suit against the two GSEs and the Federal Housing Finance Agency, which oversees them, for violating a state law designed to help troubled borrowers remain in homes they are losing to foreclosure. The law prohibits provisions, which Fannie and Freddie include in foreclosure sales, barring purchasers of [Read More...]

June 30, 2014

FEELING DOWN.   Feeling more upbeat about the economic outlook? We’ll take care of that right now. The International Monetary Fund has slashed its growth forecast for this year from 2.8 percent to 2 percent, and is now predicting that the U.S. won’t see full employment again until sometime near the end of 2017. UNSETTLING OR OVERSTATED?   The severe economic restraints on young adults will create serious and long-term impediments to economic growth, Wall [Read More...]

June 16, 2014

THEY LIKE WHERE THEY LIVE.  Notwithstanding periodic reports of heavy-handed condominium boards and the owners furious with them, most residents like the common interest ownership communities (CIOCs) in which they live. And every year, the Community Associations Institute (CAI) publishes a survey confirming that conclusion. This year’s survey, conducted for the Foundation for Community Association Research, found once again that nearly two-thirds of the 65 million owners and renters living in CIOCs rate their experience [Read More...]

May 30, 2014

The Community Associations Institute (CAI) is opposing a proposed rule that would prohibit community associations from collecting transfer fees on the sale of units in their communities. Sound familiar? It should. The Federal Housing Finance Agency (FHFA) – the primary regulator for Fannie Mae and Freddie Mac – proposed the same rule but ultimately withdrew it when CAI argued that a blanket restriction on transfer fees was unnecessary and potentially devastating to the thousands of [Read More...]

May 30, 2014

GSE REFORM. Despite the loss of what could prove to be crucial support from several Senate Democrats, the Johnson-Crapo bill to restructure the home finance system made it out of the Senate Banking Committee with a bipartisan 13-9 margin. The legislation, which would replace Fannie Mae and Freddie Mac with a federal reinsurance fund to back up private-sector mortgage originators, has emerged as the primary vehicle for restructuring the mortgage market. But critics on both [Read More...]

May 19, 2014

RISK MANAGEMENT? It appears there may be more than one way to duck those rising flood insurance premiums. The FBI is reportedly investigating “unusual” alterations tin FEMA’s flood maps that inexplicably removed some properties from “high risk” zones where insurance is required. A NEGATIVE TREND. A growing number of condominium associations aren’t as financially sound as they once were. Association Reserves, an industry consulting firm, estimates that 70 percent of association-governed communities are underfunded today, [Read More...]

April 30, 2014

ALL CASH. Cash transactions made up more than 80 percent of condominium sales in Florida and Nevada in January ― the largest percentages among the 25 markets analyzed by CoreLogic. Massachusetts was at the bottom of the cash purchase list, at 36.7 percent, just above Virginia, at 32.4 percent. Restrictive lending requirements and other lingering effects of the downturn have “pushed condo cash shares much higher than pre-recession levels over the past five years and [Read More...]

April 30, 2014

Can condominium associations limit the number of people occupying a residence in the community? The short answer is, if the governing documents impose occupancy restrictions, association boards have the authority to enforce them. But can they do so without violating Fair Housing laws forbidding discrimination against families with children, ethnic minorities, and other protected classes? That’s a different question, and a far more complicated one. Many associations impose occupancy limits (no more than two occupants [Read More...]

April 14, 2014

DEVELOPER RELIEF. Condominium developers may win relief from the Interstate Land Sales Full Disclosure Act (ILSA). The law requires developers to provide specific pre-contractual and pre-closing disclosures to borrowers and to register development projects with the Consumer Financial Protection Bureau (CFPB). Although the law was not aimed at condominium developments, federal and state courts have ruled that a condominium unit represents a “lot” which is subject to the disclosure and registration rules. Many condominium buyers [Read More...]

April 2, 2014

APPRAISAL RULES. Federal regulators have issued new rules governing the state registration and supervision of appraisal management companies (AMCs), which serve as intermediaries between appraisers and lenders. Although states aren’t required to establish a regulatory structure for AMCs, federally-regulated financial institutions can obtain appraisal services only from those that are subject to state oversight. READY TO BOUNCE. Real estate brokers, emerging from a miserable winter, are expecting an exceptionally sunny spring. “Because we’ve had a [Read More...]

March 26, 2014

Court decisions usually attract our attention because they break original legal ground by creating new precedents or overturning existing ones. But sometimes a decision stands out because it demonstrates that a legal principle established at the appellate level is gaining acceptance and traction closer to ground level in the courts below. A recent Massachusetts Superior Court decision, Donna Diggs, et. al. v. Wilmington Whispering Pines, deserves attention for that reason. The principle involved ─ the [Read More...]

March 13, 2014

Just when you were getting used to your iPhones, it is time to get ready for the next wave.  Smart phones may soon be replaced with smart glasses.  Google Glass allows the user to view images called up in the glass through voice activation or by touching the rims of the glasses.  The product is expected to hit the market in 2014.   Currently they sell on e-bay for around $2,300 a pair. Google Glass like [Read More...]

March 13, 2014

Registered Land is unassailable.  This is one of those “truths” Massachusetts Real Estate Lawyers have had drilled into their heads over the years.  Registered Land is supposed to be unassailable because land boundaries, easements and encumbrances are determined through an exhaustive, time consuming and expensive process and ultimately certified in the form of a Certificate of Title signed by a Land Court Judge.  Anybody who goes through that process (which some real estate lawyers think [Read More...]