Legal/Legislative Update – January 13, 2014

Published on: January 13, 2014

HEALING PROCESS. A strong sales pace has reduced the inventory of unsold existing condominiums and co-ops to a 4.6 months’ supply. Average prices have increased by 17.7 percent over the past year, according to industry statistics. .

CONSTRUCTION COSTS. The rising price of lumber – up 30 percent over the past year – is narrowing the construction cost gap between high-rise and garden-style apartments as wood frame becomes almost as expensive as steel.

BOOMERANG BOOST. Homeowners laid low by the foreclosure crisis may boost the housing recovery in 2014. Based on a poll of their members, and are predicting that 2014 will be the year of the “boomerang” buyer, as owners who lost their homes to foreclosure regain their financial footing and re-enter the housing market.

GETTING BIGGER. Builders aren’t just building more homes as the economy improves; they are building them larger. The average size of a newly constructed home was 2,607 sq. ft. last year, 300 feet larger than in 2012, according to a National Association of Home Builders report. Construction costs also jumped by 34 percent – to $246, 453, while new home prices rose by 25 percent. 1-8-14

IF ONLY. Nearly half of all the mortgage defaults occurring during the housing bust would have been avoided had the “qualified mortgage” rules taking effect in January been in effect, a Goldman Sachs study has concluded. The study found that 47 percent of the loans originated between 2005 and 2008 and 59 percent of those originated in 2007 had at least one feature barred by the new mortgage rules.

FEELING SQUEEZED.  Smaller seats are not the only reason passengers feel more constricted these days. Travelers are also getting bigger. In the last four decades, the average American gained a little more than 20 pounds and his or her waist expanded about 2.5 inches, according to the Centers for Disease Control and Prevention. The dimensions of airplanes, however, have not changed and neither has the average width of a coach seat, which is 17 to 18 inches.




BY DESIGN. The Fair Housing Act requires community associations to approve accommodations for residents suffering from physical or emotional disabilities. More often than not the law favors owners seeking concessions over boards reluctant to grant them. But not always.

The owner of a home in a Tennessee homeowners association (Hollis) sought permission to add a sunroom to her home after a storm damaged the awning over her patio. The HOA’s Architectural Review Committee rejected the application because it failed to include the project details (plot plan, building materials, building setbacks, etc.) the association’s declaration required and because, in their view, the proposed design did not meet the community’s aesthetic standards.

The board rejected the addition as proposed, asking Hollis to submit a plan incorporating design elements (brick and shingled roof) more compatible with the community. After the board had rejected two subsequent plans – because of aesthetics and the lack of sufficient detail – Hollis indicated for the first time that the room was intended as a playroom for her two disabled children and submitted physicians’ letters documenting the benefits for them. Once again, the board said it could not approve the application without detailed design specifications, which Hollis had not provided.

The fourth application was the charm – the ARC and the board approved it, with one caveat –Hollis had to incorporate a shingled roof matching the community’s architectural standards.

Hollis objected to the change and sued the board, claiming that it had improperly rejected four separate accommodation requests.

In its decision (Hollis v. Chestnut Bend Homeowners Association), the Tennessee District Court made quick work of the first three applications, noting that they were rejected appropriately because they were incomplete. The fourth application was complete and properly documented the basis for Hollis’ modification request, the court agreed. But the association, in the court’s view, had demonstrated a non-discriminatory reason for insisting that Hollis modify her proposed design, and Hollis “presented no direct evidence that the [board] denied their application for a sunroom addition because [her children] are handicapped.” For that reason, the court refused to overturn the lower court decision granting summary judgment to the association.


WORTH QUOTING: “The combination of financial healing, greater balance in the housing market, less fiscal restraint, and, of course, continued monetary policy accommodation bodes well for U.S. economic growth in coming quarters….Of course, if the experience of the past few years teaches us anything, it is that we should be cautious in our forecasts.” ─ Former Federal Reserve Chairman Ben Bernanke, in a speech shortly before his term ended.