Legal/Legislative Update – May 19, 2014

Published on: 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, compared with 60 percent in that category a decade ago.

UNFAIR PRACTICES. The Consumer Financial Protection Bureau’s (CFPB’s) investigations of mortgage related consumer complaints (and there have been nearly 100,000 of them) have identified a number of “unfair and deceptive” practices, among them:

  • Failure to cancel private mortgage insurance when required;
  • Failure to credit borrowers properly for bi-weekly mortgage payments;
  • Inaccurate submissions to credit reporting agencies; and
  • Refusal to honor loan modification terms.

WATCHFUL EYE. The Federal Reserve is keeping a wary eye on the housing market and isn’t much liking what it has been seeing. Testifying recently before the Joint Economic Committee, Fed Chair Janet Yellen noted, “The recent flattening out in housing activity could prove more protracted than currently expected, rather than resuming its earlier pace of recovery.” This is the first time Yellen has included housing on the list of factors that could impede the economic recovery. The housing trend, she said, is something that “will bear watching.”

AFFORDABILITY PROBLEMS. The percentage of homes affordable to middle income buyers has been declining steadily for the past two years, pushing home ownership beyond reach for a rising share of the population. Providing statistical support for the concerns of housing industry executives, a Trulia analysis found that more than half the homes in 20 of the largest 100 metropolitan markets are not affordable to middle-income buyers. And affordability has declined in all but two of those markets over the past year. “Affordability is worsening,” Trulia Chief Economist Jed Kolk said. Notwithstanding recent improvements in the labor market and a slowing in appreciation rates, he noted, “prices are still rising faster than wages and income.”

NOT AS PLANNED. Analysts predicted that the Qualified Mortgage rules would produce overly-conservative underwriting policies, but that doesn’t appear to be the case. In fact, the National Mortgage Risk Index indicates that risk levels are rising – and dangerously so, according to the International Center on Housing Risk, which produces the risk barometer.


TOO MUCH EVIDENCE.    When dealing with requests for accommodations under the Fair Housing Act, boards are allowed to ask for evidence documenting the disability claimed and demonstrating how the accommodation relates to the stated disability. But they can’t be stupid about it. That’s the shorthand assessment of how a Florida District Court viewed a dispute between an association board (Sabal Palm) and an owner requesting waiver of the community’s no-pet policy so she could have a service dog. (Sabal Palm Condominiums of Pine Island Ridge Association, Inc. v. Fischer.)

The resident (Fisher) suffered from Multiple Sclerosis and was confined to a wheelchair because of it. When she requested a service dog to help with daily living tasks, the board demanded medical records from all the healthcare providers who diagnosed or treated the disability that she claimed made a service dog necessary. In addition, Sabal Palm insisted that she provide “all documents relating to the nature, size and species of dog, as well as all documents regarding any training it received.”

Although Fisher submitted reams of information in response, the board nonetheless concluded that she had not provided all the information requested and voted unanimously to deny the accommodation request for that reason. But the board delayed enforcement of the decision in order to seek a declaratory judgment from the court affirming the board’s view that the evidence Fisher had presented was inadequate.

The court concluded otherwise. While acknowledging that there is cause for skepticism about some accommodation requests – specifically those seeking service dogs to assist with emotional disabilities that are largely invisibles – the court pointed out, “This is not such a case…. It is undisputed that Deborah has a bona fide physical disability that has severe physical symptoms. And her specially trained service dog does not assist her by providing emotional support: it assists her by helping her complete physical tasks that her physical disability makes difficult.” The voluminous documentation Fisher submitted was more than adequate, the court said, to substantiate both her disability and her need for the service dog she requested. Because the documentation Fisher submitted was extensive and evidence of her disability obvious and indisputable, “Palm’s demands for even more information were unreasonable,” the court said.

The court also rejected the board’s argument that Fisher unreasonably refused to accept the smaller (20-pound) dog the board had proposed as an alternative. The board itself had acknowledged that the presence of a dog of any size would not impose any excessive costs on the community (one reason for rejecting an accommodation request), nor would a dog “alter the essential nature” of the association’s operations, the court noted – another possible reason for asking Fisher to consider an alternative. More to the point, the court added, it was clear that a smaller dog would not provide the services Fisher needed. And she was not required to accept an alternative in any event.

While housing providers can suggest alternative accommodations, the court said, they “should be aware that persons with disabilities typically have the most accurate knowledge about the functional limitations posed by their disability, and an individual is not obligated to accept an alternative accommodation suggested by the provider if she believes it will not meet her needs and her preferred accommodation is reasonable.”

The court found the board’s actions sufficiently egregious to justify Fisher’s demand for punitive damages, and to support her move to hold the board president personally liable for the discriminatory acts, which the lower court had rejected.


“The deferral of marriage has such a staggering impact on real estate and I just don’t think people focus on it…. I don’t think the multifamily market has ever had a better set of future demographics.” —Sam Zell, chairman of Equity Residential, the largest owner of multi-family rental property in the country.