[WSBARP] Judicial foreclosures and HOAs

Mon Feb 1 11:40:24 PST 2016

We care-thanks-maybe an article from you for RPPT section newsletter

J

Jay A. Goldstein
[cid:AEF18ED8-6AEE-403C-99E7-30A379E62D84 at local]
1800 Cooper Point RD SW NO. 8  |  Olympia, WA 98502
Telephone 360.352.1970  |  Fax 360.357.0844 |  www.jaglaw.net<http://www.jaglaw.net/>
jay at jaglaw.net<mailto:jay at jaglaw.net>

Nothing contained herein should be construed as legal advice.
The purpose of this email is to transmit a message or document.
Should you not be the intended recipient of this email message,
please reply advising of the mistake and then delete this message
from your computer. Should you have any questions,
please call the Sender at 360-352-1970.

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Rob Wilson-Hoss
Sent: Monday, February 01, 2016 11:22 AM
To: 'WSBA Real Property Listserv' <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Judicial foreclosures and HOAs

          I just want to introduce this topic and see if anyone else cares. I represent many HOAs and some condos and coops. This means many interactions with lenders around nonpayment of both loans and association fees. These days, lenders are filing more judicial foreclosures to address dead borrowers and other difficult issues. That is their choice. But they almost always name the association as a defendant, and claim, and seek relief about, extinguishing all rights of defendants.

          This is absurd, as a bank judicial foreclosure of a deed of trust in a covenanted community cannot (usually) extinguish the application of the covenants to the property. Certainly one issue is priority, bank loan to association delinquency, and that is a complicated issue involving the form of the association (condo or HOA/coop); if a HOA/coop, the language of the governing documents; and so on. Putting priority and payment issues aside, there are very likely a whole lot of other very important rights that associations and members of associations have in property that is being foreclosed, including the rights to the property condition and behavioral covenants, for example.

          For a lender to file a complaint and serve it on an association that seeks to extinguish those rights is, well, not something they teach in law school. Of course, my release date from law school was 1978, so things may have changed.

          So, who cares? First, there is a difference between associations with lawyers who call the banks on these complaints, and insist on a dismissal and judgment language that excepts covenant rights; and smaller (usually) associations that just ignore these lawsuits. But if the association is sued and is defaulted, then the judgment is going to say that all of its rights are extinguished.  Never mind the mess that needs to get unwound around unknown persons claiming rights being served by publication - I doubt that this can reach the individual members who usually have individual rights to enforce covenants, because they are known, and without service the judgment is void against them for want of jurisdiction.

          I guess I care because these things mess up the record for the lots foreclosed and sold.

          I will say that the bank lawyers I have dealt with about these issues typically agree, agree to a dismissal, and usually include language in the judgment that excepts the association, although not always. Twice I have had to make them go back and change the judgment to except the association from the general language extinguishing all other liens or encumbrances.

          Second, if an association is not prior, such as a condo or HOA without priority language, why should the association have to pay for an hour or two of its lawyer messing around with this to get the lender to do what it should have done in the beginning? And then following it to the end to make sure the judgment is what it is supposed to be? I suppose I could send out a CR 11 warning right away and let them take care of it directly, but that sounds like it would be more work in the long run, in most cases; and very unfriendly as well.

          Anyone else care? Anyone? Buehler?

Rob

Robert D. Wilson-Hoss
Hoss & Wilson-Hoss, LLP
236 West Birch Street
Shelton, WA 98584
360 426-2999
www.hossandwilson-hoss.com<www.hossandwilsonhoss.com>
rob at hctc.com<mailto:rob at hctc.com>

This message is intended solely for the use of the addressee and may contain information that is privileged, confidential, and exempt from disclosure under applicable law.  If you are not the addressee, you are hereby notified that any use, distribution, or copying of this message is strictly prohibited.  If you received this message in error, please notify us by reply e-mail or by telephone (call us collect at the number listed above) and immediately delete this message and any and all of its attachments.  Thank you.

This office does debt collection and this e-mail may be an attempt to collect a debt, Any information obtained will be used for that purpose.  To the extent the Federal Fair Debt Collection Practices Act (15 U.S.C. § 1692) applies this firm is acting as a debt collector for the condominium/homeowners' association named above to collect a debt owed to it. Any information obtained will be used for collection purposes. You have the right to seek advice of legal counsel.

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbarp/attachments/20160201/cc415a83/attachment.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.png
Type: image/png
Size: 28939 bytes
Desc: image001.png
URL: <http://mailman.fsr.com/pipermail/wsbarp/attachments/20160201/cc415a83/image001.png>