[WSBARP] No Super Priority Lien for Non Condo HOAs? RCW 64.34.364 Inapplicable.

Fri Feb 24 18:19:12 PST 2017

It was my understanding that FHA and VA had requirements that their 
mortgages be superior to the HOA liens, and that is why so many HOAs 
(especially in my hinterlands) have such a provision in their CC&Rs.  
Did this requirement change?  Or is it just ignored by FHA?  We get 
around this by having the HOA's CC&Rs impose a transfer fee upon any 
sale, which is a set amount plus any nonpaid HOA dues/assessments.

Very Truly Yours,

Robert R. Cole

Law Office of Cole & Gilday, P.C.

10101 - 270th St. NW

Stanwood, WA 98292

(360) 629-2900 (Telephone)

(360) 629-0220 (Fax)

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On 2/24/2017 5:04 PM, Rob Wilson-Hoss wrote:
>
> 1.       The condo six month superpriority statute has zero to do with 
> non-condo HOAs. What you see is servicers and lenders who all trade 
> the same tired, wrong information, a list of states and priority 
> rules, and when they get to the W's, and read Washington, the list 
> says, six months.  Yeah, for condos. These aren't condos. And the 
> six-month rule only applies to new act condos anyway.
>
> 2. Lien priority in Washington for non-condo HOAs is structured by the 
> association's governing documents, so the results will vary widely. 
> The research to support that conclusion is hundreds of pages long and 
> totally compelling. Just think of them as any other consensual, 
> contract lien. Without going into the authorities, think of deeds of 
> trust. A restrictive covenant lien is considered to be like a contract 
> lien for these purposes, so it is like a deed of trust in many 
> conceptual ways. Now, some deeds of trust are fixed in terms of the 
> amount at the time of recordation, such as my house loan, but some 
> are, for example, home equity lines of credit, or reverse mortgages, 
> or construction loans - the date of recordation of the right is fixed 
> as of the date of recordation of the deed of trust, even though the 
> money is not lent yet. Then when the money is lent, the right to 
> collect that money by lien foreclosure relates back for priority 
> purposes to the date of recordation of the deed of trust, or, in the 
> case of an HOA, the covenant, bylaw or other governing document that 
> creates the lien right and the priority right.  Banks can't really 
> argue against this because they are the ones who use the same 
> principles with their relation back liens.
>
> 3. Yes, this means that some HOAs have lien priority and some don't, 
> and some have some sorts of priority and not other sorts of priority. 
> Depends on the documents.
>
> 4. Don't give up on the six year old debt so easily. Have there been 
> any payments on the debt that suggest an acknowledgement of the entire 
> debt and intent to pay it? There are other exceptions to the SOL, but 
> that is one of the most useful.
>
> 5.       I see that Jim Strichartz has weighed in to the same effect, 
> and he is always right about these things, but I will say that we live 
> in different worlds. Out here in the hinterlands, banks do lend on 
> properties in HOAs with priority all the time. I have been making 
> these arguments for thousands of units of HOAs since the mid-90s and 
> have never once had a member complain that he or she couldn't get a 
> loan because of them.
>
> 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>
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> *From:*wsbarp-bounces at lists.wsbarppt.com 
> [mailto:wsbarp-bounces at lists.wsbarppt.com] *On Behalf Of *Rowley, Rob
> *Sent:* Friday, February 24, 2017 4:39 PM
> *To:* WSBA RPPT
> *Subject:* [WSBARP] No Super Priority Lien for Non Condo HOAs? RCW 
> 64.34.364 Inapplicable.
>
> Assume standard non-condo residential homeowners association records 
> lien against one of its lots for an owner who never pays. Lien grows 
> in excess of six years and association starts and abandons lien 
> foreclosure.  Big bank forecloses on underlying deed of trust of the 
> recalcitrant homeowner and sells at auction to real estate investor.  
> Homeowners association wants to collect in excess of six years.  I 
> looked at the CCRs and see nothing allowing for survival of the lien 
> post foreclosure. Real estate investor swears up and down the 
> Association is barred to the six months as all of his fellow investors 
> are saying the same thing.  I know that the balance beyond six years 
> would be barred by the contract statute of limitations.
>
> I'm aware of a section under the Condo Act dealing with a six-month 
> limitation on dues that an Association can to collect RCW 64.34.364. I 
> can't find anything similar for a non-condo homeowners association.
>
> When I ask my favorite title office below is her response. Even she 
> got it confused.
>
> "Hi Rob!  Received your message regarding “super liens” – you may want 
> to check out RCW 64.34.364 – it is my understanding that those 
> priority liens need to be established in the CCR’s to be legally 
> effective to survive a foreclosure. However, from a title perspective, 
> we tend to be cautious about them and if there is an HOA lien 
> recorded, we will continue to show it after the sale and make the new 
> owner cure or negotiate a release with the HOA if the priority 
> standing is unclear.  I think from a “legal” perspective, the RCW 
> above lays out the conditions and stipulations.  Hope this helps and 
> hope you have a great weekend!"
>
> Suggestions?
>
> *Robert R. Rowley*, Attorney at Law
>
> 7 S. Howard St., Suite 218
>
> Spokane, WA  99201
>
> T: (509) 252-5074
>
> C: (509) 994-1143
>
> F: (509) 928-3084
>
> E: rob at rowleylegal.com <mailto:rob at rowleylegal.com>
>
> W: www.rowleylegal.com <http://www.rowleylegal.com/>
>
> Practice concentrated on business, real estate and general legal 
> matters in Washington and Idaho.
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