[WSBARP] HOA inherent powers?

[Paul Neumiller]

No, I do not practice bankruptcy law.


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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of prudence_b at comcast.net
Sent: Sunday, September 16, 2018 4:25 PM
To: 'WSBA Real Property Listserv' <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] HOA inherent powers?

Hi Paul,
Do you handle Chapter 13 bankruptcy? If you do can I ask you a question pertaining to past due HOA dues.
Thanks

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Paul Neumiller
Sent: Tuesday, April 3, 2018 3:27 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] HOA inherent powers?

Richard, I can address the second part of your question.  A lender accepting a DIL is not an innocent party/purchaser.  While a foreclosure action will relate back to the date the deed of trust was recorded and therefore wipe out all junior liens and obligations, a DIL is treated as a current sale of the property for the price of the forgiveness of the loan.  This means that the lender takes the property subject to the liens of record.  For example, before my clients accept a DIL from a defaulting debtor, we always pull a Trustee Sale Guaranty ("TSG") to see what is recorded against the property.  If there are many and expensive junior liens, my client will continue with the foreclosure procedure in order to wipe out the junior liens.  But if there are no junior liens or just a few for only a couple thousand dollars, my client may make the decision to abandon the foreclosure procedure, accept a DIL and then just pay off the junior liens and get early possession of the property.  If lender pulled a TSG, the lender should have seen that the property was subject to CC&Rs and should have contacted the HOA to see if the debtor was current in the payment of assessments and dues.


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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Richard Holland
Sent: Tuesday, April 3, 2018 10:53 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] HOA inherent powers?

Property owned by A with a DOT to Lender.  HOA for the property.  Lender forecloses and takes title by DIL.  HOA months later liens the property for unpaid dues by A.  Review of HOA Bylaws etc. does not specifically mention the power to lien the property for unpaid dues just the catchall 'any remedy at law or in equity'.  RCW 64.38 does not explicitly grant the power to lien but there are the 'catchall clauses':

(13) Exercise all other powers that may be exercised in this state by the same type of corporation as the association; and
(14) Exercise any other powers necessary and proper for the governance and operation of the association.

So two major issues, to me:  1) Can an HOA just inherently lien a property for unpaid dues when nothing expressly in the Bylaws gives them that power? 2) How can an HOA lien a property no longer owned by A for A's debt?

I understand that the Bylaws run with the land but, for example, if A had sold to B (assume GFPV), I don't see how in the world the HOA could do this to an innocent B.

Am I missing something obvious?

Sincerely,

Richard L. Holland

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