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<p class="MsoNormal"><span style="color:#1F497D">I’d love to see the topic fleshed out as I represent many lenders post foreclosure with REOs and we run into a similar issue with HOA/COA foreclosures from the other side where they either don’t name the bank
or do and then insert what I contend is rather sneaky language into the default which a judge rarely reads stating that the HOA/COA lien has super priority over everything except taxes even if there was subordination language in the governing documents. They
then foreclose and demand the bank pay the full amount to redeem. Creates a huge mess when realistically the attorney had no good faith basis for requesting that relief over the bank.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b>From:</b> wsbarp-bounces@lists.wsbarppt.com [mailto:wsbarp-bounces@lists.wsbarppt.com]
<b>On Behalf Of </b>Rob Wilson-Hoss<br>
<b>Sent:</b> Monday, February 01, 2016 11:22 AM<br>
<b>To:</b> 'WSBA Real Property Listserv' <wsbarp@lists.wsbarppt.com><br>
<b>Subject:</b> [WSBARP] Judicial foreclosures and HOAs<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"> 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.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"> 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.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"> 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. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"> 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. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"> I guess I care because these things mess up the record for the lots foreclosed and sold.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"> 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.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"> 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.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"> Anyone else care? Anyone? Buehler?<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">Rob
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal" style="text-autospace:none"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">Robert D. Wilson-Hoss
<br>
Hoss & Wilson-Hoss, LLP <br>
236 West Birch Street <br>
Shelton, WA 98584 <br>
360 426-2999<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><a href="www.hossandwilsonhoss.com">www.hossandwilson-hoss.com</a><br>
<a href="mailto:rob@hctc.com">rob@hctc.com</a></span><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal" style="text-autospace:none"><i><span style="font-family:"Times New Roman",serif">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.<o:p></o:p></span></i></p>
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<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Times New Roman",serif;text-transform:uppercase">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.
</span></b><span style="font-size:10.0pt;font-family:"Times New Roman",serif">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.</span><o:p></o:p></p>
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