Foreclosures Lead to Rise in Homeowners' Association Fees

Recently, WKYC Cleveland ran a "focus" story entitled "Foreclosures Lead to Rise in Homeowners' Association Fees" featuring Kaman & Cusimano, LLC Attorney David Kaman. The story details the plight of Ohio's associations in the event of a foreclosure and highlights the grassroots effort to pass a "Super Lien" in Ohio.

When a unit goes into foreclosure and an owner stops paying the association's fees, the other members of the community often have to "foot the bill" to ensure that all necessary services of the neighborhood are carried out. According to Attorney Kaman, "[Ohio's] associations are bleeding bad debt, with no bank bailout to help them and so they have to act aggressively in foreclosures." A "Super Lien" would ease this burden on community associations by giving the association's lien six months priority over a bank's first mortgage. Joining the fifteen other states that have similar legislation, a "Super Lien" would not only preserve property values, but also the vibrancy of Ohio's neighborhoods and communities.

To watch the story please click on the following link: http://www.wkyc.com/video/default.aspx?aid=94514

SB 187 Hearings Held

On Tuesday, December 1, 2009, Kaman & Cusimano, LLC attorneys David W. Kaman and Darcy Mehling Good attended Senate Bill 187’s proponent hearing before the Ohio Senate’s State & Local Government & Veterans Affairs Committee. David Kaman testified and answered questions before the committee, elaborating on the bill’s benefits to Ohio’s homeowner associations and Ohio’s homeowners. This was a crucial first step to getting this legislation passed in the Senate.

If passed, SB 187 would establish the Ohio Planned Community Act, giving Ohio’s homeowner associations a statutory foundation, similar to Ohio’s condominiums. The Act will provide Ohio homeowners with the consumer protections they deserve by protecting their investment through statutorily organized associations creating strong neighborhoods and communities. This includes the ability to amend a declaration, permit spouses to serve on the board, and affirm the association’s right to file a lien.

As this bill progresses through the Ohio General Assembly, your support will be crucial to show Ohio legislators that Ohio’s communities and homeowners need this important law. Stay tuned to this blog for how you and your community can help, and for updates on the progress of this legislation.

To view a full text version of the bill, please visit http://www.legislature.state.oh.us/bills.cfm?ID=128_SB_187

Board President Convicted of Theft

According to an article in the Middletown Journal, an Ohio Association's board president was convicted of embezzling association funds. To learn about the steps your board can take to help protect your Association's assets, Kaman & Cusimano, LLC clients should read the article "Safeguarding Association Funds" by Attorney Darcy Mehling Good. The article can be found on the client articles page of the Kaman & Cusimano websites: www.ohiocondolaw.com or www.ohiohoalaw.com


Jail time for man convicted of embezzling $44K
By Denise G. Callahan, Staff Writer

LEBANON — A 49-year-old Maineville man was sent to jail for 60 days and ordered to pay the remainder of the $44,029 he stole from the Fosters Pointe subdivision.

Warren County Common Pleas Judge James Flannery gave Phillip Enrich a severe scolding before imposing the sentence, following Weinrich’s guilty plea Thursday, Aug. 27.

“I’ve decided that sending you to prison in this case won’t be necessary,” Flannery said. “It’s justified, you deserve it, but I’m not going to impose that consequence ... You have shamed your children, your wife, your parents and the very good people who wrote letters on your behalf, that counts for something, that is some consequence.”

Weinrich was the subdivision’s homeowners association board president when other board members found something was fishy with the books. It came to light that Weinrich had set up a secret HOA checking account and was paying his credit cards with those checks, his attorney Mark Krumbein said.

Flannery said in his 36-and-a-half years on the bench he has never had so many correspondence on one case, not even in death penalty and rape cases. He said 42 people took the time to write him and it was an even split between those who vilified and those who supported Weinrich.

Krumbein told the judge that his client, before the lapse in judgment, was a good neighbor, helping anyone in need. He has worked for Habitat for Humanity and performed other charitable works. He also said Weinrich tried to start paying back the money just before he was caught. He has paid back $24,500 of the money he grabbed.

Krumbein said Weinrich works as a traveling sales manager for a large company. The Weinrich home on Kelso Drive is valued at $359,280 by the Warren County auditor.

Flannery noted if Weinrich still has a job after this, he will serve his 60 days on work release, so he can earn the rest of the money he stole. Weinrich will be on community control for three years and also is not allowed to hold any position that involves handling money.

In a letter read during the hearing, members of the HOA board asked Flannery to throw the book at Weinrich, who faced a maximum 18 months in prison for the felony four charge. Members of the HOA board declined to comment after the hearing.

First Assistant Prosecutor Andy Sievers told the judge the best outcome would not be prison, but repayment of the money. Flannery said it mattered little to him that Weinrich intended to repay the money — embezzlers almost always do, he said.

“And you’re an embezzler, you’re a thief,” he said. “There is no polite way to say this and I’m not going to mince words with you. You stole from people who trusted you.”

Weinrich was cuffed and led out of the courtrom. Krumbein said Flannery’s decision was just.

“I feel Judge Flannery’s sentence was fair,” he said. “He respected the victims and was still fair to Mr. Weinrich by allowing him to continue working so he can repay the money.”

Red Flag Rules Delayed

During our current seminar series, entitled "Success Basics for Community Association Board Members," our attorneys have been asked about the new "Red Flag" Rules. The Federal Trade Commission (FTC) has announced the implementation of "Red Flag" Rules which would require financial and creditor institutions with certain types of accounts to implement various rules, regulations, and safeguards to protect against identity theft.

While these new rules were intended for financial institutions such as banks and mortgage companies, the language of the regulations was so broad that they may also apply to certain community associations and property management companies. In part due to this expansive language, the FTC has delayed enforcement of the Red Flag Rules until June 1, 2010.

In order to clarify its positions, the FTC plans on issuing additional guidance to parties effected by these new rules. In the meantime, the Community Association Institute will continue to communicate its concerns to the FTC regarding the implications these rules will have on community associations. As soon as the FTC releases its guidance, the attorneys at Kaman & Cusimano will review it and advise our clients on how best to comply with the rules and reasonable safeguard against identity theft. Stay Tuned to this blog for more information.

FHA Regulations Delayed

This past summer, the Department of Housing and Urban Development (HUD) announced that it was proposing new regulations for the condominium approval process of FHA loans and insurance. These new regulations, as initially proposed, would eliminate the "spot approval" process currently in place and would require existing associations to complete a new, comprehensive application process to obtain FHA approval. Once an association completes this process, it would be on a list of approved condominium associations whose units are eligible for FHA financing for two years.

Unsurprisingly, these sweeping new regulations have met with considerable resistance from both the lending and community association communities. As a result, implementation of these new guidelines has been delayed a second time, to December 7, 2009. In the coming weeks, FHA and HUD promise to release additional guidance on how to best transition an association to the new regulations. The attorneys at Kaman & Cusimano, LLC will continue to monitor this progress and will update readers on any developments. If and when the new guidelines are issued, we will provide information on how best to proceed with FHA financing. In the meantime, the "spot approval" process continues to be the easiest way for a potential unit owner to obtain FHA financing.

The Community Association Institute (CAI) has been an integral part in lobbying Congress, HUD, FHA, and the administration to make the FHA financing process as easy as possible on the millions of American community associations. Please check back to this blog in the coming weeks for additional updates from the CAI, HUD, and FHA.

HOA Legislation Introduced!

The Ohio General Assembly has introduced legislation that will govern Ohio’s homeowner associations. Senate Bill 187, entitled The Ohio Planned Community Law, enjoys bi-partisan support, sponsored by Senator Seitz (R) and co-sponsored by Senator Sawyer (D). Getting this legislation passed into law is essential to preserving and protecting Ohio’s homeowner associations, and their owners, residents, and guests, far into the future.

For some time, Ohio’s condominium associations have had a state statute, the Ohio Condominium Act (O.R.C. 5311.) The Ohio Planned Community Law does not contain new law. It takes the currently existing condominium law and applies pertinent provisions to the operation of planned communities that are not condominiums. This includes important provisions such as requiring the developer to file a declaration and bylaws with the county recorder, providing that boards be elected from among the owners or spouses of the owners, allowing amendments to the declaration and bylaws with a seventy-five percent (75%) vote, requiring associations to maintain adequate reserve funding, and giving associations the statutory right to file a lien for delinquent assessments.

This bill, if passed, will provide Ohio homeowners with the consumer protections they deserve by protecting their investment through statutorily organized associations creating strong neighborhoods and communities. While the legislation does not currently include "Super Lien" language, we are working with legislators to amend the bill and insert a homeowner association "Super Lien."

Kaman & Cusimano, LLC is now reviewing the bill and as soon as our review is complete we will be posting a bill summary and a sample letter for homeowners supporting the bill to send to legislators.

To view the full text of the bill, click here: http://www.legislature.state.oh.us/bills.cfm?ID=128_SB_187

Bill Introduced to Permit Patriotic Flags

The Ohio General Assembly has introduced House Bill 289, which if passed would prohibit Ohio community associations from passing an amendment or rule banning "A service flag approved by the United States secretary of defense for display in a window of the residence of a member of the immediate family of an individual serving in the armed forces of the United States. A service flag includes a blue star banner, a gold star banner, and any other flag the secretary of defense designates as a service flag."

This prohibition would be in addition to the restriction on associations prohibiting the American flag already found in Ohio law. The intent of passing this bill follows the common sense approach to patriotic flags that Kaman & Cusimano has advised its clients to follow in the past. Even before this bill becomes law, in these times of great national pride, especially for those serving in the armed forces, associations should consider permitting such displays of patriotism. While the association may require that the display conform to some reasonable restrictions, an outright ban will lead to angry, upset owners and even significant media attention.

This legislation is sponsored by Representatives DeGeeter and Coley and Cosponsored by Representatives Book, Boose, Murray, Gardner, Evans, Harris, Uecker, Harwood, Gerberry, Letson, Adams, R., Lundy, Luckie, Stebelton, Mecklenborg, Lehner, Ujvagi, Yuko, Phillips, and Dodd. To view the full text of the bill, click here: http://www.legislature.state.oh.us/bills.cfm?ID=128_HB_289