Lawyers and Managers Try to Use Seniors and Board Members as Fronts for Their Own Financial Gain

August 12, 2004

By Peter Amherst
Copyright AHRC News Services

Sacramento is used to high pressure tactics from special interests. But the current campaign by CAI lawyers and CACM managers to get AB 2598 and SB 1682 vetoed by the governor sets new highs for intensity and trickery.

Karen Conlon, president of CACM, Jennifer Wada - CACM's lobbyist - want to "bombard" the governor's office with letters, emails and anything else that they can get their hands on to defeat the two anti-foreclosure bills.

They paint a picture of hapless seniors being strapped with unpaid bills of their deadbeat neighbors, of associations struggling to survive because a $120 assessment bill goes unpaid. CAI/CACM lobbyists have already met with Yolanda Benson on July 23. She is Governor Schwarzenegger's legislative deputy.

At no time in all of this do they even give a hint about what is taking place - namely, that lawyers and managers will lose a lot of easy money if these bills pass. They know that preserving non-judicial foreclosure by homeowner associations gives them an economic noose around homeowners' necks. A study done in San Diego County between 2000 - 2002 shows that CAI lawyers earned approximately $300,000 from homeowners who were forced to pay between $2000 to $3,000 in CAI lawyers' fees to avoid losing their homes in foreclosure. CAI lawyers can do this by simply posting a Notice of Foreclosure Sale.

It is the prospect of losing this easy money that is driving the campaign against AB 2598 and SB 1682. There is no concern for the welfare of homeowners - especially seniors. If there really was, CAI lawyers and CACM managers would not be draining homeowner association reserves for legal fees and costs. No, they wear the holier-than-thou mask and parade before the governor's office as if their hearts were bleeding for homeowners.

Hence, it is important to let the governor know the true facts. Here are a few for starters.

1. Homeowners believe that everybody should pay their bills.

2. Homeowners do not believe that financial nuclear weapons should be used to compel this. Credit card companies do not have this power of non-judicial foreclosure, and mortgage lenders who have a lot more at stake use it only as a last resort.

3. Homeowners are not deadbeats. They have gone through a rigorous credit screening to purchase their homes.

4. Everybody in life sometimes hits a bump in the road - an accident, the loss of a job, illness, divorce etc. If a homeowner hits such an unfortunate bump, the neighborly thing is to lend a hand, not take his/her home. Both bills provide a balance of helping the homeowner and preserving the long term financial health of the homeowner association.

5. Less intrusive and less expensive means of collecting unpaid assessments such as small claims actions can be used instead of foreclosure.

6. For too long, lawyers have preyed on homeowners for their own financial gain. One study shows that between 1999 and 2003, almost 20,000 Notices of Foreclosure Sale were filed in California homeowner associations. With legal fees ranging up to $3,000 in each case for the mere filing of a piece of paper, this means that these lawyers extracted $60 million from California homeowners. This racket must end.

7. CAI/CACM claim that only a "small" percentage of these homes end up in foreclosure - in the above study, 143. This, of course, is a red herring. The prime reason why lawyers want homeowner associations to have the power of non-judicial foreclosure is to collect the $60 million in lawyers' fees. Getting a house in foreclosure is the icing on the cake. See the Radcliff story where Tom Radcliff lost his retirement home over an unpaid $120 assessment. His $300,000 home was sold for $70,000.

8. Point out to the governor that these bills have overwhelming bi-partisan support in the legislature. These bills have gone through many rigorous committee hearings. The people are behind these bills. The lawyers are against them. Ask the governor to sign the bills - and thank him for doing so as part of his pledge to work for the people of California.

Your letters should be addressed to:Governor Schwarzenegger

Click here to write a webletter , fax or mailed letter to Governor Arnold

You can email a copy of the letter to his Deputive Legislative Secretary YOLANDA.BENSON from the above link.

If sent by mail:

Ms. Yolanda Benson
Deputy Legislative Secretary
Office of the Governor
State Capitol , Sacramento, CA 95814

As the governor will be signing bills at once, try to send your letter of support right away. Right a wrong, write a letter. Homeowners are on the verge of a historic victory. Please take a few moments to be part of that history. Thanks.


THE FOLLOWING IS THE LETTER FROM CACM THAT MERIT PROPERTY MANAGEMENT HAS BEEN SENDING THE BOARD MEMBERS IN HOMEOWNER ASSOCIATIONS THEY SERVICE

Subject: Legislative Alert - You help is needed!

Legislative Alert - Write the Governor and ask for a VETO!

Jennifer Wada (CACM's lobbyist from Public Policy Advocates) and I had a meeting in the Governor's office on July 23, 2004. We met with Yolanda Benson, his Legislative Deputy, regarding AB 2598 & SB 1682. We provided her with a letter to the Governor requesting a VETO of both bills.

We briefed Ms. Benson on the potentially disastrous market effects the bills will have in the following:

(1) the impact on innocent homeowners who would be forced to subsidize delinquent homeowners (an especially serious concern for senior communities);

(2) the disclosure of "ALL" types of records including certain private information between the owner and the association;

(3) the interference with private business matters between CIDs and their owners who are bound by the CC&R's; and

(4) the expansion of allowing commercial signs and banners in the exclusive use common areas. She seemed interested the arguments including the current non judicial foreclosure process, recently improved in just 2002, results in only 1% of homes being foreclosed upon (i.e. the current process has safeguards built in to ensure Non Judicial Foreclosure only occurs in extreme circumstances of delinquent assessments..

CACM worked diligently and offered language alternatives to both authors. Numerous amendments have been suggested by association representatives and consumer advocates in an attempt to create a workable and reasonable compromise, yet they have been unfairly dismissed throughout the process. Additionally, hundreds of constituents' letters and petition signatures that were presented in Opposition to these bills were completely ignored.

The only strategy left is the VETO of both bills as they are considered "mirror" bills.

Ms. Benson was extremely gracious and asked that letters of VETO be sent directly to her.

If you're able to send a letter (EMAIL IS OK TOO), please indicate that you want these bills vetoed.

In each letter, cite

(1) who you are representing (are you a board member? manager?) (2) how many consumers and or associations you represent and their location (County) cited in your veto letter. etc. If you are sending a letter for a senior community, make sure you note as such.

If you have already sent your request to the general email address of the Governor, please re-send it to Ms. Benson.

The only way the Governor will veto these bills is if he has enough letters from California Consumers (especially senior groups) to support his actions!

Send your message to the Governor no later than August 31, 2004. We need to literally "bombard" his office with our requests.

SAMPLE LETTER FOR YOU TO USE:

Governor Arnold Schwarzenegger

Sent via email to: XXXX@XXXX

Ms. Yolanda Benson
Deputy Legislative Secretary
Office of the Governor
State Capitol , Sacramento, CA 95814

Dear Governor Schwarzenegger:

I am writing to urge you to VETO SB 1682 (Ducheny) and AB 2598 (Steinberg).

California's community associations and industry professionals are strongly opposed to both bills, which will not only burden housing consumers with even higher assessments to pay but will also create a second class of consumer citizens who will now have to pay extra fees for homeowners who do not pay their assessments on time.

The California Association of Community Managers (CACM) provided you with a letter of VETO on July 23, 2004 that cites specific technical problems with both bills. Rather than reiterate those items, there are additional concerns.

I represent (name of your association or management firm here).

We have (number of owners and/or number of associations) located in (County(ies) represented). (Note- if you are a senior community make sure you state so here).

Community Associations are private businesses who contract with their owners (via CC&Rs) to pay monthly assessments to sustain the community's infrastructure. Association budgets rely on assessments as their sole source of income to conduct those duties which associations must, by contract, perform for the benefit of its members.

Both bills are profoundly inequitable and an offensive scheme that will potentially allow an individual to not pay their contractual obligation for a period of up to 3-5 years! In other words, these bills "incentivize" nonpayment of assessments. Given the contractual nature of the relationship, the preliminary collection policies and annual notices given to the member, and the procedures already in place that provide opportunities for a homeowner to arrange payment plans with the association to avoid foreclosure, these bills would unnecessarily and unfairly burden innocent homeowners.

As a matter of broader public policy, this violates principles of fair taxation and government interference with working and effective business practices.

Here are additional concerns regarding both bills:

(1) This legislation also allows for an unproductive and irruptive approach to inspect certain association records and all contracts to which the association or any affiliated organization is a party by amendment to CC 1632.2. It also allows civil fines of up to $500 per violation. What constitutes a violation is not specified; i.e. each contract/document, each request, each individual making a request?

(2) It significantly impedes the ability of the association to obtain fair and equitable proposals from 3rd party contract services. This will again raise costs to the homeowners in the community.

(3) The bill also expands the right to post ANY sign and banner in exclusive use common area, which will be extremely problematic for associations, real estate developers and the owners themselves.

The bottom line? Community associations represent trillions of dollars in real estate value in California. Approximately 9 million residents live in them. With the current California population base, at least one in four residents lives in a community association. These bills will add additional financial and administrative burdens that are just not necessary.

Please - VETO SB 1682 and AB 2598.

Thank you.

(Your Name and address here)

Karen D. Conlon, CCAM
President
California Association of Community Managers, Inc.
Irvine, California