http://blog.seattlepi.com/intelligentinvestor/archives/212001.asp
The above link provides an exhaustive outline of what someone interested in purchasing a foreclosure/short sale home should consider.
This article in Business Week outlines the ongoing (and troubling) picture of the US housing market:
One of the most depressing things to experience as a property owner, is the realization that your rights to property are junior to a third party’s.
In a few recent cases involving condominium parking, parties were locked into a dispute regarding who had rights to particular parking spaces. To a casual observer, this may not see like a big deal, but to a condo-owner, parking spaces are vital to any future rental opportunities. (Who wants to live in an apartment where you have no parking space?)
When developers complete condo construction projects, they usually draft and record covenants, conditions and restrictions (CC&Rs) that govern the units overall. Contained within these document are usually tables that outline specific parking assignments. However, often times the developers also reserve the right to change those parking assignments to meet the specific needs or wants of prospective property owners. This allows for not only a degree of flexibility in establishing the parking, but it offers a way for the developer to sweeten the sale of a particular condo by offering specific (usually more convenient) parking spaces. Once those units are sold, however, and a valid statutory warranty deed is transferred to the buyer of the property, those parking spaces become part of the ownership of that particular condo. Therefore, any subsequent purchasers of the property cannot claim rights to those parking spaces, regardless of what is contained in the CC&Rs.
In general, the way that you determine whether your title has superiority to another is twofold. First, if your title was recorded before the other title was recorded, then you have priority. Second, the transfer of the property MUST be valid! In other words, even if you record your deed to the property, the property you receive must have been transferred to you from someone who has the actual ownership rights to do so.
Commercial property owners sometimes run across the unexpected on their property during excavations and/or renovations. One of the most difficult (and feared) situation is that of locating an underground fuel storage tank on your property. The reason why this can be challenging to a landowner is because of how stringent Washington State’s environmental regulations are. The Model Toxics Control Act (“MTCA”, or “MoTCA” as it is often called) provides the statutory authority to demand clean-up/remediation of these underground tanks. The Washington Administrative Code, section 173-340, outlines with specificity the limitations to remediation of these tanks. On March 3, 2010, according to a Board of Health Resolution No. 2010-4225, the manner in which tanks are “decommissioned” was altered.
Up until March 3, 2010, an option that property owners had in decommissioning these tanks was to extract whatever fuel remained, then fill it with inert material. The tank would stay underground, but it would be harmless as it would contain no fuel and would be full of soil. This is no longer an option. “Decommissioning” now means that the tank must be fully removed from the property. This is significant, as the costs involved in removing a tank vs. filling it with inert material, is substantial.
A Seattle law firm, Hagens Berman Sobol & Shapiro, has filed a lawsuit against Bank of America over its apparent failure to satisfactorily distribute TARP funds to stem foreclosures.
According to a press release by Hagens Berman, Bank of America has made an “affirmative decision to slow the loan modification process for reasons that are solely in the bank’s financial interests.”
It will be interesting to monitor how this suit develops, as it strikes at the core issue of whether the government’s injection of capital into the banking market actually resulted in a positive result.
After the first attempt by the Obama Administration to stem the foreclosure tide fell flat (only a fraction of eligible home owners facing foreclosure secured permanent modifications), the federal government is proposing a broad new initiative.
The New York Times reports that the government will now try to reduce the principal for home loan modifications. To do this, it intends to provide a program by which those who are “underwater” (home value less than what is owed) can refinance into a government-backed mortgage.
This is significant because most (if not all) loan modifications up to now consisted of banks largely shifting interest rates and extending payment terms. Thus, the actual principal of the loan was never really effected, merely the interest. As a result, the underlying problem which plagued a lot of homeowners was never truly addressed (that they simply had purchased homes which were beyond their budget).
To fund this new program, the government intends to utilize $50 billion funds previously allotted to the Troubled Asset Relief Program, more commonly known as “TARP.” Though reaction from many non-profit groups is generally positive, it remains to be seen whether banks will cooperate with the new program.
Public and private construction projects are different in many respects, however chief among those differences is the party that owns the property subject to the contract. In other words, when contractors enter into a contractor with a municipality (County, City, State, agency, etc.) any subcontractors, material suppliers, laborers, or mechanics to that project are at a disadvantage. Why, you ask? Because unlike private property, the law prohibits subcontractors, material suppliers, laborers, and mechanics from recording liens on public property.
This is important because these second-tier contract participants are therefore unable to protect themselves should the general contractor refuse to pay them for their services. Unfortunetly, this puts them in an impossible position, as they cannot gain payment through a lien on public property, but there is often little to no amount left in the general contractor’s construction bond that would satisfy what these subcontractors are owed.
In response to this issue, Washington State enacted RCW 39.08, a statute which extends certain protections to subcontractors, laborers, material suppliers, and mechanics who do work for a general contractor on a public project. Here is what it does:
RCW 39.08.10 — Municipalities must require that general contractors to public projects have a “good and sufficient bond.” This bond is to be filed with the clerk or comptroller and is intended to stand as a surety in case the general neglects payment to all “laborers, mechanics, and subcontractors and material suppliers…”
RCW 39.08.15 — If the bond is not present, or is insufficient, then the municipality becomes “liable to the [laborers, mechanics, and subcontractors and material suppliers] to the full extent and for the full amount of all such debts so contracted by such contractor.”
The case law supports these protections —
Puget Sound Elec. Workers Health and Welfare Trust Fund v. Merit, 123 Wash. 2d 565, 870 P.2d 960 (1994) states that public works lien statutes require general contractors on public projects execute and deliver a bond to the public agency in order to protect all laborers, mechanics, subcontractors, and material suppliers performing the contract work.
National Sur. Co. v. Bratnober Lumber Co., 67 Wash. 601, 122 P. 337 (1912) states that statutory requirements for contractors on municipal improvements give bonds for payment of laborers and materialmen in order to secure claims not protected by lien laws.
Smith v. Town of Tukwila, 118 Wash. 266, 203 P. 369 (1922) also states that if the bond does not meet the statutory requirements, then it is insufficient and not a statutory bond (which by implication would satisfy the requirements outlined in RCW 39.08).
In short, if you are a subcontractor, laborer, material supplier, or mechanic doing work on a public job, and the general contractor refuses to pay your invoices, look to the contractor’s bond. If it is insufficient, then you may have a claim against the city/county/state is paying for the project.
If you are ever involved in property development, a liquidated damages clause is something you ought to be familiar with. What is a “liquidated damage”? It is basically an amount of damage that contracting parties agree to during the formation of the contract, which is applied if the agreement is breached. In other words, rather than the parties trying to calculate damages after a breach happens, they pre-determine the damage amounts.
These clauses are usually favored and often upheld in Washington State. Ashley v. Lance, 80 Wash. 2d 274, 280, 493 P. 2d 1242, 62 A.L.R. 3d 962 (1972). To determine whether they are enforceable, Washington courts generally require the following two factors to be satisfied:
(1) Liquidated damage must be reasonable (just compensation for the harm caused by the breach);
(2) It must be very difficult or impossible to determine the harm beforehand.
Walter Implement, Inc. v. Focht, 107 Wash. 2d 553, 559 (1987).
A liquidated damages clause will NOT be upheld if it is show that the provision is simply a penalty or is otherwise unlawful. Jenson v. Richens, 74 Wash.2d 41, 47, 442 P.2d 636 (1968).
In short, parties can pre-set what a contract breach will cost the breaching party. This allows for a clear assessment of damages, provided that it is not a penalty. The liquidated damages must not only be reasonable when compared to the harm of the breach, but the harm caused must be difficult or impossible to ascertain.
For a tenant to exercise his or her remedial rights under the Landlord-Tenant Act (RCW 59.18), the following requirements must be satisfied:
1. Tenant must be current on rent
2. Tenant must give landlord notice of any defective condition in writing (the landlord then has statutorily-outlined time requirements in which to correct the defects. RCW 59.18.070). If the landlord is not given notice, the court will not expect him to have fixed the defect(s).
3. Tenant must not prevent or thwart the landlord’s attempt at remedying the defect
4. If the landlord still does not correct the defect, the tenant may elect one of the following remedies:
(a) terminate rental agreement, and vacate; (b) commence action in court; or (c) fix the defect and deduct the cost from the required rental payment; (d) seek a third party arbitrator or court determination which assesses the reduction of rental value of the property; (e) in the case of substantial danger to the health and safety of the tenant, he or she can request that a government conduct an inspection on the premises. The inspector will then certify whether in deed the property is sufficiently dangerous, thus verifying whether withholding rental payment is justified; (f) seek authorization from a court or arbitrator to end the tenancy — this is only authorized when the defects are so drastic that they cannot be corrected.
For a more detailed description of the above guide, look to RCW 59.18. It is important to note that tenants must follow these requirements strictly. If a landlord can show that the RCW was not followed, he may defeat the tenant’s actions in attempting to correct the deficiency — meaning that the tenant may have violated the lease and is liable for subsequent damages.
Above all, if you are a tenant, be sure to keep paying rent! The court will not go along with your actions IF it is shown that you are either deficient in the rent owed, or have unnecessarily withheld amounts that you rightfully owe.
In a recent case, I encountered an interesting issue regarding deposits held by landlords. Specifically, what happens to a tenant’s deposit once the landlord/tenant relationship has ended (either the tenant has moved out or abandoned the property, or, the landlord has removed him or her)? In the Landlord-Tenant Act, RCW 59.18.280 outlines what needs to happen —
“Within fourteen days after the termination of the rental agreement and vacation of the premises or, if the tenant abandons the premises as defined in RCW 59.18.310, within fourteen days after the landlord learns of the abandonment, the landlord shall give a full and specific statement of the basis for retaining any of the deposit together with the payment of any refund due the tenant under the terms and conditions of the rental agreement. No portion of any deposit shall be withheld on account of wear resulting from ordinary use of the premises. The landlord complies with this section if the required statement or payment, or both, are deposited in the United States mail properly addressed with first-class postage prepaid within the fourteen days.
The notice shall be delivered to the tenant personally or by mail to his last known address. If the landlord fails to give such statement together with any refund due the tenant within the time limits specified above he shall be liable to the tenant for the full amount of the deposit. The landlord is also barred in any action brought by the tenant to recover the deposit from asserting any claim or raising any defense for retaining any of the deposit unless the landlord shows that circumstances beyond the landlord’s control prevented the landlord from providing the statement within the fourteen days or that the tenant abandoned the premises as defined in RCW 59.18.310. The court may in its discretion award up to two times the amount of the deposit for the intentional refusal of the landlord to give the statement or refund due. In any action brought by the tenant to recover the deposit, the prevailing party shall additionally be entitled to the cost of suit or arbitration including a reasonable attorney’s fee.
Nothing in this chapter shall preclude the landlord from proceeding against, and the landlord shall have the right to proceed against a tenant to recover sums exceeding the amount of the tenant’s damage or security deposit for damage to the property for which the tenant is responsible together with reasonable attorney’s fees.”
The important thing to remember is that the landlord has a mere 14 days to provide either an explanation of why the deposit has not been tendered (or to ask for more time). After that 14-day window, the landlord is functionally barred from making any defenses to keeping the money and may actually have to pay more. So, to all those landlords out there: be sure to take care of the deposit issue within that 14-day deadline.