Tag Archives: community association

Matt Drewes Quoted in Three New Articles at National Community Association Forum

5 Sep

Matt Drewes recently contributed quotes for the following articles published at www.hoaleader.com, a national web-based publication focused on homeowners association and condominium board members and association management professionals:

  • 7 Tips to Keep HOA Legal Fees in Check; published August, 2013 at HOALeader.com
    • Publisher: Plain-English Media, LLC (quoting Matthew A. Drewes); Read it now.
  • HOA Owners and Security Cameras: OK or No Way?; published August, 2013 at HOALeader.com
    • Publisher: Plain-English Media, LLC (quoting Matthew A. Drewes); Read it now.
  • Smart Rules for your HOA Meetings Open Forum; published August, 2013 at HOALeader.com
    • Publisher: Plain-English Media, LLC (quoting Matthew A. Drewes); Read it now.

Matt is a Shareholder with Thomsen Nybeck.  He is the head of the firm’s eight-member Community Association Representation Group and the firm’s Creditors’ Remedies Group, and practices in the areas of business and real estate litigation and transactions, employment law, construction litigation, community association law, debtor/creditor law and insurance. He has been included in the annual list of Minnesota’s Rising Stars for several years, and has been quoted in the Minneapolis StarTribune, Minnesota Lawyer, Habitat Magazine, and on various websites including Yahoo!Finance.com, Bankrate.com, MSN.com, HOALeader.com, and elsewhere on issues involving construction litigation, community associations and real property issues. He can be reached at mdrewes@tn-law.com or by phone at 952.835.7000.

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Matt Drewes Quoted in Recent Article at HOALeader.com: Does Your Architectural Committee Have the Right or Responsibility to Enforce Local Laws?

6 Jun

Matt Drewes recently contributed quotes for the following articles published at www.hoaleader.com, a national web-based publication focused on homeowners association and condominium board members and association management professionals:

  • Does Your HOA’s ARC Have to Enforce Local Laws? Discussion Forum Follow-up; published April, 2013 at HOALeader.com
    • Publisher: Plain-English Media, LLC (quoting Matthew A. Drewes); Read it now.

Matt is a Shareholder with Thomsen Nybeck.  He is the head of the firm’s eight-member Community Association Representation Group and the firm’s Creditors’ Remedies Group, and practices in the areas of business and real estate litigation and transactions, employment law, construction litigation, community association law, debtor/creditor law and insurance. He has been included in the annual list of Minnesota’s Rising Stars for several years, and has been quoted in the Minneapolis StarTribune, Minnesota Lawyer, Habitat Magazine, and on various websites including Yahoo!Finance.com, Bankrate.com, MSN.com, and elsewhere on issues involving construction litigation, community associations and real property issues. He can be reached at mdrewes@tn-law.com or by phone at 952.835.7000.

Matt Drewes Quoted in Several Articles at HOALeader.com: Dealing with renters; Associations issuing speeding tickets?; Getting an inactive association back on track

23 May

Matt Drewes recently contributed quotes for the following articles published at www.hoaleader.com, a national web-based publication focused on homeowners association and condominium board members and association management professionals:

  • “Smart HOAs Get Tenants on Their Side”; published March 8, 2013 at HOALeader.com
    • Publisher: Plain-English Media, LLC (quoting Matthew A. Drewes); Read it now

 

  •  “Restarting Your HOA? Where to Begin”; published March 2013 at HOALeader.com
    • Publisher: Plain-English Media, LLC (quoting Matthew A. Drewes); Read it now
  • “Court Says HOA Can Issue Speeding Tickets; What’s next, Undercover Ops?”; published March 2013 at HOALeader.com
    • Publisher: Plain-English Media, LLC (quoting Matthew A. Drewes); Read it now
  • “Getting Tenants Invested in Your HOA”; published March 2013 at HOALeader.com
    • Publisher: Plain-English Media, LLC (quoting Matthew A. Drewes); Read it now

Matt is a Shareholder with Thomsen Nybeck.  He is the head of the firm’s eight-member Community Association Representation Group and the firm’s Creditors’ Remedies Group, and practices in the areas of business and real estate litigation and transactions, employment law, construction litigation, community association law, debtor/creditor law and insurance. He has been included in the annual list of Minnesota’s Rising Stars for several years, and has been quoted in the Minneapolis StarTribune, Minnesota Lawyer, Habitat Magazine, Yahoo!Finance.com, Bankrate.com, MSN.com, HOALeader.com, and elsewhere on issues involving construction litigation, community associations and real property issues. He can be reached at mdrewes@tn-law.com or by phone at 952.835.7000.

Minnesota Construction Warranty Claims: New Procedures for 2011

18 Jan

You may be familiar with (or at least aware of) the warranties provided to homeowners under Chapter 327A of Minnesota Statues.  These warranties include a one-year warranty on all workmanship and materials, a two-year warranty on plumbing, electrical or other mechanical systems, and a ten-year warranty against major construction defects.  These warranties apply to new or newly remodeled residential property (which can include single-family homes or community associations, such as condominiums or townhouses), and are binding against the builder (of a new home) or contractor (in the case of a remodeling project).  Throughout the rest of this article, I will refer to both as a “contractor”, though homeowners should appreciate there can be a difference.

For years, Chapter 327A has contained certain procedures that owners must follow to preserve a claim for a breach of one or more of these warranties.  Effective January 1, 2011, these procedures now have been revised, and new procedures have been added.  You can read the complete text of the new statute here.  The legislature’s goal in making these changes is to try to reduce the number of lawsuits that are necessary to resolve these warranty disputes, but as with any new process there will always be traps for the unwary and navigating the new procedures is bound to catch more than a few homeowners off guard.

The process still provides that written notice of an alleged defect must be provided to the contractor within six months of the discovery of the defect, with the new exception being where the owner can demonstrate the contractor had actual notice of the claimed defect. Of course, it’s best to provide timely written notice if you wish to rely on this statutory warranty.  Many owners falter by failing to provide this notice within six months of discovering the defect.

After this notice has been provided, the contractor has always been required to inspect the alleged defect within 30 days and propose a repair.  The new amendment now requires the owner to allow the contractor to conduct “invasive” testing to determine the extent of any damage or the proper type of repair, however.  Invasive testing may involve making test cuts in stucco or interior drywall and/or using a probe to test the moisture content of the wood framing members of the home, though the statute does not specify.  It is of course fair to permit the contractor a reasonable opportunity to understand fully the defect (if any) involved, and the contractor is required to place the property back into “pre-inspection condition” following any invasive procedures, but it is unclear how this restoration process will be measured or enforced in practice.

In the event the contractor inspects the property and the owner and contractor cannot agree on the proposed repair (and owners should carefully evaluate proposed repairs, preferably with the assistance of a trusted contractor, engineer or attorney), the homeowner must (yes, must) follow through with the new “home warranty dispute resolution process”.  The new dispute resolution process requires the selection of a “qualified neutral” from a list maintained by the Minnesota Department of Labor and Industry, which will charge aspiring neutrals a $200 fee to be listed.  There are rather short timeframes applicable to the steps for selecting a neutral, so homeowners should consult with an experienced member of the construction industry and/or their own construction attorney before submitting their claim to the commissioner of the Minnesota Department of Labor and Industry.  Otherwise they will find themselves with little time to make a decision about the neutrals from which they must choose to evaluate their case.

After a neutral has been selected, the parties must meet together with the neutral and each will submit its own reasons why its proposed repair is proper.  There is a fee of $25 per party for participation in the process, in addition to the hourly fees of the neutral third-party the parties select.  It also is possible the parties will use attorneys to represent them through this process, and contractors with insurance coverage almost certainly will have attorneys present to represent them, though homeowners presumably will not be required to do so.  According to the amendment, at the end of this process the neutral third party does not issue a binding decision (it simply is an evaluation). Moreover, this evaluation may not be used as evidence in any later litigation if the “unreasonable” party does not care to acknowledge that it is being unreasonable. The process does, however, provide the parties with perhaps some further understanding of the potential damages at stake and chances of a favorable (or unfavorable) result.

Barring certain exceptions, the parties must complete this process before litigation can be commenced.  However, there are four situations which owners may commence litigation earlier if the contractor is not engaging in the process in good faith:

1) The homeowner may sue the contractor immediately if:

a) the contractor fails to conduct an inspection within 30 days after the owner has provided written notice of the defect;

b) the contractor performs the inspection but fails to provide a written proposal to make a repair of the alleged defective condition within 15 days after the inspection is complete;

c) the contractor provides a proposed repair, to which the owner agrees, but the contractor does not perform the repair.

2) The homeowner may also sue the contractor following the expiration of 60 days from the owner’s receipt of the contractor’s repair proposal, whether or not the dispute resolution process is complete.

In the event the evaluation process is not successful in bringing the owner and contractor to a resolution, the new amendment also alters certain timing considerations applicable to a construction defect lawsuit. This is because there are numerous claims (or theories of recovery) applicable to construction defect cases. These can include not just a claim that the contractor breached one or more of the statutory warranties under Chapter 327A, but also that the contractor breached an applicable contract, or that the contractor was negligent. There are also other warranties that may apply, including warranties applicable to common interest communities (condominiums and townhouses) as well as warranties covering the sale of goods (such as windows, doors, shingles, etc.). Each of these claims has not only its own standards, but each also has an applicable limitations period (the period within which you must sue or your claim is barred) which may be different from the next. The amendments to 327A now provide that, for as long as an owner is following this statutory procedure, or for 180 days, whichever is longer, all of those claims will be “tolled” (meaning their expiration will be delayed). This is a useful provision for ensuring a homeowner does not lose the right to commence litigation as a result of participating in this mandatory dispute resolution process.

The new provisions of Chapter 327A certainly have created more opportunities for construction defect cases to reach resolution outside of court, in theory.  However, there is little likelihood that a contractor who was being unreasonable under the prior procedures failed to realize it was being unreasonable, and there is little consequence to a contractor that fails to reach a reasonable resolution even under this new scheme.  Therefore, until we have seen this process utilized a few times, we do not know whether it will provide aggrieved homeowners with a legitimate alternative to litigation, or just another hurdle to clear to obtain a recovery under Chapter 327A.  In the meantime, if you have any questions about whether this process applies to you and how to comply with its provisions, contact Matt Drewes or one of the other construction litigation attorneys at Thomsen Nybeck.

Matt Drewes contributed this post.  Matt is a Shareholder with Thomsen Nybeck.  He is the head of the firm’s 10-member Community Association Representation Group and co-leads the firm’s construction litigation group.  Matt practices in the areas of business and real estate litigation, construction litigation, community association law, debtor/creditor law, insurance and employment, has been included in Minneapolis/St. Paul Magazine’s list of Rising Stars for several years, and has been quoted on issues involving construction litigation, community associations and real property issues in the Minneapolis Star Tribune, Minnesota Lawyer, Yahoo!finance.com and Bankrate.com, and elsewhere.  He can be reached at mdrewes@tn-law.com or by phone at 952.835.7000.

MORTGAGE FORECLOSURE: PROTECTING YOUR ASSOCIATION

6 Jan

In the midst of a foreclosure crisis negatively impacting all Associations, there are some steps Association s may take to protect themselves both physically and financially. 

In Minnesota, for the purposes of this article, we will focus on foreclosure by advertisement where a Notice of Mortgage Foreclosure Sale is personally served upon the occupants at least four weeks prior to the scheduled sale, and a copy is published in the legal newspaper for six weeks prior to the scheduled sale. 

Prior to the actual sale, the owner has a right to “reinstate” the mortgage by paying the lender the amount in default (as opposed the accelerated loan balance) plus all costs and a statutory amount of attorney fees.  Reinstatement stops the foreclosure process.

If the owner does not reinstate prior to the sale, then, the Sheriff of the county in which the property is located holds a sheriff’s sale.  The lender will make a cashless bid either of the amount owed, or often times for an amount less than what is owed.  Third parties are free to appear and over-bid the mortgage company with cash.

If the sale is held, then a redemption period follows which normally is six months from the date of the sale. However, if the mortgagor/borrower has paid more than two-thirds of the original principal balance of the mortgage, a 12 month redemption period will follow. 

If the property is “abandoned” within the meaning of Minn. Stat. § 582.032, the lender may shorten the statutory redemption period to five weeks.  This five week period may run from the date of sale if the was brought before the sale, or five weeks from when the order granting such relief is entered and filed against the property, if brought after the sale.

During the redemption period, the owner/borrower continues to own all right, title, and interest in and to the property.  He can continue to live there, continue to lease it or enter into a new lease and collect the rents.  He also may redeem the property by paying to the holder of the sheriff’s certificate of sale the amount bid in at the sale, plus additional interest at the underlying note rate, and attorneys fees and costs, as determined by the statute. Redemption usually is accomplished through new financing or the sale of the property.

Before property goes into foreclosure, i.e., before a Notice of Pendency & Power of Attorney to Foreclose has been rerecorded, one of the best things an Association  can do for itself is to file a Request for Notice of Mortgage Foreclosure and Redemption Reduction with the county per Minn. Stat. Sec. 580.032.  If filed before the Notice of Pendency and Power of Attorney, the lender’s attorneys are required to provide you notice of the mortgage foreclosure sale and, if the redemption period is being shortened, notice of this action too. 

Most mortgage-foreclosure law firms provide notice weeks if not months before the sale is to occur. This often saves the Association  a good deal of time and often attorneys’ fees if a known mortgage foreclosure sale is on the horizon.  Most importantly, it allows you to take the steps discussed below!  Our firm normally files the Request for Notice for all delinquent accounts we are asked to collect.

Another good step is to review legal newspapers for the names/addresses/legal descriptions of your Association ’s property.

Routine inspections of the property should be made, looking for vacant/abandoned property.  Also,  members should be encouraged to pass along such information if they believe a neighbor has moved out and property is sitting empty.

Since being “in foreclosure” often means different things to different people, if an owner indicates to you that his unit is “in foreclosure”, of even if property is abandoned, ascertain how far the foreclosure process has progressed.   Contact the county recorder/Registrar of Titles to see if a Notice of Pendency and Power of Attorney has been recorded.  Then, contact the attorneys who filed it to see if a sale has been set, or if one has occurred, the bid, etc.

Once the Association knows about a sale being scheduled to occur, it is vitally important for the Association  to follow up with the mortgagee’s attorneys as to whether the sale occurred.  Having such information would allow you to take steps to inspect the property to see if the property is occupied, or, if not, to see if the lender already has secured and/or winterized the same.  If property is vacant and abandoned and has not been winterized (usually you would see a sticker of some sort on the door), contact the lender’s attorneys, in writing, and let them know the property is vacant and abandoned. The Association  wants the lender to winterize and secure the property.  It also wants the lender to shorten the redemption period, discussed above.  Make sure to use the word “abandoned” when having this discussion with the lender’s attorneys.

If you get no response and the temperature is plummeting, do not wait for the mortgage company to act.  Most governing documents and the statute allow the Association  to take steps in order to protect units and common elements from damage.

Moreover, if the Association  incurs cost benefiting few than all the units (here, the cost to winterize, rekey, etc. a unit), under MCIOA, said cost may be assessed back to the unit and, depending on the stage of the foreclosure process, the mortgage company may, in fact, be responsible for these costs.  If your Association  is governed by the MCIOA, the holder of the sheriff’s certificate of sale will take subject to a lien in favor of the Association  for dues, special assessments, and insurance assessments that are assessed during the six  month period preceding expiration of the owner’s redemption period.  If the redemption period is six months, this usually runs from the date of sale forward.  If the redemption period is 12 months, we still go back only six months.  If the redemption period is shortened to five weeks, we still go back six months.

However, if the process just has started and the sale is not set to occur for several months, the Board then must weigh its options carefully.  It may secure and winterize a unit (a few hundred dollars) itself or risk payment of the insurance deductible and the increased premiums from making yet another claim.   Remember, the lender/holder of the sheriff’s certificate of sale only will be liable for special assessments if assessed during the six month period preceding expiration of the owner’s redemption period.  So, if the pipes burst and are repaired/assessed in January, the sale happens in February and the redemption period expires in August, the Association , not the lender, is liable for the bill (as is the prior owner).  Therefore, do not be penny wise but pound foolish.

In addition to asking the lender to secure abandoned property, effective August 1, 2009, cities now may require the holder of the sheriff’s certificate of sale to secure property.  If the lender fails to do so, the city may do so, with the costs incurred to do so being assessed by the city against the property (similar to the way a special assessment or taxes are assessed). 

Application of the law is unclear and, most cities have not yet set up exact offices through which to request such notice.  Some cities are more responsive than others. Our office has received notice of such actions through the filing of a Request for Notice of Mortgage Foreclosure which is recorded with the county recorder/registrar of titles office.  Such Request for Notice also have been the basis for receipt of tax forfeiture notices. 

If the sale has occurred, prepare for redemption as a junior lien creditor, if the bid makes doing so economically feasible, or, if not, calendar out to after the redemption period is to expire to contact the new owner about the dues.

Once the redemption period has run and, the lender/holder of the sheriff’s certificate of sale is the new owner of the property, make sure to start sending this entity copies of your complete ledger.   Some of you reading this article have experienced first hand how receipt of a letter prompts full payment from the lender even though only six  months worth of dues were out.  Others, especially when dealing with federal agencies such as HUD, or semi-federal agencies like Fannie Mae & Freddy Mac, know the wait for payment can be very long, often until re-sale.

Hopefully, the discussion above can assist Associations to help themselves.  The key is to keep informed of the process and to follow up once you know foreclosure is likely to occur.  If you do need assistance, however, our firm stands ready to help.

This blog entry is written by Gretchen Schellhas, a shareholder at Thomsen Nybeck.  Gretchen is the head of the litigation section at Thomsen  Nybeck. Gretchen’s practice is concentrated in the areas of Family law, Townhome and Condominium law, and General Civil Litigation. Gretchen is an experienced attorney, well-versed in trials and alternative dispute resolution. Gretchen has repeatedly been featured as a Superlawyer by Minnesota Law & Politics, as well as being recognized as one of Minnesota’s Top Family Lawyers by Mpls St. Paul Magazine.

Recent Headlines Demonstrate the Importance of Associations Watching the Ledger

23 Nov

A recent article in the Star Tribune describes an unfortunate situation that has arisen for a local association that came to discover its finances were in shambles due to cost overruns that drained the Association’s reserves.  The article also describes a not uncommon situation that arises in the instance that one owner owns multiple unit, and thereby multiplied voting power.  The clout that the ownership brings is deserved considering the substantial amount of investment that owner has in the property, but also can be abused or simply perceived that way by other owners.  It sounds like it’s not the end of the story as to the outcome of the Association.  The full story from the Star Tribune can be found here.

Association’s financials affect each and every member in significant ways.  It is important to have a strong team of talented property managers, dedicated board members, and knowledgeable attorneys to ensure your association is on sound financial footing.  Contact the attorneys at Thomsen Nybeck regarding any and all of your needs in the area of Minnesota common interest ownership communities, which includes townhouses, condominiums, and single-family associations.

This blog entry is written by Chris Renz, a shareholder at Thomsen Nybeck. Chris practices in the litigation area of the firm with primary focus on wind energy-related lease litigation, real estate litigation, employment litigation, townhome and condominium law, and criminal law, particularly as the prosecutor for the Metropolitan Airports Commission.

Matt Drewes Quoted In Articles Published at Bankrate.com and Yahoo! Finance:

23 Mar

Matt Drewes recently contributed quotes for the following articles published at www.bankrate.com, a national web-based publication focused on educating the public about real estate, mortgage, insurance, tax, investment and other money issues, as well as Yahoo! Finance and Cincinnati.com:

  • “How should you title your home?” Posted under Real Estate on March 19, 2010, by G. M. Filisko (read it at Bankrate.com here, Yahoo! Finance here, or Cincinnati.com here; and
  • “7 choices for underwater condo owner” Posted under Mortgage on March 22, 2010, by Holden Lewis (read it here).

Matt Drewes is a Shareholder with Thomsen Nybeck.  He is the head of the firm’s 10-member Community Association Representation Group and co-leads the firm’s construction litigation group.  Matt practices in the areas of business and real estate litigation, construction litigation, community association law, debtor/creditor law, insurance and employment, and has been included in Minneapolis/St. Paul Magazine’s list of Rising Stars for several years.  He can be reached at mdrewes@tn-law.com.

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