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Tag Archives: protection

Kudos for Cities That Get It: Ottawa and Condo Footprints

It’s always nice to drop kudos here and there (in between most of my posts which focus on the negative). In this case, Ottawa, Ontario, Canada has updated a tree-protection bylaw that was only two years old.

The by-law itself, in purpose and thought, rocks. Trees would need municipal approval before cutting: 10 centimeters or greater diameter on hectare and larger size land parcels; and 50 centimeter or greater diameter for any property. This should ensure those old and gorgeous trees remain rooted, and allow for younger trees the opportunity to grow into fantastic groves.

Condominiums are unlike either individual houses (protecting those gorgeous granddaddy trees – 50 cm. and greater diameter) or undeveloped green space (1 hectare or larger plots). Condos are kind of both – a group of individual residents on a large shared property.

Given that, Ottawa has updated the by-law to place condominiums under the 50 cm. and greater diameter part of the by-law, and made them not subject to the 1 hectare or larger plots section. It’s a nice, simple, and easily rolled out change to a rule that overlooked the large footprint of condominiums.

Kudos Ottawa for a small, but important law change that recognizes the nature of condominiums and removes inappropriate regulation.

Bankruptcy Doesn’t Dismiss Outstanding HOA Fees

Housing represents the largest equity holding for most people in the world. Housing represents the majority of people’s working lives, and often is their security for retirement.

With that in mind, that’s why I fully support all legislation that prioritizes and guarantees that condominium corporations and HOAs have first standing to any monies recovered in foreclosure, bankruptcy or other sale. See, it’s important for government to protect people’s housing because it represents such a vast amount of equity. Government takes steps to protect people’s equity when it’s in a bank, and it does that when your money is “banked” in your house as well.

An owner failing to pay their fees harms not only their own property, but jeopardizes the housing of other, responsible, owners. Simply put, there’s no right for an owner to take a free ride on his neighbours shoulders by failing to pay their contribution, and having it shouldered by others.

Many states and provinces have very proactive laws that ensure HOAs and Condominiums have first standing in foreclosure. In Alberta, Canada, the condominium corporation – on the sale of a property – gets paid any outstanding fees before mortgages and even government taxes. Law makers realized that by ensuring that condominiums receive any money it is owed, it protects the other owners and has the highest return on economic stability.

In a similar vein, an owner in Odenton, Maryland, has found that bankruptcy doesn’t remover the requirement to pay their HOA fees. Indeed, and I congratulate the law makers, they have made those fees “nondischargeable” (a judge cannot dismiss the fees). By doing so, they have ensured the fiscal health of all the other owners. Even though Joan Sullivan no longer lives in the HOA, she is paying installments on the debt she owes.

And that’s a good thing.

Real Estate Lawyer Recommends Removing Mortgage Protections to Stimulate Greed

It really shouldn’t surprise me that a lawyer who “represents developers, builders, lenders, corporate and institutional property owners and real estate brokers” advocates that the very protections put into place because of the poor actions of industry he represents should be repealed, so the industry can wallow in greed to which they would “start making money in housing, and lots of it.”

Just to be clear from his opinionSeth G. Weissman says –

Rather than looking at investors as vultures or potential mortgage fraudsters, an attitudinal shift needs to occur where they are embraced as the potential saviors of the housing market that they are. Until investors start making money in housing, and lots of it, there will be no recovery in the housing market. This will only occur when disincentives to invest are eliminated. Like in any other market, when fear is replaced with greed, housing inventory will decline, prices will rise and a sense of urgency to buy will be restored to the market.

Very heady words there – including saviour. The premise argued seems to be that higher house prices should be the directed effort the industry and that would be a good thing.

But good isn’t about increasing housing values. It’s about generating fair market value of the actual product between buyer and seller. That’s not what we had during the recent boom.

Like any boom and bust cycle (all the way back to tulips), investors focused greed created immense inequity between the true value of a product and cost of the products.

Investors don’t value the idea of a fair market value of the property – they value the ability to flip a product as quickly as possible at a profit. The investor is bullish on taking a product in a boom cycle and encouraging the market to continue to increase well beyond the rate of inflation (artificially – by creating a sense of urgency, but not an actual urgency). On the flip, they also look to strip the product of any removable value converting it into their own wealth. Indeed, anything left on the table for the new purchaser is lost revenue for the investor.

The wreckage of the last boom cycle is still showing it’s scars upon the market and individuals (it really has been scant months). The damaging wake of a greedy industry is responsible for why so many properties still have mortgages greater than their value. The market hasn’t had time to correct. The burst hasn’t completed.

To call now for the removal of barriers preventing naked greed in the real estate industry, and to once again fleece the public, even before the bust completes, well, is pure greed. But what else should I expect.