What Does it Take to Amend the CC&Rs?

One of the questions that we are often asked is “What is required to amend the CC&Rs?” Civil Code section 1355 (Civil Code section 4270 starting in 2014) provides that an amendment to CC&Rs is effective after all of the following requirements have been met:

• The requisite approval of the percentage of owners as required by the governing documents has been obtained,
• Written certification of the approval by an officer of the association, and
• Recordation of the amendment

While the specific approval required must be determined by looking at the specific set of CC&Rs, most such documents require the approval of a super-majority of owners, typically 67% of the total voting power. If the CC&Rs are silent on the required percentage of owner approval necessary to amend the CC&Rs, then Civil Code section 1355 provides that an amendment may be approved by a majority of all members.

If there are multiple classes of membership, it is not uncommon for the CC&Rs to require the approval of a super-majority of each class of members to also be required. In addition, certain types of amendments may require the approval of first mortgagees (the banks who hold the mortgages on the various units or residences in the association), or even the city. The types of amendments which require the approval of the first mortgagees are spelled out in the CC&Rs, and typically are limited to amendments which could adversely impact the security interest of the mortgagee, such as amendments changing the manner in which assessments are imposed or allocated among the various owners.

How Do We Vote?

Once the required approval percentage is determined, the Davis-Stirling Act requires that voting on the proposed amendment must be done by the double envelope secret ballot process set forth in Civil Code section 1363.03(b) (Civil Code section 5115 starting in 2014), with the votes counted at an open meeting so that the vote counting can be observed by the members. The ballot must contain the proposed amendment to be voted on by the members.

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ATTACHING JUDGMENT LIEN TO REAL ESTATE

Any lien on any real estate, consensual or judicial, must appear in the county land records to be effective. Once a judgment is "docketed" in the county land records, it constitutes a lien on all real estate owned by the debtor in that county.⁵ Once docketed, a judgment lien works very much like a mortgage. The judgment runs interest at the judgment rate. The creditor can foreclose on the judgment lien and auction the property through judicial process.

If the judgment lien has attached to real estate, the judgment creditor will often want to simply be patient and wait. The judgment continues to run interest at the judgment rate awarded or the legal rate of 9% in the state of Virginia⁶ and 10% in Maryland⁷. This is currently much higher than market savings or mortgage rates. The real estate will usually continue to appreciate in value. If there is an existing prior mortgage, the judgment debtor will continue to pay it down. As a result of all of these factors, the judgment creditor’s position normally becomes stronger with time, once the judgment has attached to real estate.

If the judgment debtor has only personal property and no real estate, the situation is very different. Personal property depreciates with time, can be damaged and can be easily hidden. Real estate is not going anywhere. One of two things will eventually happen with a judgment lien on real estate. If the debtor is financially viable, he will eventually have to pay off the judgment lien in order to sell or refinance the property. One day, the telephone will ring and someone will want to know where to send the check.

If the debtor is insolvent, a prior mortgage holder may eventually foreclose. If there is enough equity in the property, this will also result in payment to the judgment creditor. The property may have already been encumbered by one large mortgage, multiple mortgages or other judgment liens. In this case, it is possible for a judgment lien creditor to be under secured or completely unsecured. If a prior mortgage holder forecloses in this case, the judgment creditor may get nothing and the judgment lien is eliminated. The only good news is that the judgment lien creditor did not expend additional legal fees in foreclosing on the real estate.

It is expensive to enforce a judgment lien on real estate. This requires a lawsuit involving the property owner, all mortgage holders, all judgment lien holders and anyone else with an interest in the property. A commissioner in chancery or special master often hears the case and must be paid hourly for this purpose. A title search on the property is necessary and the foreclosure auction must be advertised in the newspaper. It is practically impossible to recover attorney’s fees incurred foreclosing on a judgment lien. It is also impossible to settle such a case by agreement, unless the judgment debtor is solvent.

Accordingly, it is often the best strategy for a judgment creditor to simply wait. If judgment creditors are impatient and insist on foreclosing on the judgment lien, this will result in high costs and a lower chance of recovery. Foreclosure is normally a good strategy only if the judgment debtor has the ability to pay the judgment or the judgment is large and there is ample equity in the property.

The judgment will not attach to the real estate unless it is docketed in the name of the property owner. Therefore, it is important to look ahead and know the name of the property owner before filing the lawsuit to obtain a judgment. Common problems involve, married names, trade names, middle names and initials. It is normally possible to list a defendant more than once, with variations of their names. Then the judgment will be entered in all variations of the name, and is more likely to attach to property.

In Virginia and Maryland, a judgment in the circuit court will automatically be docketed in the land records of that county.⁸ A judgment in the district court, however, is not automatically docketed. The creditor must obtain an abstract of the judgment from the district court and have the judgment docketed in the circuit court land records.

Judgment liens on real estate are also county specific. A judgment docketed in one county will not attach to real estate in another county. Again the creditor must request an abstract of the judgment from the original court of entry and then have that judgment docketed in any county in which the debtor owns real estate. Docketing a judgment is relatively cheap, so it is often a good strategy to simply have judgment docketed in multiple surrounding counties, where the debtor may own property.

If the judgment debtor owns real estate in another state, the process is similar, but somewhat more complicated and expensive. The creditor must have their judgment "domesticated" in the state where the real estate is located. Most states including Maryland and Virginia have adopted the Uniform Enforcement of Judgment Act.⁹ In these states, the domestication process is simpler, cheaper and faster. The creditor must obtain a "triple seal" abstract from the court where the judgment was entered. This abstract is then mailed to the court in the new state, along with domestication forms. The judgment debtor receives notice, normally by certified mail. The debtor has no ability to avoid judgment in the new state, except on procedural due process grounds. In other words, the debtor can show that it was not properly served in the original court or that the court lacked personal jurisdiction. The judgment debtor cannot, however, reargue the merits of the case and whether they owe the creditor money. This is normally true even in the case of a default judgment. Some states, however, have not adopted the Uniform Enforcement of Judgment Act. In such states, it is necessary to actually file a new lawsuit in the state where the real estate is located.

Docketing a judgment in the land records is normally so easy and inexpensive that a judgment creditor will normally want to have the judgment docketed in all counties in which the judgment debtor will ever possibly obtain an interest in real estate. A judgment lien normally lasts for at least a decade and can normally be extended for decades more.¹⁰ Over the passage of this time, many things can happen causing the judgment to attach to real estate.

Once a judgment is docketed in a county, if the judgment debtor ever buys real estate in that county the judgment lien will immediately attach. Real estate often passes by inheritance. If your judgment debtor’s parents live in as certain county, this is reason enough to have the judgment docketed there. If real estate is owned by tenants by the entirety, a judgment against just one tenant will not attach. If the parties’ later divorce or the non-debtor passes away, the judgment will immediately attach. Docketing a judgment is so cheap and lasts so long, it is often worthwhile to docket the judgment in any county in which the debtor, lives, may live in the future, or has relatives.

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Ability to Repay and Qualified Mortgage Standards Under the Truth in Lending Act (Regulation Z)

AT A GLANCE

Status:Final Rule

Issued Date: January 10, 2013

Published Date: January 30, 2013

Effective Date: January 10, 2014

Docket no. CFPB-2011-0008
CFPB-2012-0022

Read common consumer questions about mortgages.

The CFPB amended Regulation Z, which implements the Truth in Lending Act (TILA). Regulation Z currently prohibits a creditor from making a higher-priced mortgage loan without regard to the consumer’s ability to repay the loan. The final rule implements sections 1411 and 1412 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which generally require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establishes certain protections from liability under this requirement for “qualified mortgages.” The final rule also implements section 1414 of the Dodd-Frank Act, which limits prepayment penalties. Finally, the final rule requires creditors to retain evidence of compliance with the rule for three years after a covered loan is consummated.

This page contains resources to help you understand the rule and its implications.

CONTENTS

1. The rule
   1. Final rules submitted to the Federal Register
   2. Effective date
   3. Breakdown of the document’s contents
2. Compliance guide and related information
   1. Compliance guide
   2. Ability-to-repay/qualified mortgage comparison chart
3. What this means for consumers
4. Proposals
   1. Concurrent proposal
   2. Related proposals

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The rule

Final rules submitted to the Federal Register

July 10, 2013:We issued a final rule amending certain provisions of the rule. It is based on a proposed rule issued in April 2013.
January 10, 2013: We issued the document containing this final rule. On January 30, 2013, the Office of the Federal Register published the final rule.
May 29, 2013: We issued a final rule amending certain provisions of the rule. It is based on a proposed rule issued in January.

EFFECTIVE DATE

This rule is effective January 10, 2014.

BREAKDOWN OF THE DOCUMENT’S CONTENTS

This document contains the following parts:

• Preamble summarizing why we are issuing the rule, our legal authority, reasoning behind the rule, responses to comments, and analysis of the benefits, costs, and impacts of the rule
• Regulatory text, which, when effective, will amend Regulation Z and can be found on page 638 in the document above
• Official interpretations of the rules which can be found on page 690 in the document above

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Compliance guide and related information

COMPLIANCE GUIDE

Read the Small Entity Compliance Guide to learn more about the rule in a plain language and FAQ format which makes the content more accessible for a broad array of industry constituents, especially smaller businesses with limited legal and compliance staff. Or watch our video on YouTube to learn more about the rule.

ABILITY-TO-REPAY/QUALIFIED MORTGAGE COMPARISON CHART

Review our comparison chart, which compares the general Ability-to-Repay requirements with the requirements for originating Qualified Mortgage loans.

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What this means for consumers

The new rule will go into effect on January 10, 2014. This summary outlines some of the ways we expect it to impact consumers who have residential mortgage loans. Download the consumer summary.

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Proposals

CONCURRENT PROPOSAL

The CFPB is proposing to amend Regulation Z, which implements the Truth in Lending Act (TILA). The Dodd-Frank Act requires creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establishes certain protections from liability under this requirement for “qualified mortgages.” The Bureau is proposing certain amendments to the final rule implementing these requirements, including exemptions for certain nonprofit creditors and certain homeownership stabilization programs and an additional definition of a qualified mortgage for certain loans made and held in portfolio by small creditors. The Bureau is also seeking feedback on whether additional clarification is needed regarding the inclusion of loan originator compensation in the points and fees calculation.

View the concurrent proposal here.

You can also view, as individual documents, the concurrent proposal’s preamble, regulatory text, and official interpretations.

RELATED PROPOSALS

June 21, 2013: We issued a proposed rule with request for public comment that proposed certain amendments for several of the final mortgage rules we issued in January 2013. This proposal was published in the Federal Register on July 2, 2013. You can also review comments submitted on the electronic docket.

May 11, 2011: The Office of the Federal Register published the following proposed rule issued by the Federal Reserve Board.

June 5, 2012: The Office of the Federal Register published a a notice reopening the comment period specifically for certain new data and information. That notice, and comments received, are available online: Notice of Reopening of Comment Period to seek comment on certain new data and information submitted during or obtained after the close of the original comment period.

April 19, 2013: We issued a proposed rule with request for public comment that amends some of the final mortgage rules issued by the bureau in January of 2013. Specifically, it amends this rule and the mortgage servicing rule.

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Socially Savvy Agent Training Class 9-18-2013

Social Media Training  with Socially Savvy Sara Forkel at Coldwell Banker First Premier Realty Ontario CA.

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Proven, successful real estate prospecting strategies !

• Calling expired real estate listings (perhaps their listing price was too high or their previous agent was not of the highest quality; a word of caution - these people are likely frustrated with real estate agents and so you must work extra hard to convince them that you are hardworking and smart)

• Talking to For Sale By Owners (over 85% of people trying to sell their own homes give up and hire an agent)

• Going door-to-door

• Calling past clients

• Sending holiday cards/ small gifts with your name and contact information (my family is a big fan of magnets)

• Calling people in your social network (everybody knows someone that wants to buy or sell a house)

• Calling out-of-town owners (a lot of them may be facing frustrations with managing a home from a distance and be ready to sell)

• Sending a notice to your alumni or fraternity/sorority newsletter (there could be alumni in your area)

• Paying for the White Pages to make your name distinct, such as bold or large lettering

• Organizing neighborhood parties (what better way to build rapport with the people that live around you)

• Creating a quarterly neighborhood newspaper that includes news such as weddings, honors, college acceptances, move ins and outs, selling prices of homes, etc (of course the newsletter will include your photo and contact information)

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