Water Rights: Let the Buyer Beware.

November 4, 2014

Water rights issues are cropping up with increasing frequency as water becomes a diminishing commodity. In the Puget Sound area this is a somewhat ironic concept, as flooding seems to have been on the uptick and the drizzle for which the area is renown has certainly not disappeared. Flooding however is often attributed to logging and development which causes rainwater to become surface water, rather than groundwater, available through wells. The expansion of the population beyond areas served by water systems has created a proliferation of wells, drawing from largely unknown underground estuaries. This increased burden on the supply of water diminishes the quantity of water available to wells, sometimes with disastrous results.

Care must be taken when purchasing water rights or acquiring property with water rights. The value of property is often dependent on water rights but too often property is purchased without a thorough investigation of those water rights. Scrutiny of a title report may give the buyer false confidence in the availability of water.

In verifying the validity of a water source the inquirer enters into the Byzantine realm of Washington water rights, which defy easy explanation. Broadly speaking there are three levels of inquiry. First water systems must be permitted by the State Department of Ecology. However, there are certain exemptions from state permitting requirements and water systems that predate the water code of 1917 need not be permitted. Roughly 166,000 systems claim to have originated before 1917 but very few claims, if any, have been adjudicated. Next the county determines compliance with health requirements and conducts routine inspections. This is usually a fairly straight forward inquiry for the purchaser.

The last common level of inquiry relates to the assignment of water rights. The right to draw water is assignable. As to any water source that is off-site, the validity of the transfer of water rights must be verified. If there is a well on site, all documents transferring rights to others, or allocating rights of use, must be verified. When creating a joint-use well a great deal of difficulty can be avoided by carefully delineating each user’s rights and duties. This warrants as much care as the determination of the rights and regulations governing a home owners’ association.

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National Collection Agencies.

February 21, 2013

It recently came to my attention that many collection agencies have not registered as collection agencies to do business in Washington or in other states in which they operate.  In order to avoid having to do this some say that they have purchased the debt so they are not collecting it for someone else.  This is a fairly transparent means of trying to avoid collection agency law in the states as well as application of the federal Fair Debt Collection Practices Act.  In many states, including Washington, this tactic does not work.  The law covers debts purchased by  businesses in the debt collection business.  Failure to register exposes these businesses to significant damages and is an enormous advantage to any consumer.


Criminal Restitution

November 13, 2008

Last week the Washington State Supreme Court published State v. Griffith a criminal case of interest to people who have had property taken from them. The criminal courts offer an alternative to an expensive and time-consuming lawsuit against the person who took the property. You have to bear in mind that conviction of a crime requires a very high standard of proof, but if you have such proof of guilt, then consider going to the prosecutor instead of suing.

If a person is convicted of taking money or property, or a related offense, the judge can require them to make restitution, that is to pay back the victim. Such an order, as a part of sentencing, is more likely to be paid than a conventional civil judgment.

The facts of this case also remind us to avoid cut rate purchases under circumstances suggesting foul play. Ms. Griffith purchased jewelry in a parking lot at a cheap price, then sold it to a pawn shop. She was later identified by the pawn shop owner and packed off to jail.


CBS News Says Obama Won by a Wide Margin Among Uncommitted Voters

September 30, 2008

CBS says that Obama won, although the polls do not seem to show a bump after the debate.  This may be because there were so many things happening last week, including last week’s declaration by McCain of “Mission Accomplished” with respect to the bailout. It was only this week that this was shown to be as illusory as previously accomplished missions.

McCain’s seizing the headlines last week and his efforts to portray himself as leader of the congressional bailout coalition no doubt caused expectations for his performance in the debate to rise, particularly when foreign policy, his acknowledged strength, was the focus of the debate.  Higher expectations may have contributed to the perception that he lost the debate.

I got the impression that he was betting the house when he “suspended” his campaign to demonstrate his leadership ability with the bailout legislation.  He of course did not suspend anything except his own public appearances and arguably the television time he got for this gesture exceeded anything that he would have received had he continued to make scheduled public appearances.  Once again though he took a short term gain — the appearance of leadership in crisis — and risked a long term loss.  Once again, as with the vice presidential decision, it looks like the long term loss will outweigh the immediate gains.  For all the broohaha last week, this week McCain looks ineffective.  His white horse seems to have charged in the wrong direction.

The vice presidential debate could given the recent downward direction of the polls momentum.  I shudder to think what episode awaits us to curb that event if it occurs.


Where is the Money Going?

September 26, 2008

I’m having trouble understanding this bailout business and I cannot find an explanation anywhere. Apparently a lot of other people are having trouble understanding this as well.  My confusion relates to the claim that the problem is due to the foreclosure crisis and that at least $700 billion dollars is needed to fix it.

The total amount of troubled home loans is $112 billion. This at least was the number bandied around over the last year. It was that portion of Washington Mutual’s portfolio that brought it down. The Wall Street Journal this morning reports that Washington Mutual has $30 billion in bad loans that will be written down with the purchase. What are these loans? Are they not home loans?

From published reports just paying off the home loans would have rendered Washington Mutual highly solvent. If the government stepped in and paid them all off, what would we use the remaining $588 billion for?

Furthermore that does not take into account the collateral for the loans. If we were able to recover just one quarter of the amount for which the collateral had been orginally valued, that would reduce the cost by an absolute minimum of $28 billion, leaving a cost to the tax payers of $84 billion. It is likely that more would be recovered so that the actual cost would be around $50 billion.

Either the total amount of troubled home loans is more than six times greater than previously reported or there is a lot going on that I have not been able to find explained.


The Economy: Pouring Gasoline on Fire?

September 18, 2008

The United States does not have enough money to sustain its own activities.  For reasons that I did not understand, nor apparently Alan Greenspan, rather than curb our country’s excesses we went into historic levels of indebtedness.  Our foreign debt has more than quadrupled and our total national debt is over three trillion dollars.

This previously unknown level of debt quite predictably caused the dollar to weaken.  As the dollar fell we have made a variety of efforts to prop it up but the weight of our debt has been too much for the interim measures we have undertaken.

While our leaders were focused on a war we entered into for reasons that have never been adequately explained by our leaders, they did not mind the store at home so that reckless lending practices were allowed to metastasize.  This certainly artificially sustained the economy for a while and just as certainly these practices were unsustainable over the long haul.  They were doomed to fail with fluctuations in the real estate market and like all houses of cards a tremor would be ruinous.

For reasons the Bush administration can best explain we were caught unprepared.   We have been forced to take measures that will be hard for our economy to endure if they are successful in stemming the current disaster.  At a time when we are borrowing money almost as fast as we can, the government is committing its resources to propping up its financial and insurance institutions.  This diversion of funds that are already inadequate to meet expenses will add to our sorry state of indebtedness.

The second measure that we are taking is to print more money.  Yesterday the Federal Reserve announced that it will be dumping $56 billion into the economy.  When you print the stuff that is pretty easy to do. This however will contribute to the downward spiral of the value of the dollar.

I have commented, after reading Naomi Klein’s “Shock Doctrine,” that the United States really has been taking on the attributes of many South American countries.  It has a diminishing middle class; the polarization of wealth distribution is greater than it has been since the beginning of the industrial age, before the first timid implementation of the restraints complained of by Republicans.

Like our neighbors to the south we have promoted the power of the executive to a greatly heightened level. We have reduced oversight of private financial activity while loosening restraint on governmental activity with respect to its citizens.  Like South American countries we have gone deeply in debt and our financial institutions are not stable.  Similar to them our currency is falling.

The current measures to cure the crisis are not the smoke and mirrors approach that we have adopted in the past. At the same time if they avert disaster they will leave us with an economy in worst condition than we thought it was in before the crisis.  In short we will bring the crisis in the wings that we already knew about a few steps closer to center stage.


Selling Short: What You Need to Know

September 10, 2008

A “short sale” in Washington State real estate agent parlance is selling during the pendency of a foreclosure. It involves convincing the foreclosing lender to accept less than the full amount owed.

One of the things to watch out for here is a fairly subtle manipulation by the real estate agent to profit by the situation. The case I’m familiar with involved a home owned by a very unsophisticated woman. The real estate agent disclosed that a relation was the buyer and that the sale was “a short sale.” The owner did not understand what this meant and signed the papers offered to her, again relying on her agent and not understanding the terminology of the contract.

She was next told to come down to sign the papers for closing and that there would be no money for her. When she objected, the agent gave her verbal promises that she would receive three thousand dollars after closing but declined to put it in writing.

It turns out that she would have received over ten thousand dollars except that the addenda to the contract provided that she would pay all the buyers’ costs of the loan and settlement charges. It also provided that almost $6000 would go to the Nehemiah Down Payment Assistance Program, which according to the closing agent is a program to refund the buyer’s down payment.

This lady had no understanding that, while she got the price she wanted, over ten thousand dollars of the money was going directly for the buyer’s benefit.

In this way the buyer gets the home for absolutely no money out of pocket and the owner gets nothing. The real estate agent gets the commission. The buyer though is left in the same position as if there had been a foreclosure, except that her credit report will contain reference to a “short sale” rather than foreclosure. What the seller has lost is time that might have been spent trying to make a sale that would give the buyer some money to at least move.