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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Washington Supreme Court Strikes Blow for Telephone Customers

August 28, 2008

Today the Washington State Supreme Court unanimously held in a thirty page opinion that Michael McKee could sue AT&T.

Mr. McKee received this green flag from the court a number years after he filed his suit. He is suing for false utility charges on the bill and for illegal, usurious late charges. He made his claim a class action on behalf of others in Washington.

This of course is what class action suits were intended to do, make a company responsible to everyone it wrongs when it gouges a small amount of money form a huge number of people. Otherwise there is no effective way to get them to stop.

The reason I linked to this case is because there is so much publicity against class actions and consumer law suits. I thought it would be useful for you to see how misleading the publicity blitz is. The cards are heavily stacked against the consumer.

I believe the Washington Supreme Court deserves a lot of credit for this unanimous decision protecting the rights of Washington consumers.

When Mr. McKee signed his contract with AT&T his entered into a Byzantine world of conditions, stipulations, and waivers of rights which literally stripped him of his right to sue and left him without any of the rights we think that we have when we enter into commerce.

Our Court found many of these provisions unconscionable and unenforceable in affirming the basic right to sue.

Yesterday I talked about a medical malpractice claim that had been in the Courts for nine years without having gone to trial. While it is unclear from the Court’s opinion, this case appears to have been in court for four years, each of which was spent litigating pretrial procedures. The case could easily go on for years to come.

Read if you will the opinion and see what Mr. McKee has had to go through to just get his right to a trial confirmed.


Frank Chopp Kills Another Consumer Bill

March 10, 2008
The State Speaker of the House, Frank Chopp, refused to let the Homeowners’ Bill of Rights out of committee, thereby killing it. The bill, sponsored by Democrat Brian Weinstein, who is quitting after this session, merely gives homeowners what they think they already have. It merely causes Washington law in the narrow area of responsibility for unsafe or negligently built residences to conform with common sense. It eliminates only one of many immunities enjoyed by the construction industry and then only with respect to homes.The bill is very simple. It says that someone guilty of the defective construction of a home is responsible to the homeowner if the defect causes damage to the home. Not all that controversial is it?Speaker Chopp killed this bill last year and did the same thing again this session. There is absolutely no legitimate reason for this bill not to be law. There is no policy reason, no legal reason, no legitimate reason of any kind.

Speaker Chopp killed this common sense measure to preserve the immunities of the construction industry, maintaining the burden of defective construction on the back of the absolutely innocent consumer. Mr. Chopp believes that by catering to BIAW, the building industry lobby, the Democratic Party will curry the favor or at least avoid the opposition of one of the State’s most influential special interests.

By the way, frequently homeowner’s property insurance does not cover this loss, leaving the consumer completely out of luck.


Washington Becomes a Lead State in Cracking Down on Foreclsore Scams

March 7, 2008
I almost missed it! This is great day because the legislature passed last night the equity skimming bill recommended by the Washington State Attorney General in January of this year. In two months the legislature passed a comprehensive bill specifically addressing foreclosure rescue scams. Representative McIntire called my this morning on his way back to Olympia from Seattle. He said that the yesterday’s session did not end until 1:30 this morning. The time was apparently very well spent.

This bill, HB 2791 , strikes right at the heart of the frauds that have been perpetrated on homeowners, making these scams felonies, as they should be. People who p[resent themselves to homeowners as consultants for foreclosures and default ed home loans are now subject to disclosure requirements and well articulated standards of behavior. The “savior” is prevented from absconding with more than 18% of the equity.

I will provide a more detailed discussion of the bill at a later date. When not impeded by special interests the Washington legislature is capable of very speedy action. With this bill (assuming the governor signs it, which is a safe assumption) Washington become one of the lead states in criminalizing this reprehensible behavior and regulating the permissible scope of legitimate activity.


Washington Legislature Begins Addressing Mortgage Crisis

March 7, 2008
Last night the the State Senate passed SHB 2770. (After passing through the legislature without an opposing vote it would be quie surprising if the governor did not sign this.) The original sponsors of the bill were Representatives Kenney, Lantz, Upthegrove, Conway, Morrell, Schual-Berke, McIntire, Hudgins, Simpson, Rolfes. This bill takes a very positive step to avoiding many of the mortgage-related difficulties that have beset so many home owners and gives the State Department of Financial Institutions rule making authority to address further details. It is important to remember that this bill does not cover national banks and federal institutions.

The bill imposes limits on prepayment penalties, prohibits negative amortization home loans, and makes it a felony for a mortgage broker to steer a home owner to a loan for which he or she is not qualified or for the broker to make a materially false statement. The broker is held to a strict standard of good faith.

The deed of trust act is amended to provide that the notice of foreclosure must include a notice identifying the various legitimate options available to the homeowner. (This is something that was absent from a bill I previously discussed.)

This bill addresses a portion of the foreclosure crisis. Other bills, particularly the foreclosure recovery scam legislation recommended by the Attorney General’s Office, are still pending.


Washington Senate Consumer Protection and Homeowners Committee

March 4, 2008
Sometimes a person could almost get skeptical about the legislature. Take for example the foreclosure crisis and the millions of dollars that are taken from homeowners through foreclosure rescue scams. The Attorney General recommended legislation to help avoid this type of larceny and to penalize those who perpetrate it. A blue ribbon Task Force on Homeowner Security was assembled which duly issued a report to the Senate Consumer Protection and Housing Committee.The report, like most of its kind, contains a lot of fluff. It says that it would be a good practice for lenders to enter into workout agreements which permitted the homeowner to pay an affordable amount. Duh! Apparently this blue ribbon panel was unaware that nearly every homeowner is this situation begs for such consideration, often without ever being able to reach a responsible person on the phone. There is much talk about consumer education and enhanced public awareness that might have helped some of the victims, but does not really get to the root of the problem.There were two areas of discussion though that particularly caught my eye. One was legislation addressing mortgage fraud and rescue scams. (This is what the Attorney General is seeking.) The other was that the foreclosure notices themselves could serve a public interest function by alerting the homeowner to legitimate counseling opportunities and warning against scams. What a great idea! This would truly serve a public purpose, at no public (or private) expense. People actually read those notices and what would it hurt to tell them about legitimate avenues of inquiry, as well as the threat of scams. This is exactly the information that the victims do not have. It would involve relatively minor changes to the Deed of Trust Act.

Dutifully Brian Weinstein, the chair of this committee (who has fought for a number of consumer oriented bills, usually with fellow Democrat Frank Chopp), sponsored a bill to change the Deed of Trust Act. The proposed changes though bore no relationship to the changes proposed by the committee’s task force. In fact they worsened the situation of the scam victim. The trustee is the person or company which actually performs the foreclosure. It has a fiduciary duty to the homeowner, the highest duty imposed by law. The proposed legislation eliminated that. It did provide that the trustee had to have an office with a telephone in this state, but then changed the law so that the trustee does not need to answer its phone. Requests for information need not be honored unless they are in writing and then the trustee need not respond sooner than 10 days. These changes limit and delay the information attainable by an aggrieved homeowner. That’s it! Nothing about informing the homeowner of legitimate counseling opportunities or warning about scams. How on earth could the chairman of the committee that had a report recommending changes to the Deed of Trust Act, sponsor a bill that, not just disregarded those proposed changes, but actually hindered the homeowner’s interest in being treated fairly and getting information.


Consumer Protection Act

February 14, 2008

The legislature is considering putting more teeth in the consumer protection act.  SB 6382 would change the penalty provision from three times the amount of damages to a maximum of $50,000 per violation.  The reason for this that many, perhaps most of the consumer protection issues that arise involve a small amount of money but are repeated sometimes ten thousand or more times, such as billing practices, and small charges on retail items.  If the fraud involves $1 per customer then the maximum penalty would be $4 for each customer ( damages of $1 and a penalty of treble damages of $3) who sued.  (Class actions, despite what you hear, are rare because of the great cost bringing one.)  This bill would make the the maximum penalty $50,000 depending on the gravity of the offense.  A consumer fraud culprit could no longer say “so sue me” knowing that such a suit would be virtually impossible.