Articles & News

2013 Olympic College Foundation Donor & Scholar Dinner

Bob Scholars Event2As current President of the Olympic College Foundation, privileged to make opening remarks and introductions Monday night at our Annual Donors and Scholars Celebration dinner. We gave away lots of money to deserving scholars. Very gratifying to see the reactions of the awardees. Many hardworking students with a very full plate of responsibilities beyond classroom demands, including working multiple jobs, long commutes and raising children.

CONGRATULATIONS to all those receiving scholarships, and THANK YOU TO OUR GENEROUS DONORS!

By Robert Hawkinson

WA Supreme Court Rejects 2/3s Majority for Raising Taxes

This week, the Washington Supreme Court ruled the requirement of a two-thirds vote by lawmakers to pass a tax hike is unconstitutional. The decision was announced on February 28, 2013. The Court was divided 6-3. Justice Susan Owens wrote the majority opinion. The dissent was written by Justice Charles Johnson. See Seattle Times article for more details.

By Robert Hawkinson

Loophole in End of Life Law Needs Fixing

A loophole in the Washington Physician Orders for Life-Sustaining Treatment (POLST) law needs a quick fix by the Legislature. See (Seattle Times). I remember when a long-time local resident in her 80s ended up with a broken sternum from CPR years ago. She died a few days later. Those days were very painful. I remember the look on my elderly mother’s doctor’s face when she told him she wasn’t going to sign a POLST form. He went pale as a ghost and persuaded her to sign it.

We all want our loved ones to live forever. My wife and I provided elder care for five relatives over a 13-year period. Each of them wanted to move on when life became too heavy a burden and there was no hope of improvement.

By Robert Hawkinson

NLRB Finds Costco’s Social Media Policy Violates Rights of Union Workers

The National Labor Relations Board has determined social media rules in Costco’s employee manual violate the rights of union workers under the National Labor Relations Act because the policies prohibited protected activities. See article posted by the Resnick Law Group, P.C., on The New Jersey Employment Law Firm Blog on November 9, 2012.

Employee manuals can be a problem for businesses without union employees, too. In addition to the risk of adopting policies which violate governmental laws and regulations, employee manuals can constitute binding contracts between the employer and employee. Business owners must be very careful when adopting employee policy manuals. Downloading employee manuals and other legal documents from the internet can lead to expensive problems. One also needs to be careful hiring non-lawyer consultants for such documents.

By Robert Hawkinson

Washington Supreme Court Says Mortgage Registry Can’t Foreclose

According to an article posted on the Seattle Times website on August 16, 2012, the nation’s largest electronic mortgage tracking system, MERS, can’t foreclose on a homeowner in Washington state. The Court unanimously said MERS (Mortgage Electronic Registration Systems) can’t foreclose on it’s own because it doesn’t own the promissory note the homeowner signed with the original lender. Attorney General, Rob McKenna’s office filed a brief in support of the homeowners. Click here to read the Seattle Times article.

Lender’s often package up numerous loans and sell them to investors. A note signed by the homeowner can be bought and sold many times over the course of the loan. Click here to read the Supreme Court’s opinion.

By Robert Hawkinson

Our Non-Traditional Law Office – Better Service and Fees

Our law office has moved on from attorney and staff working in a fixed location open all day. The old model requires extra staff to ensure someone is on site at all times and paying rental on the additional space. This extra cost is passed on to clients. My light bulb moment came just before Christmas 2010 – my office is really wherever I am at the moment!

A frustrated client called my cell phone while I was shopping at the mall. It was the last day for him to sign very important real estate closing documents. The lender’s documents had a handful of revisions the client had never seen before. He was not comfortable signing without legal advice. The closing agent e-mailed me the changed pages, which I read on my smartphone. Accessing the original documents negotiated with the lender on my sphone, I compared the changes to the originals and called my client back within 20 minutes. I told him to go ahead and sign as the changes were not substantive. The client was ecstatic.

We still maintain a smaller physical office where we meet clients, but we are not there 100% of the time. We do our work in many locations, including our office, shopping malls, on ferries, at clients’ homes and businesses, coffee shops, senior living centers and court. We have combined a physical location with a virtual office. This has greatly improved service to our clients. It also has cut down our overhead, which helps keeps our fees reasonable.

Do you want or need a traditional law office so you can walk in at any time, or do you want better service and accessibility, faster responses and more reasonable fees?

By Robert Hawkinson

Who Really Owns Your Home Loan?

Are you aware of the differences between a lender, loan holder and loan servicer? Your lender is the bank or lending institution from which you originally borrowed money. Your lender may keep your loan or sell it, usually as part of a package of many loans. Your loan may be sold many times during the loan period.

The loan holder currently owns your loan. Lenders and loan holders often hire another party to service your loan. The servicer sends out statements, collects your payments, answers your questions and processes your requests such as postponing payments, forbearance or canceling the loan. Your lender or loan holder may choose to service the loans they own in which case they are also the servicer.

Your monthly statement comes from your servicer, but you may not know the identity of your current loan holder. Some servicers are very responsive to questions and requests for information. Others are not. You need to know who owns your loan if you are considering a short sale or want to renegotiate terms, or are having serious problems getting questions answered or requests considered working through your servicer.

By Robert Hawkinson

Attorney/Client Privilege May Not Apply to Work E-mails

The Third Appellate District Court in Sacramento, California, has unanimously decided the attorney-client privilege does not extend to emails sent from a work email account.  Additionally, the U.S. Supreme Court recently ruled a police officer’s texts on department pagers were not private.   Be careful what you talk about when communicating with your lawyer via a work e-mail account, or just don’t do it. See case.

By Robert Hawkinson

Sad Tale of the Uninformed Co-Borrowers

Have you ever been asked by a family member, friend or promoter to personally guarantee or co-sign a loan?

Guaranteeing a loan and co-signing have very different consequences.  These days, private and institutional lenders seem to prefer setting up guaranteed loans as “co-borrower” arrangements rather than using “personal guarantors.” Knowing the differences is crucial and may save you from a big hit to your personal wealth.

Co-Borrower Status

Co-borrowers all sign the loan as primary borrowers and are typically equally liable. This means the lender can directly go after you, some of the co-borrowers or all of them for the entire loan amount under the legal doctrine of joint and several liability. Many co-borrowers think they are only responsible for their share of the loan.  WRONG.

Personal Guarantor Status

Personally guaranteeing another party’s loan is much different than being a co-borrower.  Certain protections for personal guarantors became part of the law as it evolved.  For example, it may be necessary for the lender to first pursue the primary borrower before pursuing any personal guarantors. If the lender can’t get its money back from the primary borrower, only then may the lender go after any personal guarantors for any remaining balance owed.

Sad Tale

Wheeler dealer Sam envisions developing a commercial building with separate office spaces for himself and others, and shared amenities like a conference room. He can’t afford this project by himself, so Sam recruits investors. He chooses business owners who would like to be tenants and have ownership in the building, and other investors who would not be tenants. Sam hires attorney Joe to set up a limited liability company that will own and operate the building. They call their company We R. Rich, LLC. All the investors are members of We R. Rich.

Sam arranges for construction and permanent financing for the building from Flash-in-the Pan Bank. Sam tells his investors that attorney Joe has reviewed the loan paperwork, and it all looks fine. The completed building will be pledged as security for the loan. Sam also tells his investors they have to guarantee the loan or the bank won’t give them the money. Sam advises them they don’t have to worry about We R. Rich failing because the value of the building will cover the loan in the unlikely event the limited liability company defaults on its loan. The investors decide it isn’t necessary to have another attorney duplicate the work of attorney Joe, and they all sign the loan paperwork as unknowing co-borrowers.

Flash-in-the Pan Bank is shut down by its government regulator for having too many real estate loans in default. No bank will take on the bank’s loan portfolio, so the regulator ends up selling We R. Rich’s loan to a loan recovery group.

The commercial building does poorly during the economy’s downturn and the limited liability company gets behind in its loan payments. The loan recovery group declares the loan in default and takes steps to foreclose on the property pledged as security for the loan.

During negotiations with the loan recovery group, Sam’s co-borrower investors learn the property securing the loan has lost so much value that the foreclosure sale may not generate enough to cover the loan balance.  The co-borrowers are stunned to learn the loan recovery group expects them to personally make up the difference between the loan balance and the proceeds from the foreclosure sale.  Then, the co-borrowers receive a truly unexpected smack in the face.  Sam tells them he will not be contributing any of his own money towards paying off the loan recovery group.  Sam has transferred all of his assets offshore, and neither the loan recovery group nor the co-borrowers can collect anything from him. We R. Rich’s sole asset is the building, and the investor co-borrowers now face being on the hook for the whole amount sought by the loan recovery group.

The investor co-borrowers believed they only owed their respective share of the loan. They are angry Sam has left them holding the bag. Some of the other co-borrowers are broke. The solvent co-borrowers are even more dumbfounded when they learn the loan recovery group can sue just one, some or all of them for the entire amount owed.

Had the investors hired an attorney with experience in business law and financing commercial real estate projects to review the papers before they signed on the dotted line, they would have better understood what they were getting into and the risks involved.   They might a have been able to modify the arrangement to reduce their risk, or simply walked away.

None of the investor borrowers are as rich as they were before investing in Sam’s big dream.

This article is particular to Washington State. Laws on this subject may vary from state to state. The foregoing example raises numerous other legal issues which are not covered in this article.

By Robert Hawkinson