By Clark Mason Press Democrat Staff Writer
The Sea Ranch homeowner who lost his $300,000 home because he was $567 behind in his homeowner association dues regained title to his house Tuesday after a year long legal battle.
Terms of the settlement were not disclosed, but in the past attorneys in the case said Sea Ranch was attempting to buy the house back from a real estate recovery company and return it to the owner, Patrick Mahaffay. `Patrick is pleased the case is settled,'' said Mahaffay's attorney, Michael Miller.
The case demonstrates how easily homes can be lost when owners fail to pay their homeowners' dues.
The 45-year-old carpenter owned the house free and clear but fell behind seven months in homeowner association dues in 1993 during a period when work was scarce.
He said he never got the many notices that were mailed to him warning his home was about to be foreclosed upon and auctioned off if he didn't pay up.
His house was bought a year ago by Real Estate Recovery Inc., a partnership owned by Bob Dixon and Cathy Liner. Dixon was the sole bidder on the property when it went on the auction block on the steps of the Sonoma County Administration Center.
The $2,403 the partnership paid for the house represented back dues, plus interest, collection and foreclosure costs on Mahaffay's property.
After his home was sold, Mahaffay filed a lawsuit against Real Estate Recovery, The Sea Ranch Association, its manager Jerrold Gonce, as well as Bay Counties Foreclosures Service, the San Jose company the association hired to sell his home.
He managed to barely fend off eviction attempts by Real Estate Recovery, which eventually sued The Sea Ranch claiming the association mishandled the sale of Mahaffay's property, which Real Estate Recovery bid on “in good faith.”
Barry Parkinson, the attorney for Real Estate Recovery, said all the litigation was being dropped and Mahaffay will get his home back in his name as a result of mediation by retired Sonoma County Superior Court Judge William Bettinelli.
"The only information we can disclose under the terms of the settlement is that Real Estate Recovery no longer claims an ownership interest in the house," Parkinson said.
Mahaffay could not be reached for comment, but Parkinson said when he last saw him Tuesday afternoon after the settlement was reached "he had a big smile on his face."
Parkinson said all the parties involved in the Mahaffay case agreed to end the litigation as a result of the deal brokered by Bettinelli. "It's pretty much satisfactory to everybody," he said.
While terms of Tuesday' settlement were confidential, last month Parkinson acknowledged Sea Ranch's insurer made an offer in the $40,000 range to buy back the house, but Real Estate Recovery was seeking at least $75,000.
Mahaffay's home was sold from under him because California's 1986 Davis-Stirling Common Interest Development Act, the law governing homeowner's associations, gives them the right to bring non-judicial foreclosure proceedings against homeowners who get behind in dues.
Representatives for homeowners associations argue they need the legal sledgehammer to get deadbeat homeowners to pay their dues. Critics say it is an example of the far-reaching powers enjoyed by community associations like the one at Sea Ranch, something of which property owners are often unaware.
Mahaffay's case was unique in that he owned his home free and clear, paying for it with an estate settlement he obtained when his wife passed away several years ago.
Unlike Mahaffay, most homeowners have a mortgage and the foreclosure gets slowed down due to the lender's involvement. Also, there is often face-to-face contact between the homeowner and the association other than sending notices of overdue payments, and foreclosure. But in Mahaffay's case there was none.