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Forlenza ~ Implications of Non-Conforming


Sergeant Joe Friday vs. CAO “Facts”

Taking a stand on any issue seems to cause more divisiveness today than ever, whether it concerns politics, religion, economics or San Juan County’s own maelstrom over the Critical Areas Ordinance (CAO).

Crucial in coming to a truly informed decision is knowing the facts.  Not Wikifacts, or half-baked facts, but good old-fashioned facts, as in Dragnet’s “only the facts, Ma’am.”  With this in mind, I read with interest David Dehlendorf’s recent letter to the editor where he recounts having contacted “Islanders Bank, Key Bank, Wells Fargo, Swandberg Judkins Insurance, Chicago Title, and the county’s assessor’s office. In all cases,” he said he was told, “that whether a property is legally conforming or non-conforming is not even considered in the decision to approve or deny an application for financing or insurance, nor in the process of writing the title on the property, or in assessing its value.”
Well, David’s words got me to thinking he had just dotted all the i’s and crossed all the t’s regarding some of the major concerns of property owners have  with the CAO.
Or had he?
So, I had an idea: I would consult the same list of entities that Mr. Dehlendorf queried and see for myself if what he reported could indeed be considered facts that would pass Sergeant Joe Friday’s muster.
Here’s what I discovered beginning at the top of Dehlendorf’s list:
1.      Islanders Bank: The bank’s official position is, “We are waiting and are certainly concerned about the outcome [of the CAO] because it could have real ramifications as far as lending money in the islands.” The bank stated that Mr. Dehlendorf did not ask for their official position.
2.     Key Bank: “Since we do very little lending for vacant land we only considered Mr. Dehlendorf’s question from a construction or refinancing point of view. It is definitely possible that CAO regulations of conformity could impact loans for purchasing raw land.”
3.     Wells Fargo: Deferred comment to their corporate legal department, which could not be reached in time for this article’s deadline.
4.     Swanberg-Judkins: Tim Judkins went on record stating, “Mr. Dehlendorf may be technically correct that non-conformity status does not prevent us from writing a policy, but it just might prevent us from paying a claim. Insurance companies could not fully indemnify their customers if non-conforming designations prevented a homeowner from rebuilding their home. Our contracts wouldn’t be able to perform because they require us to pay up to full value of the insurance policy to replace damaged structures. Even if there are grandfathered structures there are bound to be problems. The language of the CAO requirements would have to be extremely clear in defining what could be rebuilt. If the customer could not rebuild their previous home on the same footprint or new building codes prevented a house being rebuilt on site, customers could be denied payment of their claim or be forced to use the insurance proceeds to rebuild the same home on a different lot which would be considered conforming.” Mr. Judkins said Mr. Dehlendorf did not talk to him for his letter to the Journal.
5.      Islanders Insurance: A spokesperson for the firm said that indeed there was “potential for non-conformity to become an issue.”
6.     Chicago Title: An employee explained that a title insurance company is not in the business of granting building permits, so whether a property is conforming or non-conforming has no bearing on their function. Its only purpose is to relay to the customer what is on file with local authorities concerning a particular property. A licensed broker in Friday Harbor confirmed that a buyer would be within their rights to cancel an offer if a title search stated a property was non-conforming.
7.     County Assessor Charles Zalmanek: Mr. Zalmanek explained assessed values are based on sales prices. He further explained,” There is a basket of considerations that go into determining a sales price. The economy, the weather, government regulations, etc. A properties’ designation as being conforming or non-conforming would definitely be one of the issues for a seller to consider when determining a sales price.” Mr. Zalmanek said Mr. Dehlendorf did not talk to him for his letter to the Journal.
The reader can draw their own conclusions regarding the above, but as for me, I will stick to, “just the facts ma’am.”
Marc A. Forlenza
Friday Harbor
[Editor's note:  Marc is a real estate investor and has been a resident of San Juan Island for the past eight years.]