CARSON CITY — If the commissioners who oversee Nevada’s common interest communities have inherent conflicts of interest, then the board member who recently made this claim is just as conflicted, his critics say.
Jonathan Friedrich of Las Vegas, a commissioner representing homeowners, criticized the seven-member panel because some members benefit financially by doing business with Nevada’s many homeowners associations.
His comments in a recent Review-Journal article have provoked a reaction from his critics, who also claim he is not qualified to serve on the Commission for Common-Interest Communities and Condominium Hotels.
Friedrich rejects the assertion, saying his opponents want him off the board because he is “a very sharp thorn in their side.”
His critics include Las Vegas attorney Michael Schulman, who represents homeowners associations in lawsuits over issues such as the super priority lien that was the genesis for Friedrich’s comments.
The super priority lien in Nevada law allows associations to recover nine months’ worth of assessments. But a legal dispute is ongoing over whether fees and collection costs can be included as part of the lien.
The foreclosure crisis has hit Nevada’s common interest communities hard, creating conflicts among homeowners associations, residents, lawyers, collection agencies, federal housing agencies and investors seeking to buy distressed properties. The conflicts have spawned numerous lawsuits over many issues, including the super priority lien. The Nevada Legislature has been unable or unwilling to pass legislation to resolve the issues.
Schulman, who is on the opposite side of the super priority lien issue, said that before being appointed to the commission, Friedrich was one of the people serving legal documents to homeowners associations in what is known as the Higher Ground case. An affidavit of service dated July 2010 reflects Friedrich’s work as a process server.
Friedrich delivered the paperwork on behalf of Las Vegas attorney James Adams, who is challenging the inclusion of costs and fees on top of assessments owed to associations on foreclosed properties. Adams represents investors who argue the additional charges are illegal. The Higher Ground case and many others are working their way through the legal system and are expected to be resolved by the Nevada Supreme Court.
Schulman said Friedrich’s concerns about conflicts should apply to his own actions, as well. He should have to disclose his relationship with Adams and recuse himself should the issue come to the board, Schulman said.
“It is true folly for Commissioner Friedrich to be suggesting that the commission on which he sits has conflicts of interest that make it impossible for the commissioners to act, when he certainly has the same, if not more severe, conflicts of interest,” Schulman said.
Friedrich responded that he took no payment for his work for Adams, and did the work because of his concerns about the “heavy-handedness” of the industry.
Another critic is Bruce Alitt, a Las Vegas homeowners association resident and retired chief investigator for the Nevada Real Estate Division, which oversees the commission. Alitt has questioned whether Friedrich is qualified to serve on the commission.
Alitt said he came across an affidavit submitted by Friedrich as part of a complaint to the Real Estate Division submitted in February stating that he is not a resident of a common interest community. It relates to a legal dispute Friedrich has with his Rancho Bel Air homeowners association over whether his property and others are part of the association.
Alitt, who serves on the board of Sun City Summerlin, said appointment as the commission’s homeowners association representative requires three years of residency in an association.
When asked, Gov. Brian Sandoval’s office said only that the Real Estate Division determined Friedrich is eligible to serve, Alitt said.
Sandoval appoints commission members. Friedrich was appointed in 2012.
“If I was on the commission, and I had submitted a sworn affidavit that I do not live in an HOA, I would resign,” Alitt said. “Where is his honor, integrity and ethics?”
Friedrich said he is clearly qualified and that Alitt’s ongoing efforts to oust him result from a personal vendetta.
“I do meet the requirements,” he said. “I did serve on the executive board at Rancho Bel Air. I have been an unpaid homeowners advocate for many years.”
Friedrich’s complaints about the statutory composition of the commission, which includes three homeowner representatives, an attorney, an accountant, a manager and a developer, stemmed from his effort to amend the state administrative code to conform to a December advisory opinion by the Real Estate Division. It said collection agency fees and costs couldn’t be part of a super priority lien.
The effort failed on a 4-2 vote in August, prompting Friedrich to say the board is not acting in the best interests of homeowners because it includes professionals aligned with homeowners associations.
But Schulman said that, prior to Friedrich’s appointment, the commission itself issued an opinion that specifically said the super priority lien does include costs and collection fees. This opinion has more weight than the more recent advisory opinion, he said.
Former commissioner and homeowners association advocate Marilyn Brainard of Sparks made a similar point, noting that the commission’s opinion that the fees and costs are allowable came after numerous public hearings that included hundreds of homeowners and other interested parties.
The regulation adopted by the commission capped the fees at $1,950, although actual costs can add to the total lien.
Brainard said the Legislature directed the commission to determine what should be included in super priority liens.
“The assessments are the lifeblood, the only revenue source, available to the associations,” said Brainard, a commissioner from 2006 to 2012 now on the board of the Wingfield Springs HOA.
Association boards must rely on collection agencies because they do not have the time or expertise to pursue delinquent assessments alone, she said.
“We have to do what is in the best interests of our communities and the residents who pay their assessments. It’s not fair that they should have to carry the burden for those who don’t pay.”
Contact Capital Bureau reporter Sean Whaley at firstname.lastname@example.org or 775-687-3900. Follow him on Twitter at @seanw801.