Recent HOA laws affect foreclosures

This is my final column pertaining to the new laws that were passed in July. You can see all my columns on this subject at www.hlrealty.com under the news and events tab.

Assembly Bill 273 is a very complex law that revises the provisions of homeowners who enroll in the foreclosure mediation program. Separate and distinct from its complicated changes in the mediation process is a section of the law that pertains to homeowner associations that revises the foreclosure of liens. In order to put in perspective the changes in the foreclosure laws that impact the associations, I have summarized the basic elements of the mediation process.

When a lender sends a notice of default and election to sell your home, the lender is required to include a notice provided by the Foreclosure Mediation Program administrator that the homeowner has the right to seek mediation under the rules adopted by the Nevada Supreme Court and a form on which the homeowner may request the mediation. Under the existing law, the homeowner completes and returns the form to the lender stating that the homeowner elects to enter into mediation, along with paying his share of a fee, which is set by the Supreme Court.

One of the major changes in this law is that the mediation notice states that the homeowner will be enrolled to participate in the mediation process unless the homeowner elects to waive the mediation, fails to pay his or her share of the fee or fails to appear at a scheduled mediation. The homeowner has 30 days in which to waive mediation.

If the homeowner elects to waive mediation or fails to meet the requirements, the mediation administrator must provide to the lender a certificate that allows the lender to continue the process to exercise their power of sale. Not later than 60 days after the administrator receives the form, the homeowner waives mediation or 90 days after the service of the default notice, the administrator is to provide the certificate that no mediation is required. These established deadlines become important as they impact the association’s foreclosure process.

The law then requires the lender to notify anyone who has an interest in this property be sent by certified mail notification of the enrollment of the homeowner to participate in mediation as defined in Nevada Revised Statutes 107.080. In theory, what should happen is that the lender sends the certificate to the association, which has already begun the foreclosure process on the delinquent homeowner.

This bill prohibits an association from foreclosing its lien on the delinquent homeowner (a homeowner must occupy the home) while the homeowner is eligible to participate or is participating in the mediation program. The association will just have to sit and wait for the final disposition of the mediation process before the association can take any further action with its foreclosure.

The new law states that during the mediation process the homeowner “must continue to pay any obligation other than past-due obligations.” What the legislators forgot to clarify in the law is if the homeowner does not pay the regular assessment (not past assessments) during the mediation process, can the association continue to foreclose on the delinquent homeowner who is still in mediation with the lender?

You can just imagine the new court cases that will be filed over this omission!

Here is the bottom line: In last week’s column, SB 280 created additional laws that will slow down the association’s collection process for at least 90 days, if not more, depending upon the delinquent homeowner requesting a hearing with the board. AB 273 will add more delays from 60 to 90 days before the association can take any action on its foreclosure of an owner-occupant unit.

Barbara Holland, certified property manager, broker and supervisory certified association manager, is president and owner of H&L Realty and Management Co. Questions may be sent to Association Q&A, P.O. Box 7440, Las Vegas, NV 89125. Fax is 702-385-3759, email is support@hlrealty.com.