District judge lets lawsuit by collection agencies over HOA fees proceed

Clark County District Judge Susan Johnson on Tuesday denied a motion from a state agency to delay proceedings in a lawsuit that collection agencies filed against the Financial Institutions Division .

Her decision is the latest development in the bitter legal battle between the state division and collection agencies that have been using so-called super-priority liens to impose fees for collection activities related to delinquent bills for homeowner association dues.

The liens must be paid before a house can be sold. Investors and real estate agents have complained that the fees are exorbitant.

Financial Institutions Commissioner George Burns in November issued an advisory opinion limiting the fees that collection agencies can recover through super-priority liens.

Nevada Association Services Inc. and two other collection agencies, however, filed a lawsuit and persuaded Johnson to issue an injunction against the advisory opinion the following month.

The state appealed the injunction to the Nevada Supreme Court and on Tuesday urged the judge to delay proceedings on other aspects of the lawsuit while the appeal remains pending.

The state’s attorney argued that the appeal’s court decision would have a substantial effect on the remaining portions of the lawsuit and suggested waiting before proceeding on remaining issues in the lawsuit.

Plaintiffs attorney Patrick Reilly said his clients didn’t want their lawsuit stalled for the usual two years it takes to get a ruling from the state’s high court.

Johnson denied the state’s request. She also ordered Burns to either post her injunction order or a link to the order on its website, where Burns’ advisory opinion is shown.

Reilly has amended the lawsuit and is contending that the division used retaliatory tactics against Nevada Association Services after the company sent a notice indicating it intended to sue the division.

The division then required additional documents from the company although the division had found no problems in a November regulatory examination of the collection agency, according to the amended lawsuit.

Contact reporter John G. Edwards at
jedwards@reviewjournal.com or 702-383-0420.

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