Opinion calls to erase limits on collection agencies’ fees

The state posted a new advisory opinion Friday that would allow collection agencies to charge unlimited fees for past-due homeowner association dues when a house is in foreclosure.

The Commission for Common Interest Communities has voted to adopt the advisory opinion, which allows collection agencies hired by homeowner associations to charge unlimited amounts of fees on past-due homeowner assessments.

The commission has been considering complaints from real estate agents, and buyers and sellers who said that collection agencies are imposing thousands of dollars in additional fees that must be paid before a home can be sold, the mortgage modified or the mortgage refinanced.

The collection agencies are imposing the fees as part of a “super priority” lien, which they say gives them and the homeowner association priority ahead of other creditors when a home goes into foreclosure.

The commission advisory opinion conflicts with another advisory opinion issued in November by Financial Institutions Commissioner George Burns. Burns advised collection agencies, which he regulates, that the total amount collected under super priority liens cannot exceed the total of monthly assessments for nine months.

“The purpose of FID’s advisory opinion and declaratory order was to protect the public,” Burns said. “It’s dismaying that the Common Interest Commission would render an advisory opinion that appears to do less than that.”

Three collection agencies have sued to overturn Burns’ advisory opinion, and Clark County District Judge Susan Johnson issued a temporary restraining order while she considers further action on Burns’ opinion.

Separately, the commission has written rules that would limit specific fees charged by collection agencies but not the number of times they impose those fees on a specific house. The proposed rules have no effect until they are ratified by state officials.

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

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