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High court upholds delinquent homeowners’ fees decision

CARSON CITY – The state Financial Institutions Division lacks the legal authority to restrict the amount of unpaid assessments that collection agencies hired by homeowners associations can collect from delinquent homeowners.

The state agency had issued an order in November 2010 that prevented the Nevada Association Services and other collection agencies from collecting more than nine months of overdue assessments or other fees.

A District Court judge in Clark County last year issued an injunction blocking enforcement of the order.

The state Supreme Court upheld that decision in a 3-0 ruling Wednesday.

The Financial Institutions Division had accused the collection agencies of using superpriority liens to impose high fees that homeowners must pay before they can sell their homes.

In the decision, justices said state law is clear in that only the Commission for Common-Interest Communities and the state Real Estate Division have the power to set rules for collecting from delinquent homeowners living in home­owners associations.

“There is no provision granting any other commission or the Department (of Business and Industry) the authority to regulate or interpret language of the chapter,” justices decided.

Joel Just, president of Red Rock Financial Services, which provides collection services, hailed the decision as a clear victory for homeowners associations and collection agencies.

He added his company and others have worked with the Commission for Common-Interest Communities to negotiate fee schedules and caps they will collect on delinquent homeowners, but that investors trying to pick up homes “don’t want to pay anything.”

In the decision, justices said the Nevada Association Services and other collection agencies would be caused “irreparable harm” if they could not carry out their collection activities. Any disciplinary against the association would bring “added harm” because it would be public record, they also said.

Contact reporter Ed Vogel at evogel@reviewjournal.com or 775-687-3901.

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