Superpriority lien issue will affect communities

Q: The superpriority lien issue was well-presented in the column dated March 13. The insurance issue raises many concerns in communities embroiled in these actions.

My question is about how this impacts Nevada Revised Statutes 116.310312? Is the association able to recover funds expended on these vacated, abandoned units? These appear to be the properties that are deteriorating and if I was in the position of purchasing a home would not do so in a community adjacent to one that has dying vegetation — a gate falling off and other signs of a lack of maintenance. Homeowners associations are now anxious about rising dues already with this new law.

Don’t any of the Nevada legislators think before they act? Surely many of them are affected as some may live in these communities like the rest of us do. Why don’t the banks follow the laws? Surely, they have qualified legal advice. Who wins with this situation?

A: NRS 116.310312 pertains to the power of an association board to enter the grounds of a unit to conduct certain maintenance or remove or abate a public nuisance and allows the association to file a superior lien on the property. This law was passed in 2009 in response to the deteriorating physical conditions of association homes. It allows the association after proper notice and a hearing to take action to maintain the exterior of a home in accordance with the standards set in the association’s governing documents.

The association is to maintain a record of the cost(s) it incurs in the maintaining of the home, for example, maintaining the landscape or the swimming pool. If the association was not reimbursed for these costs, the association could file a lien on the property and begin the foreclosure process. This law created a second superior lien, one for maintenance, the first being the nine-month superior lien that has been part of an on-going legal battle with the lenders and investors.

When a lender forecloses on a home, that lender becomes a “homeowner” with all of the obligations of a homeowner, to pay assessments on a timely basis and to maintain the home. Unfortunately, for many associations, letters must be sent to the lender’s representatives which are not always that easy to ascertain who to send the courtesy and violation letters and where to send them. Ultimately, the association could begin foreclosure proceedings based upon NRS 116.310312.

The banking industry has a very strong lobbying presence and during the 2015 legislative session that lobbying strength was quite evident. Unfortunately, associations cannot include in their operating budgets funds to support lobbyists to help them fight for their causes. This falls on the various association professional organizations that consist of community managers, management companies and other professionals to donate money in order to pay for a lobbying presence.

In order to counter and curb the banking industry’s power, associations must seek the support of its membership to start calling and writing to assembly and state senate representatives about these issues that impact the values of homes and their communities. It has become quite evident that it is not enough for community managers to speak at the various hearings to oppose proposed bills that would eliminate the nine-month superior lien law or eliminate the non-judicial foreclosure and replace it with judicial foreclosure which would be catastrophic to associations’ finances to operate their communities.

I did not exaggerate when I used the word, “catastrophic.” The cost to file lawsuits in district court chasing after association fees would place a tremendous financial burden upon the average homeowner association, let alone the time element to be heard in court, years later after the filing of the lawsuits. Delinquencies will increase; the paying homeowners will end up greatly subsidizing the delinquent homeowners. In some cases, associations could be forced to decrease services and amenities, such as the closing of the swimming pools. Most associations would be unable to file multiple lawsuits at the same time in District Court, forcing an association to choose which homeowner should be served the complaint, which could open up another Pandora’s Box of that homeowner claiming unequal enforcement of the association’s collection policies.

I cannot imagine that either the District Court judges or the staff at the Nevada Real Estate Division want to be bombarded with lawsuits or ADR (alternative dispute resolution) claims from associations who are just trying to collect their delinquent assessments.

Right now during this presidential election year, politicians are asking for your votes to represent you on the state level. You have to start asking questions to these candidates about their positions pertaining to the superior lien laws, foreclosure issues and lack of enforcement to require the banks to properly maintain the homes they have foreclosed upon. Community management companies and managers must educate not only their boards but their association memberships of the financial impact that will require increases in assessments and the potential loss of services. Make no mistake, your assessments could increase significantly.

As corny as it may sound, we need the power and voice of homeowners to pack the legislative hearings at the Sawyer building in downtown Las Vegas. Your voices must be heard loud and long in order to protect your position in this battle with the lending institutions. This battle needs to start now.

Barbara Holland is a certified property manager, broker and supervisory certified association manager. Questions may be sent to holland744o@gmail.com.

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