This past weekend, the Nevada Legislature passed Senate Bill 280, sponsored by state Sen. Ruben Kihuen, D-Las Vegas, and Assembly Bill 273, sponsored by Assemblymen Andy Eisen, D-Las Vegas, and Jason Frierson, D-Las Vegas. These bills now await Gov. Brian Sandoval signature or veto. The Legislature would try to overrule the governor’s vetoes.
After reading my column today, you be the judge as to whether these bills should be vetoed.
These bills miss the point. The victims are not the delinquent homeowners; the victims are the homeowners who pay their monthly assessments and who will shoulder extra operating expenses if the bills become law.
You can chastise me and say, “Barbara, what’s the big deal?”
The big deal is that if these bills become law, they would inflict more expenses, delays and financial burdens upon HOAs that already have been hit hard for the past four years by the Great Recession.
Let’s start with SB 280.
Under existing law, a homeowners association can file a lien on a unit for certain amounts owed to the homeowners association (Nevada Revised Statutes 116.3116). Under existing law, HOAs have the right to foreclose a lien by sale as prescribed by Nevada Revised Statutes 116.31162-116.31168.
Section 8 of this bill states, “an Association may not mail to an owner or his successor in interest a letter of intent to mail a notice of delinquent assessment, mail a notice of delinquent assessment or take any other action to collect a past-due obligation from an owner or his successor in interest unless, not earlier than 60 days after the obligation becomes due, the Association mails to the address on file for the unit owner the following:
■ a schedule of the fees that may be charged if the unit owner fails to pay the past-due obligation,
■ a proposed repayment plan and a notice of the right to contest the past-due obligation at a hearing before the board
■ and the procedures for requesting such a hearing.”
Most associations send a courtesy notice to homeowners informing them that the HOA has not received payment for the homeowner’s assessment. Homeowners often aren’t aware the HOA’s management office hasn’t received their payments.
We see this all the time. There could have been a bank error or a wrong mailing address. With this new law, will courtesy notices be in violation?
The bill requires the association propose a repayment plan. Well, the HOA can certainly propose a repayment plan but it would be a waste of paper. Why? Because the association has no idea of the delinquent homeowner’s finances.
A repayment plan is normally based upon the negotiations between two parties — it must be realistic about homeowner’s ability to pay.
The bill requires that a notice of the right to contest the past-due obligation at a hearing, and the procedures for requesting a hearing are sent to the homeowner. The bill does not say how much time the homeowner should get to request the hearing.
Since associations have delinquencies every month, this procedure would basically require HOA boards to meet monthly. This would mean more operating expenses and more delays in collecting pass-due assessments. Most associations must rent rooms for holding board meetings; more meetings would mean more costs. The additional meetings could also increase management fees.
Section 4 of AB273 prohibits an association from foreclosing its lien on a home that is owner-occupied, while the unit owner is eligible to participate or is participating in the foreclosure mediation program.
Here is the procedure: The homeowner has 30 days to accept or reject the mediation program. After this period, depending upon the options in the bill, there could be an additional 60 or 90 days of delays keeping the HOA from initiating or continuing its foreclosure on the property. The law would require the lender to notify the association about the existence of a mediation certificate.
What happens next?
The HOA sits and waits until the lender receives a certificate from the mediation administrator to continue to exercise the power of sale against the delinquent homeowner. Meanwhile, the association’s delinquency continues to increase on any homeowner who is involved in mediation.
Let’s put the pieces together. Under SB 280, the association can’t act for 60 days, than must add at least 15 days to let a homeowner request a hearing with the board and hope that the hearing can be held no later than 30 days after the 60-day period, which now totals 90 days of delays.
Unknown to the HOA, the lender is ready to begin its foreclosure process and notification to the homeowner of the mediation program. We can now add at least 90 days of delay. So we have a potential delay of 180 days of delinquent assessment.
The next question is. “How many more days will the delinquent assessment continue to increase while the association awaits the outcome of the mediation program between the homeowner and the lender?”
None of the above comments account for the increasing resistance of lenders and investors to pay the collection costs to the associations when they acquire the deed to property.
You be the judge. If you believe the governor needs to veto these bills, visit http://gov.nv.gov/contact/governor. Submit a form that states your opinion on the matter.
If you believe these bills are fair and equitable today, it will be interesting to see whether you still believe that two years from now.
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 email@example.com.