HOAs are important to our valley communities

The economy has suffered blow after blow the past few years, which has resulted in far-reaching and devastating effects on people across the country. As we have seen here in Southern Nevada and throughout the nation, many can't afford to pay their mortgages and homeowners association assessments and end up facing foreclosure. HOAs exist to keep our neighborhoods safe and attractive and are important aspects of building and maintaining our community.

Before the economic downturn in 2007, this type of delinquency fell in a 1 to 2 percent range. Presently, the percentage of individuals who do not pay their HOA assessments has surged from about 2 to 30 percent or more.

If someone can't afford the mortgage or HOA assessments, it is doubtful that the house would be properly maintained, resulting in a reduction of property values throughout the community. Unmaintained homes, whether as a result of foreclosure, abandonment or simply owner negligence, create additional expense to the HOAs, which in turn need to ensure that properties do not present a hazard to neighbors. In addition, the homeowners paying their portion of assessments to the association usually end up shouldering a majority of these unpaid costs, which can lead to increased assessments. The state mandates that HOAs maintain a reserve fund to operate.

At the forefront of issues at the Nevada Legislature this session are investor-owners saturating the market and the subsequent influence on collection assessments and associated collection costs. With Southern Nevada's high inventory of bank-owned homes and banks' tight lending standards, investors will continue to purchase homes with cash and flip them for profit.

Under Nevada law, residential properties face a super priority lien, which secures nine months of prior assessments, late fees, collection costs and expenses related to maintenance of the foreclosures and/or foreclosure purchases. It is the banks' or the investors' responsibility to pay the super priority amounts to the HOA (and collection companies, if any). Unfortunately, the investors do not want to shoulder this responsibility, which negatively affects HOAs and homeowners if assessments and associated fees aren't collected.

The Community Associations Institute of Nevada and its legislative action committee are currently monitoring 18 bills and bill draft requests associated with HOAs and diligently working to ensure that the best interest of all community homeowners are protected. Sen. Allison Copening introduced SB 174 several weeks ago, which would modify the way HOAs are governed, how reserve accounts are invested and address protections for funds and foreclosed homes.

Sen. Michael Schneider introduced SB 185 last week that would ban transfer fees, which are incurred after the foreclosure of a property. With the highest foreclosure rate in the nation, Nevada's HOAs are already struggling to keep afloat.

Transfer fees assist HOAs to keep overall dues low and allow them to recoup losses when a property is sold. SB 185 would further harm HOAs and the residents who live in those communities.

When homeowners fall behind on their assessments, their neighbors who are up-to-date may suffer through increased assessments and/or a reduction in quality of services, amenities and reduced funding to state-mandated reserves. Operating as a business, HOAs must work with healthy financials to ensure the well-being of their communities and the clients who reside in them.

Steve Vitali sits on the board of the Community Associations Institute, a trade organization for HOA management companies and board members.