HOAs have a right to receive collection, late fees

On April 19, arbitrator Leonard Gang, a Las Vegas attorney, reaffirmed his decision in favor of Southern Nevada homeowners associations, ruling that a superpriority lien is not capped at six or nine times the monthly assessment, but also can include the cost of collecting the debt.

On Dec. 10, 2012, Gang ruled in favor of the associations on all issues in the formal complaint that has come to be known as the Higher Ground case, which involved hundreds of HOAs as defendants sued by investors, alleging they had improperly charged fees as part of the nine-month superpriority lien.

The next day, the Nevada Real Estate Division issued an opinion that stated the superpriority lien did not include the cost of collections, which is a reversal of its earlier position.

As a result of this, the investors filed a motion for reconsideration, and both sides submitted additional briefs.

Gang reaffirmed his decision in favor of the associations stating that the issue will ultimately be settled by the Nevada Supreme Court.

Gang’s decision brought an end to the complaint, known as ADR 11-90. Within 30 days, attorney James Adams will most likely commence a civil action in the proper court.

The hypocrisy is way out of control on this. We have to take a major step in resolving this controversy as the only winners right now are the attorneys. (I call these types of cases the “full employment act” for attorneys.)

Here is part of the solution: Require all lenders to impound association fees as they do for property taxes and insurance. How come we have not seen such a bill in this legislative session?

Because lawmakers are more concerned about community garbage storage and association fines than clarifying the current law. That’s why.

Who knows how long it will take before a major decision is made by the Supreme Court? Meanwhile, associations will be spending a lot of money defending their legal obligation to collect delinquent assessments.

Here is a little reality check!

■ You have defaulted on paying your medical bills, or college loans, or automobile loans, or credit cards. Once legal action is taken against you, can you pay just the original balances to clear the debts? Or does the collection agencies or attorneys require you to pay the balance owed and any late, legal or collection costs?

■ You defaulted on your mortgage payment. The bank starts the foreclosure process. Does your bank just inform you that you have to pay only the balance owed on the mortgage in order to clear the delinquency? Or does it add late fees, legal fees and collection costs?

■ The legislator who introduced this law has stated it includes late fees, legal fees and collection costs.

■ State regulations already have established a cap on collections costs that an association can charge on delinquent assessments. In fact, state laws determine the interest rate that associations can charge a homeowner.

■ If the Supreme Court rules against the HOAs in this matter, communities will have to pass on the expense to their homeowners who do pay their assessments. Is your association prepared to pay about $2,500 per foreclosure?

■ Associations could see a major increase in insurance expenses that cover these kinds of lawsuits with a deductible as high as $10,000 per complaint filed against the association.

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 support@hlrealty.com. Holland is also available to speak at your organization or company.