HOAs suffer when foreclosures reduce cash flow

Q. Last night I went to an emergency association board meeting. We were told that our association only has $250 left in our capital account. We still have a balance of $7,000 in our reserve fund. We were told we are in arrears in the amount of $38,000 for nonpayment of dues.

Our development has multiple foreclosures. Some of these homes were bought by investors and have never been occupied. The yards are overgrown with weeds and dead vegetation. These homeowners or banks are not paying the $80 monthly dues or keeping up their property. Someone asked why we are not collecting or pursuing the delinquent accounts.

The treasurer who is also a real estate agent said: "We have to be careful because the bank will ask for relief and have the house removed from the association."

I have never heard of this relief. Can this be true? A house can have the same benefits from our association and not be responsible for paying dues?

The management company has told us that the banks refuse to accept any certified mail from them. What is our recourse to recover these delinquent funds?

A. Assuming that the reader's association has placed liens on the homes of the nonpayment owners, the association can require the mortgage companies to pay the last six months of dues prior to their ownership of the home per NRS 116.3116 (2c). In addition, the mortgage company has an obligation to pay current association fees.

The difficulty in dealing with the mortgage lenders is knowing who to contact and where to send the letters and/or notices. Within a lending institution, there are many different departments involved in the foreclosure process. Once the home has been foreclosed, another department will handle the monitoring of the home and its eventual disposition. That is the department that you need to find.

It is time consuming for the management company but it can be done to by phoning and tracking down that department in order to find someone that you can both speak with and to mail correspondence.

Reviewing Clark County records, you can begin the process of who is the new owner and mailing information. Accessing the tax department records will also provide a mailing address.

You may also contact the Nevada State's Business and Industry Administration. There are two departments -- Consumer Affairs Division (486-7355) and Financial Institutions Divisions (486-4120) -- that also can assist you. There are comparable departments in other states where you can file complaints or obtain answers as to the contact information that you need.

Lending institutions do not have the best record in promptly meeting their financial obligations to homeowner associations. Often these lenders want to wait until the home is sold and then pay the association. If only the reverse was true -- that lenders just had to sit and wait until a delinquent homeowner was able to sell his or her home to pay off the loan and not be foreclosed no matter how long it took to sell the home.

The board members and management company of this association could contact the various television and newspapers reporters to listen to their story and hear their concerns. State legislators need to be contacted, along with the Financial Institutions Divisions. Perhaps they need to begin their own investigation that would lead to stronger regulations.

The Nevada Chapter Community Associations Institute is a professional organization that consists of board members and community managers. For more information, call 648-8408. This organization has the means of contacting associations throughout the state and to gather information as to the severity of the problem of nonpaying lending institutions.

Lending institutions have an obligation to pay its dues to the association -- it just may take more work and time to collect.

Barbara Holland, certified property manager, is president and owner of H&L Realty and Management Co. She is a member of the Institute of Real Estate Management. Questions may be sent to Association Q. & A., P.O. Box 7440, Las Vegas, NV 89125. Her fax number is 385-3759. Questions may be shortened and are subject to editing.