Lawsuits continue against Southern Nevada HOAs

Editor’s note: Barbara Holland takes a break from her Q&A format to address recent lawsuits against HOAs.

More than a year ago, Las Vegas-based Adams Law Group, which represented a group of real estate investors, started legal action against homeowners associations in Southern Nevada.

The lawsuits challenged the nine-month superior lien for delinquent assessments and whether it included late and legal fees and collection costs. There were two suits — USA vs almost 600 HOAs, which were later dismissed from this case, and a second case that became known as the Higher Ground case.

The District Court ordered the case be sent to the Nevada Real Estate’s arbitration program where arbitrator and Las Vegas attorney Leonard Gang eventually found in favor, on all points, on behalf of the associations.

Adams is now pursuing the same “Higher Ground” issues in District Court, after satisfying the obligation to first submit to arbitration through the Nevada Real Estate Division.

Well, now the games continue, as Adams has filed complaints against individual associations again, but this time the plaintiff is the individual investment group that purchased one or more homes within any given association.

What does that mean? Let’s assume that two different investor groups bought two homes in your association, you will shortly be served two separate lawsuits, one for each home that was purchased by each of the two groups.

When you submit these lawsuits to your directors and officers insurance policies, your insurance company may consider them to be two different cases. Your association could have the privilege of paying more than one deductible on each lawsuit. For example, if your deductible is $2,500, then your association would be liable for $5,000. You need to contact your insurance agent.

I have learned that one of the major directors and officers insurance companies will not be charging additional deductibles, as they are considering the suits an extension of the “Higher Ground” case, and will be using the same claim number.

One of the other major insurance companies will be charging the additional deductibles, as that company is not considering the cases to be an extension of the “Higher Ground” case.

By the time we end 2014, associations will be lucky if they can even purchase this insurance at any reasonable premium, and you can expect the deductibles to significantly increase.

In the sworn statement of James R. Adams to the District Court, he states “that the legal issues addressed in the attached Complaint have been arbitrated, pursuant to the provisions of NRS 38.300 to 38.360. Thus pursuant to NRS 38.330(5), the plaintiffs are commencing within 30 days of the arbitration, a civil action in this Court concerning the claims that were submitted to arbitration and upon which a decision was based.”

We will probably see some motion from Adams to consolidate these suits as a class action case.

Our Legislature could have stopped the bleeding by clarifying the state law about whether the nine-month superior lien includes late fees, interests and collection costs (please note that interest rates are set by state law and collection costs capped by state regulation).

Our Legislature was more concerned about garbage cans not being stored inside garages then fixing a state law. The challenges from the Adams law firm and lenders who have jumped into the game and are filing their own lawsuits has wasted thousands of dollars of homeowners’ assessments in fighting these cases.

The hypocrisy continues. Next time, you are personally sued by your bank for not paying your charge card or car loan or mortgage, tell them that you should not be required to pay them any late fees, interests and collection costs; that you want their suit against you to be exactly the same as their suits against the associations.

Shame on the Nevada legislators for not addressing this problem head on.

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 the Association Q&A, P.O. Box 7440, Las Vegas, Nev., 89125. Fax is 702-385-3759, email is

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