The Nevada Real Estate Division issued an advisory opinion pertaining to homeowners associations and the superior lien laws that allow HOAs to foreclose on delinquent homeowners and collect nine months of past-due assessments. For those familiar with the issue, the collection of these delinquent assessments, late, legal and collection fees have been the subject of a number of lawsuits against local HOAs.
What is interesting to note is the timing of the division’s opinion as it is most aware of the recent arbitration hearings. In fact, the arbitrator for this major case, Las Vegas attorney Leonard Gang, has just handed down his ruling, which is contrary to the division’s recent opinion.
This issue has now become more convoluted as a result of the division’s opinions, and just adds to the “fire” in a case that ultimately will be decided by the Nevada State Supreme Court.
Gang ruled on three primary legal issues: excessive covenant amounts, notice of delinquent assessment liens and nonincurred collection charges.
The claimants allege that many HOAs limit the association’s super priority liens to six months. State law limits the HOAs super priority liens to nine months of assessments. The arbitrator’s decision was that Nevada law controls the super priority lien, regardless of any language within a community’s covenants that would appear to limit the HOA’s super priority lien.
Next, the claimants alleged that HOAs acted unlawfully by permitting their collection companies to record notice of delinquent assessment liens with the Clark County Recorder’s Office. Claimants allege that notice is unnecessary because associations’ automatic lien for past due assessments recorded of their covenants. Gang ruled that HOAs may record a notice of delinquent assessment lien.
The third issue pertains to the collection charges assessed against a delinquent homeowner’s account, which has been incurred from an association’s collection company. The claimants allege the collection charges could not be included within the super priority lien laws because associations do not incur the collection charges.
Gang based his decision on certain provisions within the Nevada Revised Statutes and the Nevada Administrative Code that expressly provide for third-party collection agencies to act on behalf of HOAs.
Overall, the arbitrator ruled in favor of the associations.
I am fairly certain that once the arbitrator issues a final order, and has the Nevada Real Estate Division issue a certificate of completion, the claimants will most likely file a new civil action in Clark County District Court.
The bottom line is that these issues will go to the Nevada State Supreme Court for a final ruling. The real question is when?
Note: The state Ombudsman’s Office has several free HOA education classes slated for January. Here are a few: open Q&A forum, 8 to 9 a.m. Jan. 4, Bradley Building, 2501 E. Sahara Ave.; administration and enforcement of NRS 116, 4 to 6 p.m. Jan. 7, Desert View Community Center, 10360 Sun City Blvd., corner of Thomas Ryan Boulevard and Sun City Boulevard; fines, liens and foreclosures, noon to 2 p.m., Jan. 8, Bradley Building, 2501 E. Sahara Ave. To register for a class, send an email to email@example.com., or call 702-486-4480.
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 385-3759, email is firstname.lastname@example.org.