Investor attorneys downplay ruling on Nevada HOAs

Attorneys suing Nevada homeowner associations over what they call inflated liens against foreclosed homes say a Nevada Supreme Court ruling on the issue this week won’t affect their lawsuits.

The court ruled the state Financial Institutions Division had no authority to regulate the HOA collection activities of collection agencies.

The court said that’s because the state Real Estate Division’s Commission for Common Interest Communities and Condominium Hotels exclusively regulates the fees HOAs can charge homeowners to collect past-due obligations such as assessments.

The case ended up at the Supreme Court after the FID issued an opinion and declaratory order capping the lien that HOAs can place against foreclosed homes at an amount equal to nine months of assessments.

Collection agencies, which claim to have the right to collect more than the nine-month cap, filed suit to block the FID opinion.

Clark County District Court Judge Susan Johnson sided with the collection agencies. The FID appealed, but the Supreme Court agreed with Johnson’s ruling.

James Adams and Puoy Premsrirut, Las Vegas attorneys who regularly sue HOAs and collection agencies on behalf of investors in foreclosed homes, said Friday that the Supreme Court ruling didn’t address whether HOA liens are capped.

The investors’ attorneys argue the liens are capped under state law at an amount equal to six or nine months of assessments, depending on the circumstances.

Instead of addressing the cap, the Supreme Court only ruled on the procedural issue of whether the FID had authority to issue an opinion interpreting the section of real estate law governing HOA debt collection fees, the attorneys said.

HOAs and collection agencies continuing to demand that buyers of foreclosed homes pay off liens in excess of the six or nine-month cap ''should not see the ruling as a blessing of that practice,'' Premsrirut said.

Whether collection costs and interest in excess of those caps are allowed by Nevada law may be determined at some point by the Nevada Supreme Court once one of their cases reaches the court, which could take years, the attorneys said.

As an example of the issues in the lawsuits, investors said they bought a home in the Mountain’s Edge community and the HOA required them to pay $1,911 to obtain a clear title when, in their view, they should have been required to pay just $150.

In the meantime, Adams and Premsrirut have scored at least an interim legal victory in one of their class-action lawsuits over the issue.

Clark County District Court Judge Susan Scann on May 2 signed an order certifying one of Adams’ suits against the Aliante Master Association as a class action.

This means the suit’s plaintiff is a class consisting of hundreds of members including investment entities, mortgage services and government agencies — all claiming to have been required to pay off unauthorized and inflated lien amounts when buying foreclosed homes in the HOA.

Attorneys for the Aliante HOA will continue to fight the suit despite the class certification.

Similar suits are under way against the Southern Highlands and Mountain’s Edge HOAs.

Adams did suffer a setback in the Mountain’s Edge case on May 14 when Clark County District Court Judge Rob Bare refused to certify a class because, prior to filing suit, not all the proposed class members had asserted their claims through arbitration or mediation at the Nevada Real Estate Division.

On top of the state court cases, Adams and Premsrirut are prosecuting at least two cases involving HOAs and collection agencies in federal court.

One is a massive suit under the False Claims Act claiming HOAs and collection agencies defrauded government agencies by requiring them to pay inflated fees and assessments.

The other claims that collection agency Nevada Association Services (NAS) violated the federal Fair Debt Collection Practices Act by coercing homeowners into paying inflated collection fees with false legal documents and threats.

NAS has denied those allegations.

HOAs and collection agencies say it’s important that they collect past-due assessments because the recession — with the related glut of foreclosures — has harmed HOA budgets and the ability of HOAs to provide needed community services.