B of A sues 28 Nevada HOAs, collection agencies in lien dispute

Bank of America is suing 28 Nevada homeowner associations and their collection agencies in the continuing dispute over charges that HOAs have been hitting homeowners and buyers of foreclosed homes with inflated bills for past-due assessments and collection costs.

The bank filed suit Tuesday in Clark County District Court charging that state law limits the ''super-priority" first-position liens that HOAs can place against homes to an amount equal to nine months of HOA assessments -- but that the HOAs are "improperly'' filing liens demanding payment of attorney's fees and collection costs on top of that.

These liens typically cover unpaid HOA assessments that accumulate while homes in foreclosure sit vacant, as well as costs to collect those unpaid bills. Charges that the HOAs and their bill collectors have been inflating the liens are pending in numerous lawsuits, with many attorneys expecting the Nevada Supreme Court or the Legislature to ultimately decide what limits should be placed on the liens.

In one recent example, a homebuyer was forced to pay off a $5,895 lien placed by the Spring Mountain Ranch HOA, but charged in a lawsuit that state law limited the HOA’s lien authority in that instance to $357, with the remainder representing an "unlawful lien amount."

But HOAs say that with the glut of foreclosures, their budgets have been decimated as no one pays monthly assessments for homes sitting vacant. The HOAs say that to maintain their revenue and needed community services, they need to recover that money from the new owner and that's why they file liens against the properties. The liens have to be cleared, or paid off, in order for the buyer to receive a clear title to the home.

Bank of America's lawsuit said its problem is that it "services thousands of mortgage loans in Nevada on behalf of many holders of first deeds of trust," but that when it tries to pay off the HOA liens, its efforts have frequently been rejected because it refuses to pay more than the nine months of assessments.

That prevents it from clearing the superpriority lien from the titles of properties securing its loans, the lawsuit says.

"The court should issue a judicial declaration establishing an association's super-priority lien does not include attorney's fees or collection costs. Under the plain language of (state law), only nine months of regular, budgeted common assessments are included in the super-priority amount," the suit says.

Bank of America also claims in the suit that some HOAs wrongly refuse to provide it with payoff information or accept its payments "in part because they wrongly contend Bank of America has no relationship with the association."

The HOAs and associated companies sued in this week's Bank of America lawsuit are:

Alessi & Koenig LLC, Aliante Master Association, Allied Trustee Services Inc., Angius & Terry Collections, Anthem Highlands Community Association, Assessment Management Group Inc., Asset Recovery Services Inc.

Also, Brias Homeowners Association, Canyon Crest Community Association, Cortez Heights Homeowners Association, Elkhorn Community Association, Elkhorn-Cimarron Estates Homeowners Association, GJL Inc. dba Pro Forma Lien & Foreclosure.

Also, Heritage Square South Homeowners Association Inc., Homeowner Association Services Inc., KGDO Holding Company DBA Terra West Property Management, Las Brisas Homeowners Association, Leach Johnson Song & Gruchow, Montecito At Mountains Edge Homeowner Association, Mountain's Edge Homeowner Association, Mountain's Edge Master Association.

Also, Nevada Association Services Inc., Phil Frink & Associates Inc., RMI Management LLC DBA Red Rock Financial Services, Sierra Ranch Homeowners Association, Silver State Trustee Services LLC, Southern Highlands Community Association and the Stonefield II Homeowners Association.



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  1. The mortgage holders are the responsible ones and not the new homeowners. These mortgage holders are getting a free ride again while we the homeowners are stuck paying their bills. We need a law that THEY CAN'T PAST THEIR RESPONSIBILITIES ONTO TO NEW HOMEOWNERS. As far as I am concern The Stae needs to protect us not these RICH BANKS.I pay my monthy fees and so should you.It bad enough the homeowners are walking away and the mortgage holders shouldn't be allowed to either.

  2. why is there a 9 month limit? What happens when all those houses are (u cant say empty cause a lot of people just stopped paying but stayed) stop paying for the costs? the costs just go away? its someone elses problem? get out of my way, im first... Walmart!

  3. I'm not going to mention any names here... but we just had one of the Homeowner Associations and Law Firms mentioned in the lawsuit above auction off a HOA lien for $150 --- while we were negotiating with Bank of America on the short sale and were going to pay the HOA over $5,000 to clean it up. Talking to another agent with a short sale they were negotiating with Wells Fargo in the same community, the same thing happened to them.

    Best interest of the Homeowners in the Association? I don't think so. Everything completely reeks.... especially when the Association KNEW we were working on short sale negotiations.

  4. Teamayres - You have hit the problem directly on its head, the state legislature is the one who has caused this problem with the arbitrary limitation of 9 months of HOA assessments. This limitation, along with banks unable to foreclose as quickly as they once were able to due to the number of lawsuits and court decisions have left numerous people in homes that are not paying the assessments. I have a neighbor who brags about living in the house now for over two years without paying the mortgage or assessments along with the HOA fines and interest.

    I agree with your analysis that most HOA's would be happy to recover the past due assessments and waive all fines and interest if they were assured that they would be able to recover the past due assessments. The state legislature needs to take this up during the next session and clarify this subject.

  5. @FVbump82 -- Always the best policy to avoid all of this silliness to begin with. Something rarely discussed in the media is the short sale deals that are ruined due to excessive HOA "penalties" tacked on that nobody wants to pay for when they get racked up to obscene numbers.

    Anybody short selling should certainly try to keep their HOA dues current to avoid the complications that could ruin what would otherwise be a successful short sale. Especially now that some certain HOA's think it's in the best interest to auction off the HOA liens during short sale negotiations.