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With lawsuits piling up and the Nevada Legislature debating caps on fees imposed by homeowner association collection agencies, investors in foreclosed homes on Wednesday filed a new class-action complaint against more than 500 Nevada homeowner associations.
The complaint was filed by Las Vegas attorneys James Adams and Pouy Premsrirut with the state Real Estate Division’s Ombudsman for Owners in Common Interest Communities and Condominium Hotels.
Adams and Premsrirut regularly sue collection agencies and Premsrirut, also an investor in foreclosed homes, has been sued by collection agencies who say she’s been abusing the legal system.
Premsrirut denies those allegations and says the collection agencies for years have been charging unauthorized fees and bullying homeowners by threatening to foreclose on homes over unpaid collection costs.
The new complaint says the HOAs have unlawfully allowed collection agencies to collect costs that were never incurred by the HOAs.
The complaint is a challenge to the practice of homeowner associations of imposing what investors call an excessive "super priority lien" against foreclosed homes that must be paid by the investor, bank or homeowner acquiring the property at the foreclosure sale.
The Nevada Financial Institutions Division last year limited the amount collected -- including collection costs -- to nine months of assessments. Collection agencies have appealed that ruling.
The new complaint says the HOAs "are making improper, inaccurate and/or excessive demands, through themselves or by their agents … for claimed collection fees and costs which (the HOAs) did not actually incur nor were liable for at the time of the lien or demand, and for claimed lien amounts which have been extinguished by law, extinguished by the covenants, conditions and restrictions, or are otherwise unlawful or improper."
"There is no provision at law which permits (the HOAs) to authorize the debt collector to unilaterally assess and charge to (plaintiffs) any and all fees and costs not incurred by (the HOAs) that the debt collector wishes to charge in the collection of past due obligations," the complaint alleges.
Chris Yergensen, senior vice president of collection agency RMI Management LLC, parent of Red Rock Financial Services, said this week’s complaint by Adams and Premsrirut is just another in a series of actions they have filed aimed at lining the pockets of investors in foreclosed homes at the expense of homeowners who responsibly pay their HOA assessments.
Yergensen said if Adams and Premsrirut are successful in preventing HOAs from collecting collection costs, "Someone else is going to have to pay those costs."
"It would shift the cost to the responsible homeowner," he said.
RMI and Red Rock Financial Services, he added, are satisfied with new regulations from the state Commission for Common-Interest Communities and Condominium Hotels limiting collection fees over unpaid HOA assessments to $1,950 plus "costs." Yergensen said in a worst-case foreclosure scenario those costs wouldn't exceed $700.
Adams and Premsrirut, in the meantime, aren’t the only ones challenging collection costs assessed against foreclosed homes.
A Bank of America subsidiary sued scores of Nevada homeowner associations over the same issue in January and that lawsuit is pending.
This week's new class action complaint seeks unspecified damages, including punitive damages, an "accounting of monies improperly taken" from the investors and orders stopping the collection practices at issue.