Southern Highlands HOA sued over liens on foreclosed homes
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23 September 2011
11:16 a.m.
In their latest blast at Las Vegas-area homeowner associations, investors in foreclosed homes have filed a class action lawsuit against the Southern Highlands Community Association.
Like many pending lawsuits over the same issue, the new suit charges the Southern Highlands HOA has been requiring buyers of foreclosed homes to pay "unlawful lien amounts’’ and "excessive’’ amounts under the association’s recorded covenants, conditions and restrictions (CC&Rs).
The suit was filed in Clark County District Court by lead plaintiff and investor Prem Deferred Trust, which is represented by Adams Law Group.
Prem and Adams Las Group regularly litigate against Nevada HOAs and their collection agencies over charges investors in foreclosed homes have been required to pay excessive collection costs, HOA assessments, fines and fees that accumulated while homes sat vacant awaiting foreclosure.
Adams Law Group is also involved in separate litigation charging collection agencies for HOAs are unlawfully threatening to foreclose on homeowners over what Adams calls inflated collection costs for delinquent assessments and fines.
One such suit is active after U.S. District Judge James Mahan denied a request by collection agency Nevada Association Services that it be dismissed.
The HOA and collection industries insist their fees are fair, that the investors are just trying to make a quick buck and if they succeed, HOA budgets would be decimated.
The Nevada Supreme Court is expected to weigh in anytime with a decision on whether the state Financial Institutions Division, which regulates collection agencies, can limit collection costs related to HOA assessments, fees and fines.
Even before the Supreme Court ruling, Clark County District Court Judge Elizabeth Gonzalez ruled June 2 that homeowner association "super priority" liens against homes for unpaid assessments are limited to nine times the monthly HOA assessment, plus costs for needed emergency repairs.
This lien (not counting emergency repair costs) can include penalties, fees, charges, late charges, fines and interest — as long as it doesn’t exceed an amount exceeding nine months of assessments, Gonzalez ruled.
In the new lawsuit, Prem Deferred Trust said it purchased two foreclosed properties in Southern Highlands but then was forced to pay off excessive liens the HOA and its collection agencies had filed against the properties.
In one instance, collection agent Alessi & Koenig LLC demanded Prem pay $2,742, the suit says.
"Much of the payment exceeded the amount plaintiff was required to pay pursuant to (Nevada law) and the CC&Rs,’’ the lawsuit charged.
In another instance, Prem said it was required to pay $1,984, which it said was an "incorrect and unlawful amount’’ as according to the CC&Rs, Prem was liable for just $330.
Prem charged in the lawsuit that "in hundreds of instances over the last several years,’’ the Southern Highlands HOA had improperly obtained money from Prem and other potential lawsuit class members with these alleged overcharges.
Besides seeking class action certification, the suit seeks unspecified damages and an injunction blocking the HOA from "filing, claiming or asserting any demands for unlawful lien amounts, excessive CC&R amounts or any unlawful or improper amounts related thereto.’’
The Southern Highlands HOA has not yet responded to the lawsuit. A request for comment on the lawsuit was placed with an attorney has represented the HOA in related litigation.
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Discussion 3 comments
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There are few things more evil than the HOAs and their collection agencies. I hope they get their hats handed to them in this lawsuit.
I"am tired of HOA getting such a bad rap. Lets say you have 10 units and the dues is $100 a month that is a $1000 dollars to run the HOA now some guy can not pay his loan so he does not pay his dues every month so now you only collect for 9 units but this other guy who is not paying the dues is using the water, garbage and elect we will not go into insurance cost the State make the HOA pay that....my point is that the other 9 units has to pay for the services....So HOA puts a lean on this guys unit to try to recover HOA dues, but it takes two to three years before they get the guy out so HOA has to hire a collection agency to try to recover the money that the other 9 units our paying to keep the grounds looking good for the HOA.......The problem here is what they are saying is the leans are to high well then don't by the property invest some were else..........You see if you do not pay the dues then someone else has to pick up the tab....and sometimes this causes a raise in the due's....So why are they suing the HOA?
@Hankster62 if you are tired of seeing HOAs get a bad rap perhaps you should spend some time helping them to stop acting like idiots, criminals and thugs. The reason the HOAs are being sued is that they are gouging people. It's not bad enough that some of these dues are already so high that they contributed to the housing crisis, now these people are asking for 20 to 50 times what they are owed. How is that fair? They deserve to be sued. So far they are getting their butts kicked in court so maybe your perspective is off just a tiny bit?
It is unfair that the buyers of forclosed homes get a big surprise once they take ownership of the home. Even more unfair are the excessive fees that are charged to the buyers. With all the headlines in the paper about crooked HOAs, one wonders if the HOA and collection agency are colluding to shake down the auction winner. Why not go after the bank or the original owner who are responsible for racking up these fines?
Hankster. The problem is that the auction buyer has no clue to how much the fines and fees are before the auction.Considering that the auction buyer was not the person who racked up the fines, it is a shock and slap in the face. One can go broke this way.
The HOA can force the house into forclosure to get paid back before the bank forcloses. Or they can go after the bank. HOAs don't do this because they know that they can force the auction buyer to pay excessive fines and fees.
I am confused as to why the Banks who foreclose on the properties don't have to pay the HOA fees. The bank owns the property, and the property owner should have to pay the fees, so why does the bank get a break? I'm fairly certain when I bought my house a couple of years ago, the documents indicated that the bank had paid all the fines and fees that had accrued since the house sat vacant. So what am I missing?
I see some folks our confused, let me try and straighten this out big word here " Auction Buyers" HOA has nothing to do with the Auctions we only can collect by law 9 months back dues, that is it. President of the HOA can only wave late charges on units he can not wave leans on the units. You have to remember that is everyone's money in the HOA.
HOA is run buy the people who own units in the community called a board they have meetings and laws that they must follow anyone who owns units can come to the meeting an bitch, vote or whatever it is not some secret underground society. We have never raised our dues scene I lived here in five years.
However the collection agency can have leans on units and fees so there beef is with the collection agency, not with the HOA.
Sometimes times Board members and Presidents of HOA can go bad what I would like to see HOA do a background on the President to make sure he has a clean background before he is elected that would be a great law. The President runs everything he even hires the Management company and the collections agency's of course the board has to vote on it but the board go's along with the President selections.
So what happens is no one cares enough about there community to go to meeting they want some else to run it for them ....Sad but true.
Anyone can be elected President ex con or does not matter...this is where I see the weak link. Until there is a law to protect who gets in charge it is scarey...True some HOA can elect a dictator maybe some already have. But some like mine is a great HOA they our on top of there game no one riding around telling people what to do and take care problems if any right away....I am the President here and my phone is open 24/7 here to anyone who has a problem. We our proud of our community and have never raised the HOA dues. So it all comes down to who running the show.
Why aren't the banks required to pay these fees - they own the homes once they forclose on them..??
Here is what I am seeing that is going on with the Banks they do not want the property because if they take the property back then they have to pay the HOA 9 months back dues and start paying HOA dues on the unit. So if they leave it sit they pay nothing what a good HOA should do is foreclose on the unit an get a trust deed on the unit then the unit belongs to the HOA now they can rent it out to try and recover the money they lost on un paid dues.
The problem is when everyone in the community pays the dues is fine but when people who do not pay dues then the others who do has to pick up there part if you get enough people not paying then you have to raise dues on the others. Sucks but you have to expenses some how.
Hankster I agree. Banks are not foreclosing and keep putting off the sales until they know they can sell it at auction. The thing about an auction buyer is they have to take care of all super priority liens from city, county and more as they don't go through a title company at the auction like you do at a traditional sale. I have heard about incomplete titles on display at these auctions showing clear title. Perhaps that should be investigated. Also any buyer can do their homework and search for free on the recorders website to see what liens are on a property.
If collection costs are not included then the paying homeowners would pick up the tab. I see neighbors not pay the mortgage for months before the bank reports to the recorders office that the mortgage is delinquent. I see HOA's often not know that the homeowner is not paying the mortgage until months after they send a delinquent account to collections. It would be unfair for the rest of the homeowners to get stuck with the bill.
Read this article. I promise you if the courts rule against Jackie Glass's original ruling on what is included in super priority liens you will see a backlash from the paying homeowners and you will see the # of people that really do support their community.
I will make sure everyone knows it is the delinquent people causing fees to go up and the lack of proper laws allowing a community to enforce the collection of the fees. The state legislatures better educate themselves instead of listening to people that don't know. Anyone that calls HOA's greedy because of this then does not know. HOA's are the homeowners. Collection companies are unfortunatelly needed outside agencies contracted to chase the money on behalf of all the paying homeowners.
http://www.wbtv.com/story/15510643/homeo...
Longtimeresident : You got it right lot of people forget that the HOA is a non profit org an no ones makes money on the Board to the President.
True statement: Collection companies are unfortunatelly needed outside agencies contracted to chase the money on behalf of all the paying homeowners.
So they should be suing the collections companies not the HOA is what I see. So HOA get a bad rap.
Thanks for your comment. I keep very close eye on who is paying and not paying I have had people here not paying for up to five years but we are getting those units back now.....HOA has to foreclose on them to keep our dues in line. We have it under control here now. And no HOA dues raises our needed I am going to ask the board to joining me on lowering the dues....So it is working for us.
I'm no fan of HOA's but I'm not sure how this seems unfair. HOA fees are based on number of homes, not number of tenants right? So if a home goes unoccupied, do they not have to maintain security gates, landscaping etc for the existing residents of that community? Those costs are fixed, so someone has to make up the difference, and I sure as hell don't want it to be me. Just because someone bought too much house for what they can afford, then lost it, why should I have to help pick up their tab? You want the foreclosed house, you make up what the previous owner owed to the community. I have no problem with this.