4 more HOAs sued over collection costs deemed improper
16 June 2012
Four more Southern Nevada homeowners associations have been sued over allegations they’ve been requiring purchasers of foreclosed homes to pay off inflated liens.
In one case filed this week in Clark County District Court, Metroplex Realty LLC sued the Black Hawk Homeowners Association in North Las Vegas, Shadow Wood Homeowners Association Inc. in Las Vegas and Highgate Condominium Property Owners Association in Las Vegas.
In another suit filed in the same court May 29, Elsinore LLC sued the Springs at Centennial Ranch Homeowners Association.
The plaintiffs in both suits are represented by Las Vegas attorneys James Adams and Puoy Premsrirut.
Those attorneys regularly sue HOAs over what they call unauthorized collection costs and other charges included in liens that HOAs file against properties whose owners are delinquent on assessments and that ultimately are foreclosed on.
State law says HOAs can file ''Super Priority Liens'' that are ahead of mortgage liens, meaning the HOA lien amounts have to be paid for the buyer of a foreclosed property to obtain clear title.
Adams and Premsrirut insist these Super Priority Liens are limited under state law to six or nine months of assessments, depending on the circumstances.
In some cases, Adams and Premsrirut say the liens are also limited by individual HOA CC&Rs (covenants, conditions and restrictions).
The HOA and collection industries say the law allows interest and collection costs on top of the caps claimed by Adams and Premsrirut. They say HOA budgets, already depleted by the recession and the flood of foreclosures, would be harmed even more if Adams and Premsrirut and their investor clients have their way.
State agencies and Clark County District Court judges have issued conflicting rulings on this issue, and many attorneys expect the Nevada Supreme Court to ultimately decide the dispute.
In the meantime, in their suit against the Springs at Centennial Ranch HOA, the attorneys said Elsinore purchased a property at 6509 Sierra Sands in an April 2009 foreclosure auction.
A few months later, Elsinore received a ''Title Payoff Demand'' for $8,338 from the HOA’s collection agency, the suit says.
The lawsuit says the ''Unlawful Lien Amounts'' included in the $8,338 had been extinguished in the foreclosure sale. The suit seeks unspecified general damages as well as special damages of attorney’s fees and costs arising from the allegedly ''improper'' conduct of the HOA.
In their suit filed on behalf of Metroplex Realty, the attorneys say that company similarly was hit with demands that it pay inflated or unauthorized amounts for past-due assessments at the Black Hawk, Shadow Wood and Highgate developments.
Black Hawk demanded $2,982 for prior assessments and collection costs when its own CC&Rs should have limited its claim to $1,533 — nine times the monthly assessment of $170.40, the lawsuit says.
The claims by Shadow Wood for $5,101 and by Highgate for $5,726 were completely without merit since those HOAs’ CC&Rs completely eliminated their liens against the new purchaser at the foreclosure sales, the lawsuit says.
''Defendants falsely and intentionally represented to and demanded from plaintiff more than defendants were entitled to,'' the lawsuit says. ''Plaintiff relied upon defendants’ false representations, and in order to clear title to its properties, paid to defendants monies that were not owed.''
The HOAs have not yet responded to the two new lawsuits.
Adams and Premsrirut are similarly pursuing a class-action complaint, with Elsinore as the lead plaintiff, against the Peccole Ranch Community Association.
In that case, Clark County District Court Judge Abbi Silver last week rejected a motion by the HOA that claims that had not yet been individually arbitrated be dismissed. She said Elsinore had already arbitrated the issue on behalf of all potential class action plaintiffs at the Nevada Real Estate Division.
But in another case involving the Mountain’s Edge HOA, Clark County District Court Judge Rob Bare on May 14 refused to certify a class of plaintiffs because, prior to the filing of the suit, not all the proposed class members had asserted their claims through arbitration or mediation at the state Real Estate Division.
Other open cases involving Adams and/or Premsrirut involve the Aliante, Southern Highlands, Horizons at Seven Hills, Terrasini and Painted Desert HOAs.
The HOA and collection industries say they won a victory in the struggle over HOA collection costs last month when the Nevada Supreme Court ruled the Real Estate Division is responsible for regulating such costs.
The court found the state Financial Institutions Division (FID), which regulates collection agencies and had tried to cap HOA collection fees, couldn’t involve itself in the portion of state real estate law covering HOAs.
Adams and Premsrirut say the court ruling covered a procedural issue only and didn’t get to the heart of the dispute over whether HOA liens against foreclosed homes are capped at six or nine months.
Adams and Premsrirut are also prosecuting a separate massive suit against hundreds of HOAs and others filed under the False Claims Act that’s active in U.S. District Court for Nevada.
In that suit, they’re seeking damages on behalf of federal agencies they say were victimized by the alleged HOA overcharges.
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