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StumbleInvestors take on HOAs, and residents might suffer
Collection-agency fees on top of delinquent dues prompted litigation
A view of the master-planned community Mountain’s Edge in the southwest Las Vegas Valley on Friday, Aug. 6, 2010.
Tuesday, Sept. 7, 2010 | 2 a.m.
Sun Coverage
- Investors’ suit over HOA fees headed to mediation (8-16-10)
- Regulators propose cap on HOA collection fees (3-25-10)
- HOAs suffer during recession (3-12-10)
- Investors irked by steep HOA fees tied to foreclosure homes (2-26-10)
- Foreclosure investors suing over HOA, collection fees (1-28-10)
- Henderson HOA to pay up for board member’s mistake (10-13-09)
The crippled Las Vegas housing market has triggered a legal battle pitting investors buying foreclosed homes against homeowners associations, with millions of dollars at stake.
This is no David vs. Goliath showdown, as the two groups are more likely viewed by the public with equal disdain.
The outcome, if the investors win and the more than 200 HOAs lose, could ultimately bump up monthly association fees throughout the valley.
The fight began when home prices started falling sharply in 2008 and 2009 and the valley had more than 20,000 foreclosures a year.
Investors locally and from elsewhere began swooping in and buying up foreclosed homes and condos Median prices have fallen about 60 percent since the market peaked in 2006.
Homeowners associations wanted to recoup the monthly dues lost when homeowners stopped paying and their homes went to foreclosure. They needed the money for pool maintenance, landscaping and other upkeep that sometimes was cut back because of tight budgets.
The associations used collection companies to get what state law entitles them to — up to nine months of past due HOA fees.
The key issue — and what will probably be dragged out all the way to the state Supreme Court — is collection companies tacking on their fees to the delinquent HOA dues they have been trying to collect, in many cases for longer than a year. If associations lose and can’t get past-due fees, assessments on paying homeowners will probably increase.
That additional charge for collections has run several thousand dollars in some cases and exceeded what the investors sometimes had to pay in delinquent HOA dues. With collection costs averaging about $2,000 per foreclosed home, investors said the amount owed could easily surpass $50 million.
This year, a group of 18 investors filed two lawsuits in District Court, one against HOAs and the other against collection companies.
Judges dismissed the lawsuits because state law requires that such disputes be mediated by the Nevada Business and Industry Department’s real estate division before there are legal challenges. Both sides expect new lawsuits in coming months because no settlement is likely.
James Adams, whose Adams Law Group sued homeowners associations and collection agencies, said supreme courts in other states have ruled that nothing can be collected beyond normal assessments.
With the additional charges, “every day this illegal activity occurs, the homeowners associations are racking up damages they are going to pay my clients,” Adams said.
David Stone, president of Nevada Association Services, a collection company, said investors are convinced they are right but the law isn’t on their side.
“We are fighting this tooth and nail,” he said. “These real estate speculators are upset, and it’s an emotional thing for them. They don’t want to pay the association anything. They just want to scare the association.”
Rutt Premsrirut, one of the investors behind the lawsuits, said the dispute is about more than protecting investors. It is about homeowners who face penalties from their HOAs and have to pay collection companies as well.
He said investors don’t want to hurt the association but don’t think the collection companies are entitled to money.
“The HOA is allowing the collection agencies to charge all of these fees, but the board never gets the bill and they don’t know if it’s $10,000 or $50,000,” he said. “We don’t have anything against the HOAs. It is the collection agencies. I don’t mind paying the HOAs their money.”
Stone said if collection companies aren’t allowed reimbursement for their expenses, associations couldn’t hire someone to collect what is owed to them. That, he said, is unfair to homeowners who pay their dues and would have to make up any shortfall.
“These speculators have it all wrong,” Stone said. “They think collection companies are making a ton of money but that is not the case.”
In agreement is Chris Yergensen, corporate counsel for RMI, a property management company, and its affiliate, Red Rock Financial, a collection company. He said some cases appear unreasonable, such as when there are $2,000 in fees on a $500 account. But, he argued, the collection process may take two years, including filing legal documents.
“They are greedy real estate investors,” he said. “They buy properties from banks for $30,000 and flip that property within a month for $60,000 and they complain about collection costs.”
Premsrirut said the collection companies don’t provide any community service. Not having to pay steep collection fees means money would be freed up for rehabbing homes, changing the carpeting and painting.
If HOAs lose the legal battle and become financially unsound, they could go into receivership.
“It would be a social crisis in this state for homeowners associations,” Stone said. “It would definitely raise the assessments.”
Investors appear to have already lost the struggle: The state Common Interest Communities and Condominium Hotels Commission is expected to approve a cap by the end of the year limiting collection companies to charging $1,950. The investors argue that’s too much and fear loopholes will allow them to be charged much more than that.
Discussion: 20 comments so far…
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Anytime you buy a house, demand CLEAR TITLE. Contact the HOA and get written documents of any past due fees, penalties and fines. Find out what the total will be at the day of closing (including all fines and late fees) and insist that the seller (bank?) put that amount in escrow to be paid at closing to the HOA. Make sure the HOA agrees (again, in writing) that no fees are due from you other than those normal monthly fees that will start beginning at the time you take posession. If there are ongoing fines for lack of maintenance, demand from the HOA that they will allow you a reasonable time to make repairs before they start to levy fines. If the HOA knows you are working with them, they should have no problem with a 30 day time for repairs. It's real estate 101 to demand clear title. It is up to you, the buyer (or your attorney or representative) to do your homework before taking possession of a property. If the seller refuses, look elsewhere. I wouldn't even make an offer without having this information in hand. Any good Realtor will know what you're talking about and will likely have the proper paperwork to include with your offer. (any comments, stevem?).
I worked with a large HOA for years as a representative on the development standards review committee, Homeowners who worked with them were treated with more respect than those who tried to get around the process (usually building something without HOA signing off on it). I watched a $50,000 "violation" get torn down after a long drawn out complaint process.
Why are new owners being hit with these costs? The original homeowner who defaulted on their obligations should be responsible for all arrears and interest. That is who the collection agency should be going after... seize bank accounts, seize cars, garnish wages and file lawsuits against the original owners. This notion that people can just walk away from their obligations leaving new owners (investors or owner occupiers) with past bills is just ridiculous. How about a good old dose of financial accountability?
I live in an HOA and pay my bills on time. Anything that can be done to offset the loses incurred by HOAs because of foreclosures...fine with me!! CHARGE THE SPECULATORS $5000 for all I care. They make tons flipping property. What is good for the goose is good for the gander.
not a bad article, considering the issues are complicated and reporters are paid os little
but the real question, unaddressed, is:
foreclosure dhould eras all debt upon the property. is that so or not. cannot tell. the better wuestion is, following foreclosure who is responsible for new debt? certainly the buyer id, but the difficult part is the interim between foreclosure and new owner posession. has a nevada court ruled? excuse the typos, little drunk
HOA's are evil entities,and un American. They should be dissolved immediately! A home owner should have the right to do with his or her properties whatever they feel like. A mortgage is enough to have to pay off than to have to pay monthly "rent" to these associations. In Ct. (and many other states) if a homeowner fails to pay just two HOA payments then the law say's that the home can be put into foreclosure! is this fair? I should say NOT! Down with the HOA's!!!!
another reason why buying a house in vegas or any where w/ an HOA is a bad decision. people who have been doing the right thing and paying their bills on time are going to suffer.
Investors flipping houses back and forth to each other like a game of catch should be made responsible for past due homeowners fee's.
As for all the idiots who were stupid enough to pay triple the cost of what a house was really worth a few years back, with no money down, never had a stake in the house anyway...
Look before you leap boys
HOA have been raising the bill every year, at Vistana Condominium (Warm spring and Durango), the bill is $ 158.50 every month and keep going up. It also have to be stop.
People who do not know the use of an apostrophe (environprotector) should not be commenting on anything. Unless you are referring to the possessive, the word is HOAs, not HOA's. Now, stop commenting on things you know little about (you too dipstick) and head back to 2nd grade english for a brushup.
Someone's worried about an apostrophe?? This is a comment board, not an english class. Silly...
We can all use a little help in the grammar dept now & again.
Its time to get rid of the HOA NAZI threat.
"The associations used collection companies to get what state law entitles them to -- up to nine months of past due HOA fees."
My HOA fee is cheap. I don't know what others are paying. But $200/month for 9 months comes to $1800 plus late fees.
Question 1: How can you get a collection fee of $2000 on a bill of less than that?
Question 2: Why can't HOAs (gotta watch the apostrophe) put liens on properties?
"How about a good old dose of financial accountability?"
bellrock1 -- how about "a good old dose of" basic contract law? If I didn't make the contract with the HOA I'm not liable. I just shut down a local attorney with that one. I don't owe just because someone else says I do.
Look it up -- to "owe" means "to have a legal duty to pay funds to another." Source: dictionary.law.com/Default.aspx?selected=1427
"The paper bubble is then burst ... there will be a general revolution of property in this state." -- Thomas Jefferson by letter to John Adams, 1819, from "The Works of Thomas Jefferson" Vol. 12
HOAs could face insolvency and dismantlement, and they're trying to win support out by instigating fear with statements like: "Don't sue the HOA's because your fees could go up!" or "If the HOA goes away, no one will enforce the rules and your neighborhood will turn into a ghetto!"
Pathetic.
Aside from what "Bakersfield" first posted, if HOAs are going to be a problem for you, either with back-fees or future ones, you shouldn't be buying a home there. Of course at the same token, HOAs always try and shakedown homeowners who don't have the funding to fight them in court, so I'm sure that this is one legal battle that the HOAs are not prepared for. Be it financially, or especially now that they face multiple defendants who are willing to intimidate them more than they can.
If you buy a property with a lien on the title and the title company discloses the lien at the time of purchase then suck it up, it's yours.
Many of you still do not understand HOAs.
<Question 2: Why can't HOAs (gotta watch the apostrophe) put liens on properties?>
They can and they have. People have lost their homes because of being delinquent just a couple hundred dollars (WORST offenders - those who live in expensive homes in places like Red Rock Country Club, Rhodes Ranch, Summerlin). They were able to afford the $5000 a month mortgage payment but not the $500 HOA fee every month.
Bakersfield's post sums it up quite well. When these investors bought these homes, they KNEW there were most likely past due HOA dues and also liens against the properties for these delinquent dues. But proceeded to buy anyway hoping they could avoid paying those dues as evidenced in this lawsuit. If you or I wanted to buy a home and it had outstanding dues owing - those dues MUST get paid before you take ownership. In the case of all these foreclosures - the BANKS should have been paying the dues. In the case of a normal house sale - the owner must have the dues up to date or sometimes - the house cannot be sold. Lot of times these homes have liens against them and the buyer has to, unfortunately, pay off the lien before taking possession.
Environprotector: You don't know what you are talking about. Yes, HOAs get a bad rap but they are not THAT bad. Most HOAs are willing to work with homeowners; it's the ones that are a pain in the ass that they don't like and THOSE PIA's start bad mouthing HOAs.
In our first community we lived in, our HOA dues kept going up because of the usual vandalism that EVERY gated community comes across at one time or another. The F'in punks from other neighborhoods would jump the fence at the pool, screw around in the pool for hours and THEN do damage. It got so bad one year, the HOA even thought about draining the pool and just cementing it in but the HOA members fought that because it was a selling point for the community. Over a 2-year period of time, the HOA spent upwards of $20,000 doing repairs, replacing the fence, etc. around that area and guess who had to pay for it? The HOA members. Then of course, the Section 8 houses NEVER had to pay any HOA dues. As I understand, they were exempt. So God knows if the owners of those homes ever paid those dues or not; my guess they did not. But because the owners had the Section 8 thing going on, were most likely forgiven any dues they owed.
KillerB
I'd like to hear about how you won against your HOA, or how you "shut down" an attorney.
Bottom line: The investors are going to lose. I use to have a copy of the NRS 116 statute (worked in this field of law for 3 years while in Vegas) but I think it is in storage. It is all very easy and specific about the HOA dues and liens put up against a property.
first of all ,i cant imagine closing on a property w/liens against,can you even do that.addressing the whole condo/association thing:maybe some folks dont want the pool expenses and like the controlled enviro the hoas provide.i personally wouldnt want a place where i'd have to pay another bill on top of all of my other 1's.
"KillerB I'd like to hear about how you won against your HOA, or how you "shut down" an attorney."
Det_Munch -- already did.
It's not rocket science, just basic contract debt principles. My response to the first demand was a simple letter telling them to prove the claim. The response was copies of bills and demands -- evidence of debt only, nothing showing that any debt was created. My second letter said to either show the contract the trust that owns this house signed with the HOA or leave us alone. That was two months ago.
I like the definition from the 6th Abridged Black's Law Dictionary, that debt sits on three legs -- it's owed, it's due, and the demanding party has the legal right to collect it. Kick out one of the legs and there's no debt.
Like I said, this isn't rocket science. And few attorneys are rocket scientists.
In defence of the HOA;
I won't buy a house without a good HOA in place.
My prefence for a home is a well maintained home and front yard. No RVs in the streets and driveways or jammed up agianst the neighbors property and no vehicles up on jacks in the driveways or on the street.
If you like living in a subdivision were habitants like having their garage door open with thier stereo blasting, their kid's playing in the doughboy pool in the front yard, dog barking, and hollering a conversation with a neighbor three houses away, you'll find plenty of them around. buy there and be happy.
There are subdivisions that have the controls I perfer. Drive through one of them and decide which one has more appeal to you. Then make your choice and be happy with your lot.
commoncentsnow -- so you prefer to live where everyone else is just like you? Just a guess but you prefer a Stepford wife, too?
You're right, it's about choices.
environprotector, HOAs (hope this is spelled correctly) are as American as apple pie and greed; and this time greed got investors into trouble trying to flip the same house again and again. As the saying goes: "There's a sucker born every minute".
H.O.A.'s are ripp offs and their collectors are scum. I owed appx 450, it was turned into almost 2k with fees liens etc. I was at fault for being late, but thier fees and charges are not reasonable at all. This was ten years ago. I was paying 140 a month then in hoa fees. I sold it, then it went to 175 a month. What do u get for the hoa fee? Cut grass, maintain pool, roof, and garbbage. I'm sure I'm missing something, but what you pay for what you get is a joke. Don't be late, or you'll really get screwed. 500 units x 170 = 85,000 a month. Think about that for a minuet! Plus, you got to live by their rules.
I would be very hard pressed to buy a home again with an hoa again. Actually, I would stay away fr om them.
HOA is required for certain communities.
These investors/banks should have paid their dues when they were suppose to, now that it is overdue, they have to pay more. THey should be lucky interest rates aren't 10%+++ on it, as it should be.
Stupid litigation from cheap ass flippers.
anthonyjoe
The late charge fees an HOA charges are minimal at best....until you are consistently late and then the fees will definitely add up. Wouldn't it have been better to pay the $450 (or even before that amount got as big as it was?) You must have had several fines imposed to get up to that $450 since HOAs DO give you time to pay the fines when first levied against the property. And the first time around, it is a minimal fine pending on the violation.
I seem to recall you are an absentee owner living in Indiana. It is hard when you are not actually physically there to see what goes on with your property. My ex keeps getting dinged fines because his "live in caretaker/security person" aka "me", no longer lives in the house and he has no one to take care of it for the last 2 years so the property has not been maintained properly any more so the fines keep coming. Unless you want to pay someone to keep up the propery, this will keep happening. Weeds grow, if something malfunctions with the pool equipment, major problems there. So I don't feel sorry for the absentee homeowners at all. Renting the property out is another major problem with a whole new set of problems with tenants. NEVER expect the tenant to pay the dues unless you bury it in the rent. And again - NO guarantee the tenant will maintain the property as required by the HOA. If you are not there to live in Vegas the majority of the time - don't buy a house, buy a condo.
Three things that I know should have came into play here is.
1. RESPA
2. Special Warranty deed
3. DUE DILLIGENCE
I would have checked for any liens and if there were any I would have made an adjustment on the purchase price.
Special Warranty deed are issued in lien theory states which is basically say the bank will only guarantee the title while they had owned it.
And last but not least the Real Estate Settlement Procedure Act the debits and credits to the buyers and sellers.
commoncentsnow has a point:
Anyone here who hates HOAs or refuse to live in an area without one - go drive around the neighborhoods in Vegas NOT under an HOA. There was a difference 5 years ago and my guess NOW, it is worse now in those neighborhoods. I read an article in the RJ a couple of weeks ago about a neighborhood in the northern part of NLV. I remember this neighborhood very well since I drove by it every day. It was very nice with really nice homes. The description of the place NOW, with all the foreclosures, sounds like a ghetto. At least with an HOA, you have a fighting chance to keep the neighborhood decent. Without one - it becomes another trash area.
I now obviously live in an area that wouldn't know an HOA from...whatever. Since I am so used to living in an HOA, when I walk around the neighborhood, 98% of the neighborhood is nice - everyone keeps their properties up very nicely, ie the grass, gardens, the homes themselves but then every so often I come across that "2%" - a house that is disgusting looking and I think "wow, if they had an HOA, this wouldn't be happening". It DOES take away from the rest of the homes and the neighborhood.
But some weekend - all you HOA naysayers get in your car and drive around. Also - some neighborhoods have HOA's but are not gated. But again - you will be able to tell the difference.
When you buy, the money owed (late fees, collection fees, etc.) should all be in writing at closing. I don't see how this lawsuit has merit. The investors know what they are getting and what is owed before they buy. If they are buying regardless and hoping to skirt the fees later on.....no no no.
I have a hard time believeing that just because a section 8 renter has occupied a homeowners dwelling,the owner is relieved of the responsibility of paying HOA dues.Take this to it's logical conclusion if section 8 becomes a major dynamic in a neighborhood.To me these leins should have occured to the legal noteholder at the time of services provided.That means banks.Banks,providing the necessary means for a homeowner to enter hoa contracts,should have included these fees as a monthly confiscatory account,similar to what is done to collect taxes on your monthley mortgage payment.Those fees ignored by the mortgage borrower,should be assumed by the legal rightful owner to ensure a proper accountability for their investment in your neighborhood. If my free and clear house I have is sold to someone with me carring back the loan on it,you could be dam sure that my responsibility was never relieved by anyone.If I repo the house from who I sold it to,am I now relieved of making payments for my prior contractual obligations.No ia'm not.Then why are banks?
Another thing people forget because they do not know anybetter and they should: when you buy a house, you ALWAYS check the "money trail" - are their any liens against it? Any unpaid HOA dues? And that information is available to you so you can't cry "I didn't know". There was an incident several years ago where this woman bought a house and THEN finds out there were late HOA dues, including liens against the property. She went public with what she was going thru to get sympathy from the public and how she was not told the truth blah blah blah. We all thought she was pretty stupid! If yourself cannot do it, then it is the responsibility of your realtor to find out about these "little inconveniences". In this story, at the time - she couldn't move into the house UNLESS she paid all these overdue fines and take care of the liens and she didn't have the money to pay all this. But then her realtor may not have cared because he/she got their commission and who cares about the buyer! I think this happened around '06.
The Clark County Assessor's website is very easy to navigate to find out who owns a house, how many owners a home has had (remember one we liked, the house was 5 years old and it had SEVEN owners already!! Alarm bells went off on that one!) There is no excuse any more for any one - investors, regular buyers - not to do their research before hand.
I am on an HOA board. I am considered the kindest of all members. I always try to work with a homeowner WHO LIVES IN THE HOME. I am usually out voted but I understand these are TOUGH economic times. I WILL work with someone who is an investor AND rents out to dirt bags. We have a big problems with that in my development. As a boardmember, I make sure that I vote that investors pay or have the fees colected.
However, If the house is sold ESPECIALLY to the investor, they shold pay the back dues. The investors again are screwing around with this housing market.
I do not believe an HOA should ever have the power or authority to foreclose on a home. EVER!
If I was to buy in the Las Vegas market today I would demand from the seller a lien wavier from the home owners association, contractors etc. if you don't get them then don't buy the seller can figure out why it hasn't sold.
Det_much
The condo I was talking about I owned 10 years ago. I stated that I sold it. I do own a house in Indiana, but I live in Vegas. To say that I should have just paid the 450 is obviously the right thing to do. I wasn't as responsible then, as I am now.
your right, it wasn't the hoa that made my fees triple, it was the collection agency that more than trippled the fees. Hoa's are in bed with collection agencys, I would bet they even get kickbacks in some hoa's.
You never pay past HOA liens when you buy a house. Who's that stupid?
Just be careful of Realtors, I've asked them abouts past liens and such and they said its clean, then when I do my own checking I find out its not.
Most HOA's have a grace period as well, that gives you ample time to gear up and clean before warnings/fines start taking place.
I'd never live in a non-HOA community. Way too ghetto from what I've seen, especially in this economy.
HOAs are Nazi organizations dedicated to trying to control people. They should be made illegal, unconstitutional, and have to account for every penny they take from the home owners!!
I am so happy that we did not move into a HOA neighborhood when we moved here! Nothing but trouble, extra expense, and negativity!
Yeah great. No HOA. Enjoy cars on cinder blocks, plastic pools on the front yard, fuscia painted homes, barbeques on sidewalk.
I'd say just the opposite. Happy to move into HOA neighborhood. Maybe non HOAs work in Indiana, Pennsylvania...but not in Vegas where transient renters and a lot of people who dont give a damn about their neighbors let their homes go to sh*t.
I view HOAs as protecting me against the knuckleheads who think nothing of their neighbors.
Many of you are missing the point.
(1) The HOA may not benefit from the outrageous collection fees charged by these collection companies (mainly comprised of local law firms). The HOA is entitled to 9 months back dues (per current law), and that is what they collect. They were recently only entitled to 6 months back dues. Lets say your monthly dues are $50 per month, times 9 months, and maybe some minimal late fees to the HOA. Perhaps a total of $500 for the 9 months dues and minimal late charges. The collection company then demands $3,500, of which $3,000 is kept by the collection agency and $500 is forwarded to the HOA.
(2) There are literally thousands of local homeowners currently struggling to pay their HOA dues, or are short-selling their homes that are located in an HOA. These struggling homeowners have no choice but to submit to these outrageous demands from the collection companies. There are many struggling homeowners that are likely just a few months delinquent that are facing these outrageous fees from the collection companies. These struggling homeowners are the other victims and will hopefully be vindicated. It just took a few investors with the wherewithal to fight the collection agencies and start this ball rolling.
""Just be careful of Realtors, I've asked them abouts past liens and such and they said its clean, then when I do my own checking I find out its not.""
How do you do your own checking? Most people here (since they do not use lawyers for closing) are depending on the realtor to do his job...which includes disclosing liens, no? Not all of these people buying have the sense or ability to do those searches. On the east coast, in general you don't buy or sell without a lawyer. Period. In Las Vegas where the real estate market is like the wild west with foreclosures, short sales, multiple creditors, liens...Personally I would find a good lawyer. Relying on the realtor who has an active interest to sell the house and get his commission to be 100% forthright?...No way. Not when you are talking about the largest financial decision you will ever make.
I reside in a gated community with HOA dues monthly and I pay it on time. I am glad for the HOA in my neighborhood, it takes care of the problems especially the ones not paying their dues. A collection agency gets involved simply because some homeowners or investors think they can get away with not paying their dues.
As far as these flipper investors trying to get properties with liens on them, it is part of their responsibility to take care of these liens, pay up or have the sellers take care of it but don't think you can just pass it along to other homeowners by having our fees increased.
HOAs will win this case. Flipper investors has already done enough damage in this economy. Bravo HOA for fighting in court these greedy investors who don't even care about the community.
My neighborhood started out with an HOA. I got on the board. We went thru Property Management companies and never did find an honest one. The last one we had absconded with our dues for over 1 year. We now live very nicely without an HOA & dues. Try a small community, it is nice. The HOA's are put in place by the builder & required to recieve the building permits from the city. Their purpose is a way for the city to not have to maintain anything. We do it on our own now. No one bothers us. It can be done, get involved.
It is a pity how investors are depicted in this story. I have bought 56 units in a 424 unit project. I have assisted to drive out drug dealers, squatters, and make it a much safer environment. The police calls to our complex are done 70% and the complex has won an award for a much improved community with the officers receiving merit awards. I asked David Stone of NAS who is quoted for a reduction in fees and I still paid in most cases 3x to 6x the amount of the HOA asssesment. I sent a long email explaining the good we do for the community and it seemed to do little good. It seems he attacks investors in the article but when even you come across as doing very good for a community it is just about maximum revenues to collection companies. I heard at the last cicc meeting which governs collection companies Anita McFarland state she can do collection for $950 a file and David Stone says he cannot do it at $1000 and be profitable and she works for a large law firm called COoper Castle. even Chris Yergensen states $2000 in fees is too high on a $500 account well I can say the amount I pay to NAS exceeds 4x on many of my files.
""It is a pity how investors are depicted in this story. I have bought 56 units in a 424 unit project.""
No one is forcing you to buy. You made that decision. While I applaud your efforts to "clean up" the project, you are in this to make money. My only suggestion to all these "investors" is to make sure they know what the liens or outstanding penalties are (collection agency, etc.) before you jump in the water. These HOAs are trying to collect back money owed to them. You can't cherry pick who and who should not have to pay collection agency fees. You guys are Johhny come latelys. You knew or should have known about the outstanding fees. Then you can make an educated decision if you want to proceed with the buy and pay off the outstanding balance. I'm sure you could even contact the board, make your case for buying and fixing 56 units and see if they have any leverage. If they don't, then you can simply walk away.
Tom,
The point is that the article written by Buck Wargo depicts investors as opportunists and my point is that they do a lot of good and I gave my example of assisting to turn around a community and get actively involved in its improvement. The rates of various collection agencies vary by a wide margin and in some cases 3x or more. get the schedule from Cooper Castle on their rates of 1/3 of NAS and Alessi. HOAs are in serious trouble and will be ultimately liable for being sold on using certain collection companies. Not all collection companies are unreasonable in fees but some clearly are and it seems the spokesperson from the industry David Stone gets heat for appearing to represent the industry when many collection companies seem to be distancing themselves as far from him as they can.
the CONCEPT of an HOA i do like, such as they keep people in line in regards to making sure their neighborhood does not look like some dirtbag trailerpark in florida. but then there are times they go to the extreme and are horribly abusive with their power. my HOA isnt too bad, the area is totally desert landscaped on all properties, so overall its really just weeds and making sure no trash is visible. but the fact that an HOA is able to take such crazy actions against a homeowner is retarded.
and no HOA should bill the new resident for past problems and back pay. no one should pay for the mistakes of others. i didnt not mow that lawn and i should have to pay for the previous persons laziness.
HOA should only be able to make sure your area does not look like a trailer park and nothing more. this is one industry that needs to be regulated heavily.
Collection agencies should not be given carte-blance to tack on whatever "fees" they think the "customer" (in this case the investor) can pay. HOA's are allowed by law to collect 9 months back dues the article said. Why isn't that enough? The investor interviewed said that they are not disputing the lawful HOA fees. None of you realize how an investor buys a house at a foreclosure auction which is "as is" with no title/closing company other than the auctioneer as a representative of the bank. So, chiding the investors for not doing their research on the property is ridiculous. These are business people, of course they are doing their research. These collection company fees are not disclosed anywhere for anyone to find. They are only disclosed when the new buyer (investor or regular home-buyer) tries to pay the HOA backdues to bring the account current. Investors and homeowners wishing to sell their home should not be held hostage by HOA's and COLLECTION companies who know they have a captive audience. Joe-blow homeowner or homebuyer just pay off the exhorbinant fees or doesn't. Investors are the only ones with enough experience to know that some HOAs and COLLECTION AGENCIES are trying to take advatage and enough money to try to make it stop. The average home buyer just thinks it is an isolated incident happening only to them on the house they have fallen in love with. Investors are employing trades people in our community and taking many an abandoned home and rehabilitating it and selling it to people who can become a part of the community rather than leaving the house there on my street as an eye sore. This article seems to be written with the slant to frighten us all into submission. Why would my HOA dues go up if the HOAs collect their dues allowed by law but the COLLECTION company can't collect their inflated "fees"?
Part 1
In my youth, law firms required young real estate lawyers to learn all of the laws and regulations pertaining to condominiums, planned developments and homeowners associations. We learned that most progressive states had a logical web of laws to protect home owners from being ripped off by management companies for their HOAs, lawyers for their HOAs, and developers who controlled HOAs and HOA management companies. Aggrieved homeowners could sue their HOAs and HOA managers in real courts.
Yet even in progressive states, homeowners and HOA boards of directors still constantly discover that they have been ripped off by HOA management companies and law firms hired by those managers to "represent" the HOAs. Beginning in 1998, my own not-Nevada HOA's members began to discover those sorts of rip-offs, by one of the largest HOA management companies in the state. That management company's Executive VP was running a not-terribly sophisticated skim and kick back scheme. The man was under investigation by the state's Insurance Commissioner and Attorney General, for more than a year. All of the HOAs' money was in a bank account controlled by the man, co-mingled with the money of other HOAs, some of which were the subject of the rip-off and skim.
All the while the state was investigating this HOA manager, my HOA's attorneys, from one of the largest "homeowners association expert law firms" knew of the state investigation and co-mingling of associations money. Those law partners did ABSOLUTELY NOTHING to warn their client HOAs' Boards of Directors that they were at risk of losing their money and property to the corrupt manager.
Finally, the local cops arrested the HOA manager on theft and fraud charges which the Insurance Commissioner had established. Only then did one of the name partners in this HOA-expert law firm admit that "We couldn't warn your HOA of the investigation of your management company's Executive VP, because he is a tremendous source of referrals of business to us. If you want to sue him find another lawyer for your HOA."
The HOA manager ultimately plead guilty and did prison time. However, the accounting records of the HOAs were so mixed up, no HOA was ever sure it got all of its money and never figured out how much the convicted manager had embezzled from each of them. That would not have happened if the lawyers hired by the HOA manager had done their fiduciary duty to their clients, the HOAs.
So whose name do I see in Nevada, year after year as the Nevada Legislature meets, lobbying against reforms to protect homeowners and the bank accounts of their HOAs? That same lead lawyer who would not rat-out my old HOA manager hauled away the cops.
This HOA-expert lawyer took the Nevada Bar exam; his firm opened an office is LV; and now he touts himself to the Legislature as an "expert" they should listen to on HOA issues.
And except for Sen. Mike Schneider, the Legislature does listen to him.
Get on your HOA board and you can change it. The Property management company is limited to the rules of the Board and the contract which is created by the homeowners. Line Item Veto works wonders!
Part 2
My bottom line is that Nevadans are abused and ripped off by the HOAs BECAUSE of the effective lobbying by the HOA management companies, HOA-expert lawyers, CAI, and developers who own and control the management companies for several large new communities. They have created the Ombudsman's Office, and its requirement for arbitration of all disputes, at the expense of the homeowner. The news reports that homeowners who take matters to the Ombudsman wind up paying tens of thousands of dollars in arbitrators' fees. I have yet to read a news story where the Ombudsman's arbitrators have ruled in favor of a homeowner.
This club of HOA manager, lawyer, developer rip-off artists have manipulated the Ombudsman's Office to create as an impenetrable barrier to homeowners suing, at reasonable cost, to vindicate what few rights homeowners do have under Nevada law. Even as the Nevada Legislature creates more and more rights for homeowners (see http://red.state.nv.us/CIC/Publications/...) the HOA managers and their captive collection agencies, the HOA lawyers, and the developers who control HOA Boards of Directors just laugh at the Legislature and the public, and keep manipulating, finding new loopholes, and ripping off the public.
In contrast, in most other states a homeowner can sue in small claims court, or in regular trial courts, and get a speedy remedy for wrongdoing by HOA managers and their puppet HOA board members.
Nevadans, as usual, are cheated by rip-off artists who lobby the Legislature and the Nevada Real Estate Division, gaming the system.
In the next session, if homeowners are to receive the justice to which they are entitled under Nevada law, the Nevada Legislature needs to abolish the Ombudsman's office, abolish mandatory arbitration, and restore homeowners Constitutional rights to a trial in front of a judge and jury.
As to my homeowners' association, recently I learned the developer who controls its management company is banking the HOA's money with an out of state bank (not allowed under Nevada law), is co-mingling my HOA's money with the money of other HOAs, and has pledged (mortgaged) all of the bank accounts to a large out-of-state bank as security for a multi-million dollar debt of the developer. Will I do anything about this breach of fiduciary duty by the HOA management company which the developer owns, or the breach of fiduciary duty by the puppet Board of Directors of my HOA? Of course not. I am not going to waste my family's money dealing with the Ombudsman and the corrupt HOA lawyers. If our HOA loses its $1+ Million in reserves to the developer's bank, c'est la vie...or rather c'est la Nevada.
People never complain about HOAs when they increase (or maintain) their properties values because of a well groomed and aesthetically pleasing neighborhood. It's only when they find out they can't do something they want is against the CCRs do they complain.
If you don't want an HOA to govern the color of your house or requires that you can't have a junk car, RV or boat and have to mow your yard, then don't buy into one of them. It is never a suprise or a secret that there is an HOA. I would NEVER buy a home without an HOA.
As far as the back dues. I agree that those responsible should pay for them. Not the new owner. There should be some accountablility for those who just walk away.
It's very foolish to buy a house; Any kind of house or home that has an "HOA" fee. When I bought my house in March 2010 I made sure of it to avoid any place with an HOA. They can increase the rates at a moments notice for any reason or no reason at all. If one owns their home, nobody should be able to tell them what color they can or can't paint it. That's very foolish and a real infringement on the American Dream. And I didn't want one with a lousy gate either. They usually break all the time and they are so slow to open up, increasing the commute time. They are a false sense of security; since they are so easy to defeat. You need a gate that has a 24 hour security officer opening it. The automatic ones can be easily defeated. DOWN WITH H O A!
There's a simple solution for those who don't like HOAs. Don't buy a house with an HOA. It doesn't take a rocket scientist to figure that out.
I, for one, bought a house with an HOA because I don't want to live in a trashy neighborhood with dilapidated, oddly colored houses, and old cars/boats/etc. in the yards. Nor do I want a pack of screaming children disturbing the peace, running through barren, defoliated yards with 100 pound nightmare dogs. If you want to live like that and call it the American Dream, fine, but don't move into my HOA neighborhood and agree to a binding contract with me and then kvetch about the details.
No one forced you to buy a place with an HOA, so quit your griping.
Tom: Contact the HOA company directly.
When I first moved here, the HOA I had were a bunch of crazy power hungry freaks which I had to fight over and over again.
I don't know how it happened, but we somehow kicked them out, and got another one. This one has been awesome. I believe they are called RMI, one of the two. Nothing but good and no harassment/complaints from anyone I know of.
So if you're having problems with your HOA, fire them and get another. You aren't FORCED to use that company, and people don't understand that option.
The HOA's are just money making schemes by large property management companies. The services they provide are worth half or less for what they charge. Apathetic residents are how they survive. I'm glad to see the investors fighting them. Go Investors Go! No one else is bellying up to the bar to buy all those foreclosed homes.
If the bank refuses to work with the borrower and decides to take the property back then THEY should also be responsible for its upkeep including the HOA fees. This would motivate the banks to work with prospective buyers and help to keep the property more presentable verus today where people place offers on homes and then fail to hear back from the lender for two months. The banks make thousands of dollars in fees and profit AND are the actual owners between sales. Just a thought.
>>>> Another HOA board member here <<< I was tired of the Nazi tactics used by the HOA that ran the community I live in, so i joined the board and set out to minimize the "Naziness". We only focus on big issues. I do want my property and neighborhood to look its best.
We did well for a while...then the economy tanked and many of the investors defaults... followed with Hope and Change - we now have a neighborhood with Section 8 that is beginning to look like East LA.
I will say this, if it was not for the HOA, my neighborhood would look like a Barrio. These renters don't give a damn about where they live or anything. All of our park equipment (hundreds of thousands of dollars worth) has been destroyed, you name it...destroyed.
While HOAs are ultimately evil, they are a necessary one in this day in age.
hey cynical...
excellent post as always...
hey killerb...
i would suggest you read the cc&r's instead of that legal dictionary...
Birdiedreamin -- why?
My question is, if homes are in forclosure, why aren't the agencies going after the banks instead of the home owners? If they want to collect, the banks own the homes..
To all who don't know. The HOA can put liens on properties and they do. But, they do not cease the properties too often because it is a big expense. Speculators should find out if there is a HOA before they buy the property and who the mgmt co. is and get the info on the property before buying. Any smart person knows this, I did it and I worked out a deal with the HOA to pay when I bought it. They will work with you if you buy. The speculators are being cheap. They have to understand the risks of buying. These are ignorant people who don't and should pay. Work it out!!!!
In my condo complex, the upstairs unit from us is vacant for over a year now. Owner from CA foreclosed on the property. Prior to foreclosing on the property he had a family of welfare recepients not working and staying in the unit.(I can hear them talk on the phone begging for welfare assistance) Renters were not following Rules and Regulations and we kept on calling on our HOA management company to make sure they follow the Rules and Regulations.
Lesson here, investors do not care who they place as renters in their property as long as rent is paid. Now the unit is vacant for over a year and the bank has foreclosed on it. HOA dues are owed and it will be paid by the buyer or the seller. NO IFS OR BUTS on this one.
Also, If there was a way to have less speculators in this city, we would not be in this crisis. Alot of the home foreclosures were out of state owners flipping and/or renting. If Las Vegas wants to be a COMMUNITY for people and families to live in, the local and state gov't has to set laws to change this. If they don't we will go through another bubble and bust again. Has the powerful controllers of Las Vegas learn this lesson? I don't thing so.
Quoyn520 you are ignorant !!
rickkorbel: explain, have you ever bought property dealing with HOA's? I have owned 3 condos and know.
To retiredyounster: the HOA puts a lien on a forclosed property and when that property is sold the payments are made. Sometimes the bank will pay for the lien so that the property can be sold faster and the cost is in the sale. The HOA dues are attached to the property.
I have belonged to an HOA for two years and I have also been a member on the Board in as many years. I know a little about our HOA but that does not mean I know about all HOA's to say the least. What I know is the devoleper and the state make the rules and regulations or the CC&R's and the home owners have to live by those rules (like it or not)if they signed on the dotted line. Most CC&R's are not there to harm you but to protect you and your investment. The HOA Board tries to establish harmony within the community but as you know not everyone is going to be happy. If your community is gated that can make matters worse or better depending on your HOA. Believe it or not if your community is gated you had better hope for a strong HOA or your investment is like a raft at sea with sharks smelling blood. Those sharks are the one's that sell drugs, loud parties, racing ATV on your street, refuse to maintain their yards, let their animals run and deficate where they want etc.. You have seen what I am talking about argo your investment has been compromised. I am not sure what the collection agency charges but the HOA's need their money to operate i.e. Insurance, Water, Landscape, Mantainace, Street Sweeping, Gates, Fences, all common areas that you have an investment in. The list goes on. To be truthful it is not the HOA but the State and Developer you should blame for your problems.
Don't close on any real estate with unpaid bills against it, whether mechanics liens, water bills, taxes, HOA dues, etc. Why? because your gonna have to pay. That's propbably why the property is so cheap! Do your research.
Are collection agencies (of all kinds) fundamentally unfair, with outrageous fees, yes they are! The game is fixed. Never tangle with them!
That said - HOAs are not perfect but they are a good thing, providing services while protecting your investment. If you are always at odds with your HOA you might just be the neighborhood problem.
Aaronboy says: "What I know is the devoleper and the state make the rules and regulations or the CC&R's and the home owners have to live by those rules (like it or not)if they signed on the dotted line."
This is not accurate.The Board (your elected homeowners) can adjust anything, even the cost of the dues. The rules set forth when a builder is getting his permit is a generic set of rules. It can be changed. This is NOT a difficult subject, it's very easy. It becomes difficult when you just try to go along with rules that someone throws in your hand. It can be changed!
The collection agency usually becomes the last resort for HOAs. What do you expect them to do when some of these deadbeats just outright refuse to pay maintenance fees even when they can fully afford them. I'm amazed at how many people "buy the horse" but refuse to take a look in its mouth before closing the deal. HOAs in Las Vegas have become a necessary evil. With garbage strewn all over, purple paint on the houses, lawn chairs on the front lawn...well...I think you get my point. If you don't mind that stuff, by all means buy in a non HOA neighborhood. Otherwise, especially in this city where the regard for your neighbor seems to be non existent for many...you need an HOA.
If these collection companies methods were so successful they would have been able to collect from the previous owner. Instead they are just churning fees and sticking the bill to the American Tax Payers. Yes our tax dollars are paying off the majority of these liens via FHA, FDIC, Fannie Mae, Freddie Mac. There is a statutory CAP these HOAs are allowed to assess and we feel these collection agencies are exceeding it. NRS 116.3116
We will often receive bills for $8000 and only $2000 was given to the HOA. This is pure fee churning nothing else. Collection companies add no value to our community. All HOAs need to do is follow the same collection process Republic Services or the Clark County Taxation does. Republic Services charges a $36 lien fee while NAS will charge $325 for the same service.
Oh boo hoo to the investors. WHEN they purchase a foreclosed home, Nevada law states the max that may be charged to the bank is $900. These deadbeat income property owners claim "we didn't know there was an HOA and that's why we didn't pay - oh yeah, there are 3 other properties that are liened for the same reason". The lawns are dead, and they refuse to come to hearings to deal with it, the neighbors are due some respect and these owners should take responsibility for their properties and maintain them. If I have to live in an HOA, then I'm damn well NOT going to live in a ghetto. I'd prefer these deadbeat absentee owners NOT buy in my housing tract because they're the cause of the entire problem, NOT THE HOA'S!!!
The fees pile up because someone has become a deadbeat. When a letter arrives telling you that if payment is not received by such and such date it will go to a collection agency....you might want to take care of it.
Most who owe thousands have continually disregarded notices. It comes in the mail and they toss it in the garbage. No sympathy for the ones who utterly disregard their financial OBLIGATION.
<The fees pile up because someone has become a deadbeat. When a letter arrives telling you that if payment is not received by such and such date it will go to a collection agency....you might want to take care of it.
Most who owe thousands have continually disregarded notices. It comes in the mail and they toss it in the garbage. No sympathy for the ones who utterly disregard their financial OBLIGATION>
Good post, Tom. That basically is it in two small paragraphs. If it gets to a point where the past due amounts are sent to collection, the owner totally disregarded the notices and had no intention of paying.
As someone above mentioned, if you are cited for something ie weeds, dead plants, leaving your garbage cans out in full view constantly etc. the HOA does not demand payment of the fine immediately. You are sent a notice of the violation and given X amount of time to fix the problem (we left our Christmas lights up one year past January 1 (unlit, just still up). We received a notice and had until Feb. 15 to fix the problem and THEN fines would be levied). If the problem continues, more notices are sent and fines are added. They only get to be substantial after the owner repeatedly refuses to fix the problem.
So if you end up having it go into collection, then YOU are the ignorant deadbeat - NOT the HOA.
I have a feeling some here that are against HOAs are the ones who scoff at the letter saying pull those 5 weeds you have in your front yard within the next 30 days or else you will be fined $25 plus a late fee if the weeds are not pulled by the due date. I think the other definition of pulling those weeds is "upkeeping your home and property".
There are also only a few trustworty management companies in the Valley. And as an HOA member and if you feel something isn't right with anything such as your fees have gone up and are offered no explanation, you have a right to view the accounting books of your HOA at any time. Pop in unannounced to the office and asked to view them and don't take No for an answer!!!
environprotector wrote "HOA's are evil entities,and un American. They should be dissolved immediately! A home owner should have the right to do with his or her properties whatever they feel like. A mortgage is enough to have to pay off than to have to pay monthly "rent" to these associations. In Ct. (and many other states) if a homeowner fails to pay just two HOA payments then the law say's that the home can be put into foreclosure! is this fair? I should say NOT! Down with the HOA's!!!!"
I for one enjoy living in my hoa. The streets and homes are clean, no purple or pink homes, there aren't any broken cars or trucks in the street, etc. HOA living is not for everyone, for sure. If you dont like HOA,s then dont live in one. There is plenty of desert out there to build whatever home you want.
Read my lips: HOAs are a waste of money - PERIOD.
I made the mistake ONCE of owning a home under an HOA - NEVER AGAIN. 100 page rule book, rules which get sporadically enforced only IF they don't like a particular owner. I'd get harassed about a few weeds in my yard, while the morons next door were allowed to run NASCAR races up and down the street and host outdoor mariachi parties at 3AM.
I stiffed them on a years worth of dues when i walked away from my bloated mortgage and bought a lovely new house twice the size with no HOA for CASH. Just try and get my past dues out of me - I DARE YA!
allaroundtown says: The CC&R's can be changed. To the best of my knowledge the only way any CC&R's can be changed is through the state. Providing a person wants to make the trip to Carson City is what I was told by our management company. True the HOA can adjust some fines but the money is still needed to satisfy the your management company. You have to maintain a certain amount for projects, upkeep and daily maintance. Again I will reiterate.... everyone signed on the dotted line.
These hoa are nazisum ,and we all know how to deal with this problem don't we
I agree many HOAs are horrible. I've been in one of my condos where there were guns at each other. They can be messy. And if you get a bad mgmt co. like I have been through, you can end up paying back dues twice if you do not have records. I personally believe single houses with land do not need HOAs. What the builder does is put in a community pool, club house, or rec room and that constitutes needing a HOA. That is not necessary. As for a townhouse or condo, it depends on the layout. My condos were bought under $100,000 so there is common ground and water hookups that cannot get away without HOAs. I would like to buy a home and make sure the sewer, water, plumbing, electrical, roof, and structure is ok and not have a HOA. The cosmetic, I can handle. They can get expensive and if the HOA ends up in a lawsuit from bad contractors, It can get expensive. Been through that too.
The problem is that it is expensive to own a home and a condo or townhouse can give a lower income buyer a chance to own. I want to own and though I have been through alot, I do not want to rent ever again. My mortgage does not go up like crazy. I have been thrown out of apt because the new owner wanted to get $825 per month and I was only paying $510 and I am a good tenet. It's been bad and hard for me. The fights to get things fixed is another. And I can fix it up the way I like. I feel a since of stablity.
"I stiffed them on a years worth of dues when i walked away from my bloated mortgage..."
mermaidintheshade proud of being a fraud!!!! Does not surprise me at all, we have them all here in Vegas. Look at Sharron Fraud Angle.
Aaronboy: of course your management company told you that. Get on the Board and fix it! The management company works for you and the other homeowners. Property management companies do NOT make the rules and neither does Carson City, it is the homeowners. It is so simple. I have done it.
The buyers knew the HOA dues were owed when they bought them, they should have paid them at closing if the HOA filed liens as they could and should. If they didn't shame on the HOA... There is a way to fix that too....
http://vimeo.com/14425309
That's why you don't buy homes at Trustee Sales... Buyer Beware...
I'll agree though... the fines and penalties racked up the Associations and their collection buddies are RIDICULOUS.
"David Stone, president of Nevada Association Services, a collection company, said investors are convinced they are right but the law isn't on their side.
"We are fighting this tooth and nail," he said. "These real estate speculators are upset, and it's an emotional thing for them. They don't want to pay the association anything. They just want to scare the association."
Nevada Association Services is a BIG ABUSER of adding Fines and Penalties. I've seen $2,000 in past dues racked up to $5,000 with every single garbage fee imaginable.
The PROBLEM is the Nevada Legislature has been bought by Association Management Companies in allowing RIDICULOUS charges and fines. OH... poor Association Management Companies charging OUTRAGEOUS fees for anything imaginable.
The REAL VAMPIRES are the Association Management Companies and their Collection Buddies. WHY IN THE WORLD should $500 to $600 in late HOA dues be turned into $2,000+ due and payable?
WHAT A SCAMMY STORY suggesting that Homeowner Associations are going to go broke selling online HOA documents for $200 a pop? They are going to go broke because they can't collect $2,000 for HOA dues that are only $500 past due?
GARBAGE.
The issue at hand is the RIDICULOUS fines added on to what is owed when HOA dues fall behind. THERE IS NO EXCUSE for Allowing services such as Nevada Association Services to add $100+ for "Service Fees" when the HOA payment is less then $50... NONE!
Nevada Association Services has helped kill more real estate deals from INFLATING past HOA dues then imaginable --- resulting in FORECLOSURE for the homeowner and another Sad Las Vegas Foreclosure Statistic.
Buck -- DO SOME REAL REPORTING and ask Real Estate Agents handling Distressed Properties what they think about these HOA companies in bed with the Collection Services and You'll change your tune... FAST.
These companies are LEECHES.