Facebook
Fark
Digg
Reddit
Stumble
Justin M. Bowen / File photo
Senate Bill 174 would cap collection fees when a homeowner becomes delinquent on HOA dues. HOAs support Senate Bill 174, while investors generally oppose it.
Friday, April 15, 2011 | 3:27 p.m.
Collection agencies could charge up to $1,950 plus “reasonable attorney fees” on a house that’s late on its homeowner association assessment under a bill passed out of committee Friday by Senate Democrats.
Senate Bill 174 passed along party lines after a fiery debate that had Republicans accusing Democrats of wading into a legal battle in favor of collection agencies.
The bill is generally supported by homeowner associations and collection agencies and opposed by consumer protection groups and investors. Sen. Allison Copening, D-Las Vegas, argued that the fee cap would protect homeowners from the excessive collection practices, and “reasonable attorney fees” could be settled by a judge. She said that the collection agency fees are needed to keep homeowner associations solvent and able to provide services for existing residents.
Copening works as a lifestyle director for a homeowner association management company, and critics, including homeowners unhappy with their association boards, have said her outside employment presents a conflict.
The legislation has been a source of drama this week, and a sign that the Democratic caucus is less than iron clad. Copening this week initially would not say whether she was a part of the Democratic caucus.
Tempers flared Friday in a back and forth between Copening and Sen. Michael Roberson, R-Las Vegas. Sen. Valerie Wiener, chair of the Judiciary Committee, stopped the sides at one point and said, “Take a breath. Take a breath.”
Friday was the deadline for bills to make it out of committee, and SB174 now moves to the full Senate.
Consumer advocates said collection fees on late HOA bills have become a growing issue in the recession and as people walk away from their houses.
“The fees that are being charged to homeowners for past-due HOA fees are exorbitant,” said Cena Valladolid, operations director for the nonprofit Consumer Credit Counseling Services in Las Vegas. She said collection agencies hired by HOAs have been unwilling to bring down payments or offer much flexibility to consumers.
The bill specifies that collection agency fees are “super-priority liens” - moving to the front of the line to be paid back when a house is sold. Investors have argued that collection agency fees should not be “super-priority,” which they say the Legislature specifically reserved for past homeowner association dues.
Republicans argued that the Senate bill would do little to slow a problem in Nevada of aggressive collection agencies taking on fees of thousands of dollars on relatively small homeowner association bills. Roberson said the Legislature should also refrain from getting involved in a legal dispute between two private parties.
Copening brought up the case of Paradise Spa homeowner association in Las Vegas, which was raided by the FBI and Nevada Attorney General’s office last week. A single investor there owes more than $1 million in assessments, she said. Residents face having their gas shut off on Monday, Copening said, calling the investor a “slumlord.”
Roberson, an attorney, scoffed at the “reasonable” attorney fees in the bill. “How are homeowners supposed to dispute ‘reasonable or not?’” he said.
“They’re going to have to hire their own attorney, and have more legal fees?” said Sen. Ruben Kihuen, D-Las Vegas, who added he was not completely satisfied with the bill, and reserved the right to vote against it on the floor. He said he would move it forward to prevent excessive fees right now.
Sen. Shirley Breeden, D-Henderson, was the other undecided Democrat on the Committee. She called Copening’s bill “a good start” to capping collections.
A regulation pending in front of a Legislative committee is designed to cap the collection fees at $1,950 per house, plus costs.
Despite a vocal minority opposing this bill and trying to give all HOAs a bad name, annual surveys have shown that most people are happy with their HOAs. Homeowners who don't pay their assessments (and the speculators who buy their bank-owned properties and then must make good on the debts attached to them) must not be allowed to leave all the dues-paying homeowners holding the bag.
I am a board member on an HOA. Most of the people who are not paying now have an ability problem. We have quite a few foreclosures. The most an HOA can collect is six months of back dues, perhaps a couple of hundred dollars. Most of the money goes to the collection companies and the attorney's office. The collection folks and the attorneys are changing thousands of dollars to collect a couple of hundred. In some cases the HOA has to pay all the fees, collect or not. For the most part the HOA business is a scam, a legal scam to generate a lot of revenue for very little in return.
Yes, we want nice communities, but at what cost to homeowners. This bill is pure BS, written by an employee of the industry who got herself elected.
I've applied for many jobs as a "lifestyle director for a homeowner association management company", but have had no luck to date.
Guess I need to be a Nevada pol to get a nice job like Allison's. What the Hell does a lifestyle director do all day? We all know the answer. Nada, except to follow orders. Nice...
ANYTHING that Senator Allison Copening introduces is suspect.
Just like with taxes. You can't get blood from a turnip. I don't know where these folks get the idea that citizens are a bottomless resource for money. Does anyone out there actually represent the citizens of this state. Don't forget adding another load on the court system to determine "reasonable attorney fees" in each case. What are our elected officials thinking.
The people complaining are probably the ones who refuse to pay their HOA dues, and are upset that their funny-money loans reset. The collection fees complained about affect only the deadbeats. HOA's generally bend over backwards to work with people who are struggling. The ones that go to collection are hard-core deadbeats, financial institutions that have foreclosed on and now neglect the properties, or people who haven't come to terms with the fact they can no longer afford the home they gambled on to appreciate in value, and need to move to cheaper housing.
I live in a wonderful HOA that looks out for the community, and have investment properties in another one that, because of the HOA, has been able to resurrect what likely would have become a slum condo complex. HOA's are desperately needed, especially in this time when local governments cannot afford to do much to watch out for neighborhood deterioration.
The folks condemning HOA's and the collection agents knew full well what the rules were when they bought properties in the HOA community. Now they want to stab their neighbors in the back. I am glad this bill passed out of committee. It is needed to keep HOA's and the collection agencies helping them stay viable, rather that having them fail, forcing us to rely on local government to do the work of the HOA, far more expensively and far less efficiently.
The HOA is separate from the management company, the collection companies and the attorneys. Most HOAs are set up by the builder and long time management companies. Often, the CC&Rs are written to be in the best interest of the builder to help sell homes. The builders don't care what fees are charged, they only want to sell homes. In fact, when we took the HOA over from the builder we found that it was losing money and the management company was charging twice the going rate for its limited services. We corrected that very quickly. We even fired collection companies that overcharged and a law firm that would bill us thousands of dollars to collect a few hundred.
As I said, HOAs: really the management companies, collection agencies, and lawyers, are a scam on the homeowners, a lot of $s for very little in return
Still excessive. The fact that HOAs are mini-governments and can legally assess you to pay for their obligations is wrong to begin with.
This reminds me of a dairy co-op in NY. My sister has a large dairy farm in NY. In the early 80s they had several winters with lots of snow. Sometimes the milk trucks couldn't make the hills in the deep snow and that causes the farmers to dump the days production. Cows have to milked everyday and no one could afford enough refrigerated storage for extra days. SO.. Dairy Lee as I remember, a co-op contacted the farmers and said if they would join the co-op the dairy would guarantee pick up. If the trucks didn't come they would pay for the milk anyway. I tried to talk her out of it but she and most of the other farmers joined. They paid their dues on time every month whether they could afford it or not to protect their interests.
Meanwhile the dairy made some bad investments and lost a lot of money. Then they assessed the members for the loss giving them all a bill for $6,000 each. Dairy farmers are lucky to break even on any day except for a few huge corporate farmers. The government has subsidized the cost of milk for decades to make up for the low prices. Hence government cheese.
So, like an HOA, the co-op puts their obligations on the members. If an HOA losses money due to a real estate bust and lack of dues paid, let them go bust too. Another one can always be formed if the members want one. But these mini-governments abuse their members the same as our national and state governments do. They mismanage their money, spend too much and nail the taxpayers/members for their p--- poor performance.
The only good HOA is the one that just lost their charter and went out of business for my money. I'll take care of my own property thank you very much.
First I don't believe tortious is a board member or they use a bad collection company as currently majority of the CIC's don't pay any fees as they are collected from the homeowner.
Without SB174 stating the super priority case law in other states would hold up that collections is part of a super priority. If not the real question is who would pay for the hard costs already spent?
A CIC that has $50 a month assessment would only collect $450 in a 9 month super priority lien. Title which must be pulled by a collection company per state and federal law could cost $300-500. So without this who would pay for the collection costs, I will tell you who.
The 900,000 homeowners that live in CIC would have harm done upon them as the CIC would be losing money and need to either raise the assessments or cut services.
First, we fired the excessive fee companies and lawyers, but we still had to pay the collections companies and lawyers for the service contracted by the builder and management company that were still on the books. We pay when they decide the money was uncollectable from the homeowner, typically a few months after the final foreclosure. We can always try to recover from the new buyer, if anyone ever buys the property.
The management company agreed to reduce their monthly charge by 50% because the new bids for the service would have been half what we had been paying via the builders plan, and they knew it. We had a monthly loss under the builders plan before the change.
For thelies is probably one of the leaches that makes a living off the homeowners through the so called property management industry. It's a scam wherein homeowners are charged thousands of dollars to collect a few hundred, and in many cases the entire association gets to eat the costs that can be thousands of dollars, times every home that is foreclosed on. Also, the management companies charge a lot of money to do very little, and the collections company, which is often a subsidiary of the management company makes a fortune, along with the lawyers. Even with a 50% reduction in price from the management company it is a lot for a little. At one point we considered dropping the collection process altogether because the end cost to the association was not worth it.
I agree with LVBear. When it gets to a collection agency it usually means you're dealing with an outright deadbeat. Someone who has simply refused to pay, ignores letters, phone calls, etc. For the most part, keep your home up to the community standards (nothing on front lawn, no bicycles on porch, don't paint your shutters purple...you get the idea) and you'll breeze thru life in a nice HOA. 99% of the people cited for violations are guilty. They just want to apply their own standard.
HOA's in the hands of the community are the best thing going in a town where people think nothing of having barbecues in their garage, refrigerators on the front lawn, decrepit vehicles on cinder blocks and christmas ornaments left on the house until June...or never removed.
I know of quite a few who aren't paying their monthly dues and it doesn't have anything to do with the bad economy....afterall - these same people are paying their housekeepers once a week to clean their homes. Perhaps, if money is tight, they should fire the ILLEGAL who is cleaning their house - clean it themselves and use the money saved to PAY THEIR DUES!!
How does one go about dissolving an HOA? I read somewhere on here that if there's 10 or more homes that there's a LAW that says there MUST be an HOA. Is this true? I'd like nothing more than to dissolve our HOA simply because they can't really guarantee that the neighborhood will stay nice and retain value. Oh ya, they can and will issue fines but if a person just refuses to pay up then what good are these idle threats? I am all for having guidelines that will enhance and maintain our properties but if the HOA can't do more than issue fines that never get paid then I fail to see the need. I'd rather take down the fences and gates and simply let the city pay to maintain the streets and replace the burnt out street lights.
When one buys a house, it is important to demand a CLEAR title before taking possession. Clear title means that all back mortgages, leins and taxes be paid up at the day of closing. This includes no back HOA fees be carried over to you as the new owner (other than the normal monthly fees you will owe beginning on the date you take title). It is important to insist that the seller (bank?) pay all back fees, penalties and interest before the final closing. One should contact the HOA to see if there are any back fees owed and get a letter stating the entire amount due as of the date you are closing, and have that amount either cleared before closing, or held out of the proceeds in escrow to clear the title (just as they do to settle mortgages and taxes, and sometimes repairs). If the seller disagrees, take a hike, or be willing to pay the extra. Taking a hike is the best option. The other option is to buy in an area with no HOA, although the security of a gated community makes the HOA's more attractive these days.
I believe the old BBB phrase is: "Investigate before you invest".
HOA's are sort of like credit card companies, if you pay on time, no problem. If you get behind, the added fees and penalties make it harder to ever get caught up.
I don't live in an HOA, therefore I don't have to worry about getting a ticket if my garbage can gets left out a few hours too long, or if my DirecTV dish is visible from the street, or if my neighbor parks his boat in view of the other neighbors. Who cares? Every HOA seems to have a self appointed "enforcer" who feels it is necessary to "patrol" the neighborhood, looking for minor "violations" to report. I used to work for a company that managed a large HOA, and had to approve any building project (patio covers, pools, arbors, additions, etc.) it was amazing what neighbors would call in about to complain.
Just stop electing lawmakers that support these Nazi HOA's and maybe we can all return to Americans being responsible for their own property and lives! If a neighbor is doing something outrageous with their property that is what we have laws for and our taxpayer dollars already pay the government agencies that enforce them. Why pay "protection" money to these thugs to intrude on our lives and tell us what to do and how to live? HOA's are better off in China or Russia where big brother and every comrade wants to know what you are doing and tell you what to do!