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July 25, 2014

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Las Vegas HOA collection agencies sue critics

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Ulf Buchholz / File photo

Two homes are shown for sale in the southern Las Vegas Valley.

New allegations of wrongdoing are flying pitting Las Vegas-area collection agencies for homeowner associations against homeowners and investors in foreclosed properties.

Nevada Association Services Inc. and other collection agencies say that when it comes to the glut of foreclosed homes in Southern Nevada, they're helping HOAs keep their budgets balanced by making sure investors buying the properties pay for accumulated HOA assessments, fees and fines.

But the investors -- and homeowners in some cases -- say the collection agencies have gone overboard in seeking to collect assessments and collection fees in excess of what's allowed by law.

A flurry of lawsuits arose from the dispute in 2010 and this year.

So far the litigation has resulted in a ruling by the Nevada Financial Institutions Division limiting the amount collected -- including collection costs -- to nine months of assessments.

Collection agencies gained a court order in December blocking implementation of that ruling and that order is now on appeal to the Nevada Supreme Court.

One of the most recent lawsuits over the issue was filed Friday by Nevada Association Services (NAS), RMI Management LLC and Angius & Terry Collections LLC.

Defendants in the suit filed in Clark County District Court include Puoy Premsrirut, a Las Vegas attorney who regularly litigates against collection agencies. She and her brother Rutt Premsrirut also were sued in their capacities as investors in foreclosed homes.

Friday's lawsuit claims Puoy Premsrirut has participated in the filing of frivolous regulatory complaints and lawsuits against collection agencies -- including one pending in federal court alleging violations of the Fair Debt Collection Practices Act (FDCPA).

"Defendants caused the FDCPA lawsuit to be filed to further their strategy of achieving economic gain through intimidation and abuse of the legal system," the collection agencies charged in Friday's lawsuit.

The lawsuit also claims Rutt Premsrirut has been sending letters to HOA board members threatening to sue anyone who attempts to collect fees and regularly sends emails to the collection agencies "in which he uses the threat of ongoing and future litigation to try and extract a settlement."

The lawsuit alleges abuse of process, intentional interference with contractual relations between the collection agencies and their HOA clients, intentional interference with prospective economic advantage and civil conspiracy.

Puoy Premsrirut sees things differently. She couldn't immediately be reached for comment on Friday's lawsuit, but in a March 7 declaration in the FDCPA lawsuit, she said: "Our office receives referrals every day concerning aggrieved homeowners-consumers who contend that they have been taken advantage of by debt collectors including defendant David Stone (head of NAS) and NAS."

"In the instant case, consumer debtors are being victimized and threatened with foreclosure, when the law and defendants' express intentions prohibit the course of conduct," she wrote.

Her co-counsel, attorney James Adams, said in his own declaration: "Defendants have been engaged in a scheme to defraud not only these investors, but to defraud banking institutions and government-sponsored corporations such as Fannie Mae and Freddie Mac, all of whom are transferees of single-family residences via foreclosure auctions."

"By allegedly employing this very scheme thousands of times over the last several years, investors, banks and Fannie Mae and Freddie Mac have paid to defendants tens of millions of dollars which they did not owe, and to which defendants or their principals had no legal entitlement," Adams wrote.

Homeowner associations and collection agencies also are being sued in federal court by a Bank of America subsidiary. That Jan. 31 lawsuit complains HOAs and their trustees are wrongly demanding the bank pay fees and collection costs it's not obligated to pay.

In yet another lawsuit over the Fair Debt Collection Practices Act against Nevada Association Services filed in federal court on Jan. 12, Jacob Seeley said he received a collection validation letter from NAS dated Nov. 8.

"Seeley owed $96 because his HOA changed property managers and didn't bill him $16 per month HOA dues during the next five months' transition. To make it more difficult, there was no HOA office to drop off payments," the lawsuit says.

The suit claims NAS required payment of $380 within 10 days from the date of the letter to avoid a lien on his home as well as $325 in additional charges.

"These threats of a lien on his home and additional charges at the beginning of this collection letter overshadowed the end of the letter, which stated that the plaintiff had 30 days to dispute the debt," said the lawsuit, filed by the law firm Marquis Aurbach Coffing.

The suit complained NAS violated the FDCPA by attempting to collect fees that are not expressly authorized by the covenants, conditions and restrictions for his community.

Seeley was damaged by anger, anxiety, emotional distress, fear and frustration as well as "suffering from unjustified and abusive invasions of his personal privacy," the lawsuit charged.

Attorneys for NAS with the law firm Holland & Hart LLP are disputing those allegations, writing in a response: "Seeley undisputedly failed to pay assessments owed to his HOA, yet now feels as though he has no obligation to pay the collection costs he caused to accrue by failing to pay his debt. NAS is fully authorized by both Nevada law and the relevant HOA to pursue collection costs in collecting the debt that was undisputedly owed by Seeley."

The NAS attorneys said that in collecting past-due assessments and charges from delinquent homeowners, "this is a task of particular importance in the current foreclosure crisis."

"Without collection agencies and the ability to pursue collection costs from delinquent homeowners, HOAs would have little or no ability to pursue the endless list of delinquent assessments, thereby increasing costs to law-abiding homeowners who actually pay their bills," the NAS filing said.

Nevada Association Services has also disputed the allegations in the Bank of America subsidiary lawsuit and the FDCPA lawsuit filed by Adams and Premsrirut.

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  1. HOA's are out of line. They are like little mini governments with special interests and special powers. People run for HOA offices and then think they are kings and queens. I buy expensive homes. Never, ever in an HOA. Way too many mini governments gone awry enjoying the feeling of power. Like we need more rules. The most despicable people I've ever met have bragged about being on the board of an HOA.

  2. Chunky says:

    Somewhere in this mess it sounds like the HOA version of Righthaven misusing the judicial system.

    That's what Chunky thinks!

  3. This is such fun to watch! Attorneys and HOAs and one of BofA's parasites fighting it out. Personally I'm rooting for Premsrirut -- you go, girl! The FDCPA is a potent defense in debt cases, and coupled with the federal mail fraud laws it can bring down the big boys. If one can get the court to actually pay attention to those laws.

    lightfoot -- good comment. I fought a HOA's collection attorney last year when I lived in the suburbs. The attorney sent a demand to pay. I counter-demanded proof of the debt. The attorney sent only copies of bills, nothing showing how I was actually obligated to pay. I reminded the attorney of this and nothing was proven. A few months later here came another demand, identical to the first except for the date and added penalties, etc.

    For sure the only winners are attorneys.

    Anyone else notice how this country went from a production economy to a debt economy? Now it seems all the USA actually produces is war and funny paper.

    "...I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." -- Thomas Jefferson in his May 28, 1816, letter to John Taylor

  4. A couple of killer comments...

    "For sure the only winners are attorneys."

    "Anyone else notice how this country went from a production economy to a debt economy?"

    2 true.

    Debt collecting in this country has exploded as a way to siphon money off the misery of others, and the proprietors of these little shops of horrors are typically nasty little sociopaths.

  5. Not all HOA's are run by nuts though that does happen. The banks that took over houses need to pay the fees. There are many good HOA's that use the fee money to benefit the whole HOA.

  6. Iamconcerned sounds exactly like the arrogance of an HOA. Look for an apostrophe or a comma or a weed out of place and attack. Never mind the message. Show how smart and powerful you are. If Iamconcerned were so smart he'd focus on the message. Geez, I guess I could invalidate all of the articles I read in the paper that contain a typo. And when I find them I should feel smarter about the subject than the writer. "Sure, you're an expert on nuclear reactors but you forgot to use a comma so I must know more about nuclear reactors than you do!" Yeah, that's smart. If you think an HOA is complicated I can only wonder how much you'd struggle with a good engineering problem.

  7. Some collection agents are gaming the system and sticking the tax payers with outrageous legal fees. My attorney refers to this as "The Legal Sweet Spot". They over charge each foreclosure by $2000-$3000. It is too little to sue over but multiplied by thousands of homes it amounts to a fortune.

    The sad thing is the collection agents are lying to the public and the public doesn't know better.

  8. As much as I hate and despise HOA's HOA's are basically mandated by the county any new homes built by a developer consisting of 10 or more has to be put into a HOA automatically. This should be changed to a vote to join a HOA cant take place until 51% of the houses are purchased.
    Homeowners who are in a HOA pay the same amount of property tax has non HOA's but if there streets need repaving sewer lines need repair or streetlights break the HOA has to pay instead of the state who collects the property tax. HOA's are supposed to keep property values up so when investors take advantage of this by buying foreclosed properties in a hoa to resell based on the higher property values that the HOA so supposedly creates they need to pay their fair share.
    A state can succeed from the US if they have enough votes and feel they can do just fine with out the US why cant a homeowner succeed from the HOA?
    The state said they feel HOA's and collection agency's are gouging the public by charging high fees and costs. Some of the high costs are costs the government charges the collection agencys to take the steps needed to collect the money owed. Also look at how the state handles collecting money you owe them.
    Say you don't mow your grass the hoa fines you and you don't pay. It goes to a collection agency and the agency takes the steps needed after you don't pay.
    Say you don't wear your seat belt you get a $75 ticket and you don't pay the state sends it to a collection agency and puts a warrant on your fine that costs an extra $200 and you go to jail, you possibly loose your job as a result and then you cant pay your HOA fees and house payments. Which is worse they are both laws created by a local government one a state or county one an HOA which have no real victim and there was no intent to cause harm to anyone.
    By limiting how much agency's can collect it puts HOA's in danger of not being able to upkeep there community much like the state needs to collect property tax and fines to continue to operate. If the state changes this then they should also use property tax collected to help with hoa upkeep or let the hoa's create a local judge and sentence offenders who don't pay there fines to contempt of HOA court and jail until they pay like the state does.
    When homeowners complain about HOA's they are told don't move into an home owned by a HOA (pretty hard when homes are forced to be in a hoa when built) so when investors and banks complain about hoa fees the response should be don't invest in a home in a HOA
    And if home owners are allowed to leave an HOA most of these disputes would be solved

  9. When I purchased my home in LV I sent the HOA 6 months fees in advance. The next month they billed me for the fees? I called them and they told me they never received the check. I contacted the bank and verified the HOA did cash the check. After calling them back and confronting them they now said they applied the money to the prior owners past HOA fees!!! I had to threaten with a lawsuit to get my money back. It's called misappropriation of funds or THEFT and lying. If the banks had to pay the fee's maybe they would not sit on the homes as long while stringing people along that are trying to buy them.

  10. "Debt collecting in this country has exploded..."

    gmag39 -- next time you're at Blockbuster rent "Maxxed Out." Trust me on this one -- it will lay out everything your post hinted at. And it starts with a Vegas realtor driving around talking about why the boom was happening. Then it goes into the debt collection industry -- the collectors look at is making the debtors walk the plank. It's all a cesspool.

    "[The law] has placed the collective force in the service of those who wish to traffic, without risk, and without scruple, in the persons, the liberty, and the property of others; it has converted plunder into a right, that it may protect it, and lawful defense into a crime, that it may punish it." -- Frederic Bastiat, 1850 "The Law"

  11. Try being in TWO HOAs. That little surprise was sprung on us at closing when we bought our house. There is one for our specific development and one for the general area - both with membership dues and rules, and all the associated fines. The one for my development charges a $30 fee if I am one day late paying the water bill - which is usually no more than a third of that. They are definitely profiteering.

  12. Slapp suit. Strategic LawSuit against public Policy

    Counter sue