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Monday, March 21, 2011 | 5:09 p.m.
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.
Does anyone know how much these fees can cost a new homeowner?
HOA's should be banned; had the founders known we'd be dumb enough to let them exist in the first place they would have written in the bill of rights for ownership of land/residence without interference from private corporations. The concept has failed the people. It's just a cash cow for lawyers, management groups, and city's. The whole system has been warped and perverted by lawyers just as predicted. It "still" being the best system in the world is not acceptable, it needs to go back to what it should be and as intended.
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.
Chunky says:
Somewhere in this mess it sounds like the HOA version of Righthaven misusing the judicial system.
That's what Chunky thinks!
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
After all the publicity on how unfair and dictatorial HOA's are anyone who moves into one is getting their just deserts. Those unfortunate individuals in HOA's should band together and vote out the current board and vote in some sensible members. As for the lawsuits, business often uses the courts to shut up the little guy who has no funds to hire attorneys. Lets see what the Nevada State Legislature does to curb the power of HOAs...
FBI is investigating the HOA's, SEC investigating the banks, AG's suing the mortgage companies, and we cover the any losses;now ain't that America for you and me.
I hate my hoa...The local board is composed of a bunch of fat cows who have nothing better to do than look for a piece of litter or the occasional weed in the front yard.
I hate them.
People who do not know the difference between plural and possessive (HOAs v. HOA's) such as skid, mar100, dcats and lightfoot, should not be commenting on anything let alone this complex issue. Please, head back to 3rd grade english and leave the complicated issues to the smart people.
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.
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.
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.
Banks are not taking back houses on time. Sometimes 2 years without a payment. Meanwhile HOA collects nothing. They are bankcrupting the whole neighborhood so they can time the market.
The banks want the laqws only to apply to the rest of us.
I'll never buy a home with an HOA, period. I can't believe people actually put up with that nonsense.
I agree with TheSerfAttack. I have done support work for HOAs and what they get away with is criminal. I am looking for a home now and I completely throw out any and all MLS listing houses that have HOA fees. If I am going to bust my tail for my own home, I most definitely will not pay extra to have some hairball company tell me what I can and cannot do with my home. Finding a neighborhood where the owners care about their homes is not very hard. I don't need someone to supervise my neighborhood's homes. That is the responsibility of the homeowners.
"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.
So what? If the contract between the HOA and the homeowner doesn't specifically lay out collection costs, there is no basis for them regardless of how it affects the HOA in the end. It's the HOA's obligation to put this in the contract if they want it. You can't just say "we assumed this" years down the road without a specific clause.
The banks and/or investors don't want to pick up the tab for the HOA dues that cover the period of time the house sat vacant and subsequently foreclosed on. Just who, if anyone, then should pay the monthly dues for that period of time? No one? That doesn't seem fair to the rest of the homeowners who DO pay their dues in a timely manner. I see nothing wrong with expecting the bank (once they take the house back) to pay those monthly fees until such time as the house is resold. If that's what the HOA is going after then I don't see a problem with it. If it's about a bunch of bogus 'fines' etal that's another story.
Marquis Aurbach Coffing are parasites who should never be given any legitimate business from decent people. Bottom feeders.
Gee maybe the banks will intervene??? How will the banks sell foreclosed homes with HOA's?
Vistana Condominiums @ Durango and Warm Spring south raise the monthly assoc. fee every year because they say to many units empty then the rest of us has to take and cover expensives. I'm tired of this.
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.
HOA's are something that belong in Communist Countries not here in America! They interefere with the ownership of ones property, invade privacy, harrass tenants, abuse their power, and actually do more to lower the property value of the homes in their subdivisions instead of keeping their value or increasing them. I bought an investment propery in 2004 from Centex homes and I am planning on suing them for breach of contract and misrepresentation - because of the HOA, our "investor friendly" investment at Stratford has been anything but and the property value is almost half what we paid for it - the home I live in does not have an HOA and, despite the economy, is valued at double what I paid and my neighborhood looks better than Stratford! HOAs should be outlawed and any politician that supports them impeached!
Little Nazi community leaders, hungry for more power. I wonder how many of these HOA officers are also tea party members that think government is too big.
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
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.
"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"
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.
Slapp suit. Strategic LawSuit against public Policy
Counter sue
The real victim in this drama?
Are the home owners who live in those associations and must pay more because the dead beat owners or the banks are delaying taking back the property in default with the lender.
A typical HOA cost structure is nearly all fixed costs. It does not matter if there are only 1 household in the entire complex or 100% capacity... the pool upkeep, general insurance, exterior lighting, road repairs, insurance, paint, accounting, legal, etc. are all the same. There are very little in the way of variable costs which change based upon usage.
The problem is that HOA have many of the obligations of government, but little in the way of collection powers of government. If the property taxes were in default, anyone think that government wouldn't be in first position over the banks to collect, and not just limited to 9 months of back fees? HOA fees are behind property taxes and the banks, and now entitled to only 9 months.
The homeowners who pay to cover the shortage of non-payors are the real victims in this arrangement, and why I would strongly discourage anyone from being part of an HOA.
Speaking only to the HOA. They all have some petty rules and generally some jerks on the board and no I've never been on a board. But just for me on more than one occassion I have been glad for the HOA rules. As long as the are enforced for everyone the same. Just as local laws and rules should be enforced. Now for the scams the debt collectors and the HOA"s are involved in, criminal at the very least.
Living in Pa. and looking to move to the Las Vegas area. I am bewildered by HOA fees. In my community we don't have anything like that and when looking at properties in the LV area, I will avoid those that have these fees. I see no real purpose for them unless they pay for upkeep, taxes, or other meaningful expenses.
HOA's are required by the city for the builder to get their building permit. The city uses that requirement to relieve themselves of responsibilties that go with maintaining their city. Get on your HOA Board. Could be your neighbor, could be you. They are nothing special but they can use line item veto and improve what the city dumped on you. The Property Management companies feel like they have the power, they dont...not at all. They can be fired. Only accept one year contracts from them. Everyone complains but no one steps up to the plate to do the work.
This dispute is very simple. It is about the people that pay and the people that negate their responsibility. While I can appreciate the trouble financial times why myself and the other 80% plus additional people in HOA's should be responsible for the non paying peoples bad debt and collections costs?
HOA's work on balanced budgeting and often very little room for bad debt without increasing the fees to all paying homeowners. These funds go to maintain streets, gates, landscaping and more. If HOA's go bankrupt what you think will happen. These items won't get maintained which could deteriorate the neighborhood and decrease property values even more. The state will then step in set a special tax district and manage the HOA themselves. We see how well big government works, is this really what we all want?
For the people that complain about their HOA it is a Democratic Republic where you get to vote for your representatives and even get to run yourself to make the difference. While sometimes bad boards do get elected this goes the same for government. Look at the protests happening throughout this country against the different levels of government, the fact is you will never make everyone happy.
Bottom line is that the overwhelming majority of Americans do not like HOA's and the HOA's need to get the message - Go Away!
totellitasitis who says the majority of americans do not like HOA's?
Personally we have a very well operating HOA that is large and a majority of homeowners are happy. Yes you will always get the few unhappy that first thing they do is run to the news and make it a bigger stink then it was.
Yes sometimes HOA Boards do overstep their boundary just like any form of government and at that time you recall, run against the board and put people on that work for the people.
forethetruth - keep believing your misinformation and delusions. Americans hate being controlled and they especially hate HOAs. If there is an HOA that people would be happy with it would be one that only maintains the landscaping and streets and does not hand out "courtesy" notices and fines several times a week, harrass homeowners, or assess fines at every opportunity. There is a huge difference between community management and tyranny! People need to take responsibility for their own homes and neighborhoods and not have their neighbors playing "Big Brother" and get into everyone's business like they do in Communist China!