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December 21, 2014

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Letter to the editor:

Legislators must help homeowners

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The story last week about the indictments in the HOA scandal, which originally swept through Las Vegas last year, was encouraging. At least some of the perpetrators who took advantage of homeowners will face years behind bars.

However, there are more out there ready to take advantage of the flawed system out of greed. We need to make sure that doesn’t happen, and we need some serious and more permanent reforms.

It is time to dig deep to the root of the problem and urge our legislators to make real changes that will protect the homeowners of Las Vegas.

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  1. "urge our legislators to make real changes that will protect the homeowners of Las Vegas."

    OK Patti. What should I urge our legislators to do? You've left us in the dark. People are already being prosecuted under existing laws.

  2. Letter writer is correct. Look for the Feds, as part of a stimulus in 2013, to provide financial assistance for homeowners with loans where their home values are lower than the principal of the loan. I believe the technical term is called principal reduction.

    CarmineD

  3. BTW in concert with my above post, note that the Congress extended the law that expired on Dec 31, 2012 which forgives taxes on debt that is waived. This affected homeowners who sold their homes using "short sales." By law, the IRS asks taxpayers to pay the taxes on the forgiven debt. But since 2007, the Congress has passed a law overriding the law. The tax forgiveness law was due to expire on Dec 31, 2012. But it was extended for another year.

    CarmineD

  4. HOA's are supposed to provide for upkeep of common areas, keep your neighbor from parking a broken down hoopty in his yard, or paint his house chartreuse. For all of this and more, you pay a monthly fee to the HOA. When someone buys a home in an HOA controlled subdivision, all the covenants and restrictions are spelled out in black and white. The homeowner is aware. However corruption and greed are not in the covenants, and the homeowner is stuck with the consequences when the HOA turns into a criminal enterprise. The only real option for a homeowner is to buy a property without an HOA.

  5. There plenty of laws on the books to punish those who take advantage of their positions. No more are needed. As for Patti and others like her, did they not take the time to read the HOA agreement to see what it entailed? I've owned property under such agreements in the past and have chosen not to do so again. I'll take responsibility for my own property's upkeep and be free of bothersome rules, regulations and busybodys that restrict what I can or cannot do outside my residence. Also, I put away money for rainy days and to pay for repairs & replacement costs that come with home ownership. How about you?

  6. Great comments, Jerry, CarmineD, and Bradley. Let me add that for those will underwater mortgages, there should be a hassle-free principal reduction. After receiving my latest county property assessment, I nearly fainted. Time to compell these lenders/banksters, to work with folks who have been making their payments, give them some relief, since the government gave them a whole lot.

    Blessings and Peace,
    Star

  7. Part1: It is fair to ask the legislature to better protect homeowners. There are 1,600,000 residing in 3,000 CIC's (HOA's). The majority live in southern Nevada and within developments of less than 200 homes. But what are the chances that anything other than a few token bandaids will be applied to an already ailing NRS116? The answer is slim to none. It is difficult enough getting qualified candidates to serve for free on HOA boards when they are often unjustly besieged by homeowner's petty complaints while having to juggle the vagaries and incompleteness of the law (NRS116)and their own crazy quilt of cookie cutter CC&R's. Here is a very short list of what needs improvement.Common Interest Communities (CIC):
    1. CICs face a real problem when attempting to alter and clarify their CC&R's. To facilitate a change most CC&R's require a 66 2/3% majority voting in favor. Good times or bad, obtaining this super majority is next to impossible. In today's world and probably the future, the fact is that banks and other controlling majority or minority interests simply block passage or simply do not respond when asked to vote. There are many ways to deal with this problem. One is to recognize the failure to vote as an automatic yes vote and another would be to allow a lower percentage requirement for passage. Lowering the percentage requirement to perhaps 55%, while requiring two back to back votes in order to ratify is an alternate suggestion. In any case the legislature should address this problem.

    2. The current NRS 116 education requirement for new board members is insufficient. New members should take at least two CIC related courses during their first year and one course every year thereafter. Perhaps this doesn't matter because there is no real oversight or enforcement of the existing lesser education requirement today.

  8. Part 2: 3. Raise the level of expertise and enforcement at the Ombudsman's office. Change the requirement for binding arbitration from "all parties must agree" to only one party must agree. At a minimum this should apply to any complaint where economic damages are judged to be nearly non-existent. Hopefully this reduces or eliminates continuing "food fights" in the CIC legal cafeteria. Add administrative law judges. Fund this by doubling the cost per home from $3 per year to $6.

    4. There is no provision in NRS 116 that allows a CIC/Board to align its annual owner's meeting to within 30 days of the start of fiscal year, usually January 1st. The timing of when annual budgets are created and due to be acted upon, ratified would benefit.

    5. NRS 116 does not specify how often a recall election of the same board member can be conducted. Furthermore, no stated reason for the recall is required. At a minimum a reason should be specified and published on the recall ballot. This would serve to reduce personality conflicts while allowing the person who is the object of the recall real opportunity to defend.

  9. Part 3: 6. Government should either be required to maintain gated community streets or provide property tax relief. The requirements placed upon CICs in Nevada already represent very significant additional taxation in that most CICs must pay for all types of support services. Most of these are services that those not residing in CICs now receive from government at no additional cost, bundled into and paid for within the existing property tax structure. In Nevada, gated communities are treated as if they were second class citizens. Property taxes on homes within these hallowed confines are not partially abated yet should be. As with all CICs, local and state government expects these communities to pick up the burden of self government. In addition, they must also hire management companies, landscapers, bookkeepers, auditors, reserve study specialists and the occasional attorney. However, living in a gated community means that ultimately each homeowner has the additional burden of paying for very expensive street repairs and maintenance services in perpetuity. These costs typically make up 30% to 50% of the gated community's total expenses. All CIC are expected to maintain their properties at a high level. This requirement improves overall property values and thereby enhances property tax revenues. I get it. However, gated communities pay an additional tax in that they must also pay for their own streets without any property tax relief for doing so. This is a special tax subsidy that is then applied to every other non gated property owner. The legislature needs to look at this issue more closely and conclude that the additional "street tax" burden placed upon gated CICs is unjust. I won't be holding my breath waiting for this to happen any time soon even thought it should.

  10. Part 4: CIC Reserve Studies:
    1. I feel there is too much latitude given to CIC Boards and study specialists when determining an association's reserve funding requirements. Five years between mandatory studies is an eternity. This should be shortened to at most four years. My personal experience (on 12/2008) also indicates that the Ombudsman's office does not track the study reporting requirement.

    2. There is the issue with study consultant expertise. I believe that the state of Nevada should oversee and sanction a universal repair cost data base that all study specialists must use. I value the specialist's opinion regarding the condition of my community not necessarily their estimate of cost if it is based solely upon what seems to be their proprietary data. Some specialists have been in the business for a few years and others almost a lifetime. As the treasurer of my HOA, I recognize their experience, their ability review the association's physical assets and make long range recommendations. Where I have an issue is, from my perspective, their cost data may be flawed. It appears that each specialist maintains their own cost data base which may have been gleaned from various unknown sources.

    3 Every study should contain cost estimates based upon the two most rigorous financial criteria. Before a community's Board can decide to under-fund their reserve study financial recommendations, they must first obtain a second independent study. In doing so they must then explain in writing to their homeowners why they chose either to obtain a second study and/or have decided to deviate from either study. I'm sure the legal staff at the legislature could word this far better than I can.

  11. Richard makes an excellent point. The State Ombudsman for Common Interest Communities is of little value to the homeowner. To say they are next to worthless drastically underestimates distance.

  12. Legislature intervention is the LAST THING we need. As economists have pointed out, let the paperwork catch up and THEN the real estate market can recover. Sure, our RE market is starting upwards but we'd be bouncing much higher if we didn't have so many impending foreclosures ahead of us. If you can't afford the house you are in, get out as soon as you can--sell, short sale, walk away after mailing the keys to the mortgage holder. Maybe you can even work out a fee or cash up front for moving into a rental, smaller place, that you can afford.

  13. Totally agree with your letter, Ms. Cardoza. And I can say this from firsthand knowledge.

    One of the people arrested in that batch of eleven was a person who masqueraded herself with a non-existent management company before the Board of Directors for my community. She appeared at meetings along with a gaggle of goons and thugs in the audience at meetings. She also got in possible cahoots with two Board members (not proven yet though, but there's a strong possibility).

    To make a long story short, all of this whole criminal enterprise acted in concert to disrupt our meetings, force out a legitimate management company, and was in the process of infiltrating more of their thugs onto our Board of Directors.

    But, as it turned out, thankfully due to the sane Board members, along with others who spotted this nonsense and revealed it at an early stage, we were able to temporarily fight this off.

    And, unknown to everyone in my community, and even our Board of Directors, criminal investigations into these people were already underway. Culminating with these eleven being arrested. With a possibility of 28 more being investigated and possibly brought to justice.

    So, believe you me, people. You need to get active in your communities.

    Because if you don't, they are out there. These predators will try to take over if you aren't vigilant.

    You need to protect what you got.

    I guess what I'm trying to say is that, to be a community, you need to act like one. Be a part of it. Because you just sit back, that unwittingly encourages criminal vampires to do what they want. You don't say anything, or take part, that's what happens.

  14. Homeowners who have suffered, whether it is taking out a loan they can't afford, drops in prices, floods, hurricanes, etc., should never receive government help. It is the individuals responsibilty to make only a purchase/investment they can afford or to carry the proper insurance on their property. It is NOT the governments responsibily to reward them for what is, essentially, their own errors of free choice.

  15. "It is NOT the governments responsibily to reward them for what is, essentially, their own errors of free choice." @ Old Bob Robert Stanelle

    Generally I agree with your statement. BUT..WRT homes and mortgages, I make an exception. It was Washington DC and the government that sold Americans a bill of goods that they could buy houses that they really can't afford. Politicians of both political parties are culpable for the last 50 years of promulgating a false American dream: Home ownership for all. Then, government using laws dictated the ridiculous loan requirements to assist all American homebuyers to do so. The entire industry, realtors, IRS tax laws, banks, home value assessors, mortgage lenders, mortgage bankers, were all on board. Thanks to the leadership of the government. They made bundles of money. They caused the housing bubble. Now that that it burst, American homeowners are suffering for it.

    CarmineD

    PS: Sorry this is off the topic of HOA's.

  16. RICHARD,

    "Government should either be required to maintain gated community streets or provide property tax relief."

    If government pay to maintain private gated community streets, then open the gates so the tax paying public can use the streets they pay to maintain.