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Official: HOAs don't want foreclosures

Homeowners, boards often at odds over fines, payments




Rick Worth keeps a manicured yard at his home in the Palm Hills community near Horizon Ridge Parkway in Henderson, much nicer than the foreclosures on his block.

That's why he's upset at his homeowners association for initiating foreclosure on his home for unpaid fines that accumulated when he converted his lawn from grass to desert landscape.


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  • Because he didn't submit paperwork on time, including design approval from Southern Nevada Water Authority, Worth was slapped with a $275 fine that has grown to nearly $2,000 in four months with late penalties and collection agency fees, he said.

    There are already quite a few foreclosures in the neighborhood, Worth said. One of them is three houses away from his.

    "Do you want another foreclosure or do you want to work with me? There are enough problems with foreclosures and here's a guy making his house payment and you want to take it for HOA fees? Give me a break," Worth said.

    David Stone, president of Nevada Association Services, the homeowners association collection agency for Palm Hills, said he can't speak specifically about the account because Worth has hired an attorney. However, he said community associations can only foreclose on a home for nonpayment of monthly assessment fees, not for fines and penalties.

    Worth's claim that collection fees total more than $1,500 is "ridiculous," Stone said. Nevada law sets a $50 limit on collection amounts of $250 to $500, he said.

    "We want to work with everybody," Stone said. "We don't want to foreclose on anyone."

    Nevada Association Services started thousands of foreclosures last year and only six went to foreclosure, he added.

    The licensed collection agent discussed the legal procedures and ramifications of HOA foreclosures, bank foreclosures and bankruptcies at an April 28 seminar attended by about 80 people, a majority of them association board members.

    Homeowners who have lost their jobs, filed for bankruptcy or face foreclosure probably won't pay their homeowners association fees, leaving associations struggling for solvency.

    Las Vegas showed a 17.7 percent mortgage delinquency rate at the end of 2008, up from 14 percent in September. Preforeclosure filings, which start with a notice of default, topped 11,000 in March, according to Foreclosures.com.

    Despite the statistics, most homeowners in Las Vegas are not in foreclosure and have no desire of losing the place where they're living and raising their children, Stone said.

    "So HOAs should not be scared into doing nothing with respect to collections," he said. "In our office, we have people bringing their accounts current."

    One audience member asked about homeowners who refuse to answer letters and notices. If the home is vacant, rented or in foreclosure, it's unclear where the the correspondence ends up, the woman said.

    "Whatever. You've done all you can do," Stone responded.

    "You sent a letter out. It may not get received. It may not get returned. That's all you can do. There's no statutory requirement that you go knock on their door at 11 o'clock at night to see if they got it," he said.

    When the bank takes over the first deed of trust, often called real estate-owned, it becomes the bank's obligation to pay HOA assessments, he said.

    If the bank doesn't pay, the account is turned over to Nevada Association Services and a notice of lien is filed.

    None of Nevada Association Services' six foreclosures last year were bank-owned. Banks won't allow an HOA to foreclose on a $500,000 property over a $4,000 assessment, Stone said.

    The Community Association Institute reports that less than 1 percent of nonjudicial foreclosures, or foreclosures that do not require court approval, result in homeowners losing their homes.

    "But by threatening such a devastating loss, foreclosure actions can coerce homeowners to pay inflated delinquencies even if such delinquencies are unjustified or onerous," an article in Legal Affairs magazine stated.

    A 2001 study by Sentinel Fair Housing, a California-based homeowner advocacy group, found that the typical homeowner in a homeowners association foreclosure is $2,557 in arrears.

    By contrast, the typical homeowner owes $190,000 in delinquent payments or back taxes when banks or municipal governments foreclose.

    Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.

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    keith scott wrote on November 19, 2009 01:27 AM: yes i deal with 3 hoas, the management co that runs them has changed at least twice 3 times in the case of anthem highlands, pulte man, then prism, then rmi, the hoa says legally all they have to do is mail a letter to the house, so they do that, r not i dont know my 3 properies r rented and im only contacted when it goes to a collection agency such as allessi, is it too much to ask that a hoa when they change management cos contact the owner of the house either via email, letter, phone call or the local real estate person.
    i paid an attorney $2000 to get benchmark, rmi, and sierra valley hoas off my back due to the fact that they changed not me. however this can all happen again at any time, as the hoa will only send a letter to the property where the tenant quite rightly does not care about my mail.


    Thomas wrote on June 16, 2009 09:27 AM: We live in a gated community that has an HOA. Although at times they can be somewhat heavy handed, the streets are clean, the landscaping is wonderful and there aren't derelict cars parked on the streets or in the driveways - we would not have it any other way. Mr. Stone is not the bad guy here. He is doing a service for our community. Thonas


    johnfromdowntwon wrote on May 13, 2009 08:26 AM: If you don't like th HOA then you need to do what we did and get 51% of the unit owners to vote to dissolve the association and your problem will be solved.


    HOA wrote on May 12, 2009 08:36 AM: HOA's are taking total advantage of forclosures, you can guarantee that any home in foreclosure has a HOA lien, and they are ridiculous. They slap those fees on knowing the bank has to pay them prior to closing the property. So when they do their little dance about how the foreclosures are hurting their reserve's don't believe them, they are making up the money ten times over. I know of a 42k condo that sold with 4600 in fees owed to the HOA and the bank paid them. Oh boo hoo for the HOA, their hurting so bad. That amount paid for years of the normal monthly fee for more than one unit. The HOA's have learned how to collect and capitalize on the situation and they are using it and taking advantage of it to the hilt. Yes I appreciate living in a community with a HOA, but the people on the board obviously have no life whatsoever and all they do is walk around and look for every little thing to send you a violation for. Try calling the Ombudsman for any help, you might as well forget it they are all entwined together, and it's so easy for them to discourage any homeowner from fighting their HOA, They tell you that you need to have every single thing documented and if you have done one single thing that's not to the word of the rules and regs then you will lose before you can even think about setting a date to mediate or complain in a venue other then the monthly board meetings where they set aside a time where the homeowners can talk.. WOW thanks! And for all you posters in here throwing up your self rightous Follow the rules or move comments get over yourselves.


    anygve wrote on May 11, 2009 06:46 AM: If you want to live in a nice place you have to pay - it's not fair for some to pay and others not - and then expect the same services - same for getting arc approval - follow the rules and you won't get a fine - there's a reason for architectural reviews - if everyone just did 'whatever' the neighborhood would soon look like the ghetto - this guy should have followed the rules - any judge in a court of law will tell you that ignorance of the law is no defense - FOLLOW THE RULES or MOVE - those are his options. LOSER.......


    Patrick wrote on May 10, 2009 11:16 PM: HOAs are annoying, no one likes to be told what to do, yet people do like HOA's telling other people how to live.

    Still an HOA is better than a state government (it is a private government) without the monopoly of force) at least we can opt out of an HOA by not moving into the neighborhood. We cannot opt out of the Nevada state government or the US federal government.

    At least not yet.


    Harvey Birdman wrote on May 10, 2009 09:56 PM: I am not a lawyer. I don't even play one on TV. This post is for entertainment purposes only.

    What alot of people don't realize until it's too late is that every member of an HOA is liable for judgements against the HOA.

    The way it often plays out is HOA board members harrass a homeowner. The homeowner sues, wins and now every other homeowner is on the hook while the board members wave their hands around and claim they were just doing their job.

    In Vegas alone there's dozens of HOA's that have put all the houses underwater by $10s, even $100s of thousands of dollars after losing a lawsuit. Nobody will buy those houses. Many real estate offices won't even take the listings because it's a waste of time. In California and Florida it's even worse.

    I'm thinking of one incident in particular where the court found it credible that an HOA board member solicited sex from a delinquent home owner in lieu of fines. Because of the multi million dollar judgement, every house in the development is upsideown.

    So people might want to ask themselves what good an HOA can do vs the county code enforcement and what is the potential liability of an HOA.


    BDM wrote on May 10, 2009 08:08 PM: There is a mind set that is deplorable with these HOA's. Much of the country seems to survive without them. In fact having lived in FL, MI and NY I can say I never dealt with an HOA until NV. The premise in CA and NV is your a moron or a Stepford wife, I am not sure which - and must be told how to make your home and yard presentable, a neat little clone house. In the rest of the country, its common sense to preserve your investment, and if you falter drastically, zoning steps in. Its odd, and telling, that in the states with tons of HOA's there are also tons of foreclosures and prices plunged. Maybe its also because in most of the country, a house is also a home, and not just an investment that needs to be "Managed" by some HOA.


    steve wrote on May 10, 2009 01:11 PM: This guy was not forced to move into a neighborhood with an HOA. He knew the rules, he broke them...what do you expect? When will you crybabies learn personal responsibility? Let him foreclose, let him move out of the neighborhood. Maybe someone responsible will move in his place. Our property values can't get any lower. I should know, I live less than a block away from this guy.

    Palm Hills complains about those who don't pay their monthly fees. The only quick solution is to post their names on the wall of the guard shack...you'll get checks the same day!!!

    Palm Hills, are you listening?!?!?!?!?


    John the janitor wrote on May 10, 2009 12:51 PM: Wow! Posters here complain about loss of freedom and privicy from HOAs yet most probably voted for Obama. You think HOAs getting in your business about landscape is bad? Just wait until you see what Nancy, Harry and Barrack have in store for you!


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