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Agency governing homeowners groups scrutinized
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Craig L. Moran/Las Vegas Review-Journal
Robert Hall, shown with legal papers on April 11, has sued the Sun City Summerlin Community Association, accusing it of unduly depriving him of civil contract property rights. » Buy this photo
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LAS VEGAS REVIEW-JOURNAL
Retired and living the good life in Las Vegas, Robert Hall should be making waves in the lap pool on his back patio overlooking the 15th hole at Highland Falls Golf Club.
Instead, the former military officer and immunotoxicologist is making waves with his community homeowners' association.
Hall sued the Sun City Summerlin Community Association in July alleging, among other things, that the association unlawfully exceeded its corporate authority and deprived him of civil contract property rights without due process. This tramples on the state constitution, he says.
How can justice be served when board members of Nevada's Commission for Common-Interest Communities have what many perceive as a conflict of interest? The seven-member commission, created under Nevada Revised Statue Chapter 116 and appointed by the governor, acts in an advisory role for the Nevada Real Estate Division, adopts homeowners' association regulations and conducts disciplinary hearings.
"It's all one little ball and you can't get out of it," Hall said. "This is the biggest con ever because of the conflict of interest and everybody wearing two or three or four hats. This makes Bernie Madoff look like a pipsqueak."
Hall cited Michael Buckley, a partner in Las Vegas law firm Jones Vargas. He's chairman of the commission and his firm lobbies on behalf of RMI Management, a company that manages a number of the 1,000-plus HOAs in the Las Vegas Valley.
Buckley wrote an "ambiguous" advisory opinion on superpriority liens that collection agencies used to counter an opinion from the Financial Institutions Division, said Jonathan Friedrich, a Rancho Bel Air resident and leader of an homeowners advocate group. RMI petitioned the commission to adopt it during the company's lawsuit against the division.
Superpriority liens are those that get paid first when a home is sold. They've become a hot-button issue for investors who buy foreclosure homes that carry delinquent HOA assessments and collection fees totaling thousands of dollars. They say the fees should not be tacked onto superpriority liens.
Buckley said he submitted his opinion on superpriority liens and collections costs last year based on other cases and scholarly text.
"My research led me to conclude that collection fees should be part of the superpriority lien," he said Monday. "It wasn't ambiguous. I reached a conclusion."
Buckley said state law requires commission members to either reside in a common-interest community or be actively engaged in HOA-related business for at least three years. Commission business is conducted in open meetings and policy is shaped by public comment, he said.
The commission tries to be the "voice" for homeowners associations because nobody is lobbying for them in Carson City, Buckley said.
But Friedrich doesn't see it that way.
"Isn't it interesting that these law firms go into the collection business? It's got to be so profitable they can't walk away from it," Friedrich said. "Why are law firms involved? Follow the money."
Commissioner Randolph Watkins is vice president for Del Webb Management, which manages homeowners' associations in the Sun City communities developed by Pulte Del Webb.
He's also the boss of state Sen. Allison Copening, D-Las Vegas, who introduced seven HOA-related legislative bills in Carson City that Friedrich sees as detrimental to homeowners. Copening was hired as lifestyle director for Del Webb in September for $40,000 a year, planning community events and writing a newsletter. Before being elected to the state senate, she was spokeswoman for Pulte Homes in Las Vegas.
One of her proposals, Senate Bill 174, seeks to amend superpriority liens. It was passed 4-3 along party lines by the Senate Judiciary Committee on April 15.
SB 174 conflicts with Fannie Mae underwriting guidelines, which allow up to six months of past-due common expense assessments for a dwelling unit to have limited priority over Fannie Mae's mortgage lien, said Rutt Premsrirut, a broker with Valtus Real Estate in Las Vegas.
If a home is in a jurisdiction that allows for more than six months of assessments to have priority over Fannie Mae's lien, Fannie will not purchase a mortgage loan secured by that unit.
Ultimately, the debt falls back on the U.S. taxpayer, Premsrirut said.
"SB 174 is nothing but a scheme to raid the U.S. Treasury through the superpriority lien," the broker said. "The federal government -- Fannie Mae, Freddie Mac and HUD (the Department of Housing and Urban Development) -- are the parties eating the majority of these egregious collection demands."
Critics of the Commission for Common-Interest Communities assert that allowing members tied to the industry to regulate homeowners' association collection fees is equivalent to allowing executives of local power utility NV Energy to sit on the state's Public Utilities Commission and regulate electricity rates.
"There is an obvious bias when a senator works for an HOA management company and introduces legislation that regulates her industry," said Troy Kearns, an agent handling real estate-owned properties in Las Vegas. "We vote our appointed senators to protect our interests, not their own."
Copening said the Legislative Counsel Bureau determined there was no conflict of interest in her taking the job with Del Webb.
"The investors started this smear campaign against me to try to kill both my collections bill that would have capped collection fees and SB 174 because of Section 15, which protects homeowners living in homeowners associations, but which they view to hurt their chances of turning a larger profit when they buy a foreclosed home and later flip it," Copening told the Las Vegas Review-Journal in an email.
If the superpriority provision is removed, homeowners' associations will go broke because they have no money to pay collections companies and attorneys, Copening said. Otherwise, the fees are passed on to all homeowners in an association.
"There's no easy answer because somebody has to pay, but I think if you ask the homeowners that are left in the association, they would rather have the investors pay the fee than them," Copening said.
She said her bill also stipulates "reasonable" attorney fees based on the work done.
Other members of the Commission for Common-Interest Communities are:
■ Gary Lein, an accountant for homeowners' associations and management companies.
■ Favil West, retired from homeowners' association management. West has disclosed that he receives contributions from RMI and Nevada Association Services, a homeowners' association collection agency, for his charitable foundation.
■ Marilyn Brainard, member of Community Associations Institute, a national lobbying group for the homeowners' association industry.
■ Robert Schwenk, community manager for Olympia Management (Southern Highlands).
■ Scott Sibley, former state assemblyman and owner of Nevada Legal News. Sibley makes his living publishing foreclosure notices and trustee sales, including homeowners' association collections. He opted not to vote on the collections regulation because of his conflict.
Brainard and West are designated as homeowner advocates, but Friedrich said they're among the most "anti-homeowners" members of the board.
Nevada Association Services President David Stone said anyone who says SB 174 conflicts with federal housing guidelines hasn't read the bill. Section 15 deals with collections and only affects banks and investors who buy foreclosures.
"Freddie (Mac) and Fannie (Mae) are not financing the banks and investors. Some of those (homes) are subject to Freddie and Fannie, but most are not," Stone said. "If Freddie and Fannie and the banks were opposed to this, they should have said something. Only investors and people who don't understand the bill are opposed to it."
What's confusing for a lot of people is that there are two types of consumers involved in this issue, Buckley said. One is the homeowner delinquent on homeowners' association assessments; the other is the investor who buys the house at a foreclosure sale.
Section 15 of SB 174 makes it clear that once the foreclosure sale occurs, the association lien goes away and the slate is wiped clean, though it's still on record, Buckley said.
Michael Lathigee of the Las Vegas Real Estate Club said all 156 members voted in opposition to SB 174 at the investment club's meeting in March.
"As servants of the public, we hope you will vote with representing the people who elected you and not special-interest groups that are interested to line their own pockets and in some case(s) create more hardship in a recovering real estate market," Lathigee wrote to the Senate Judiciary Committee before their vote.
"I want to also note that when I testified in front of the CICC commissioners and tried to point out their conflict of interests to the collection industry, I was stopped while I was speaking, yet the applause from the gallery where I was testifying at the Grant Sawyer building was very loud," he said.
Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.
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After Sun City Anthem has been accessed more than 1.3 million in back taxes, fines and penalties by the IRS for the tax year 2007 (can't wait for report on 2008,2009 from the IRS), President Jack Troia yesterday announced we are now being audited for non-paymentos state taxes by Nevada. Do the homeowners of SCA have a sign on their backs that say kick me, I elect directors that refuse to follow the law, and city council members that provide biased information and insist on aiding our of out of control HOA directors.
Wow, the City of Henderson held a by invitation forum on Tuesday. One of the major speakers, Sara Barry, sponsored by the City of Henderson used that forum to bash homeowners who are the taxpayers and voters of Henderson and sympathize with HOAs that are having "problems" with their homeowners. Ms.Barry asked the audience to support poor Senator Copening, a non-resident of Henderson although employed by Pulte Del Webb in Henderson. She has seven anti-homeowner bills before the legislature. Guess one non-resident working for a large donor is much more important than thousands of homeowners. I personally can not figure out why my representative, Debra Marsh would think sponsoring a seriously biased event would be beneficial to homeowners and taxpayers in Henderson. Is the city doing the dirty work for bad HOA boards? The only thing I can figure out is money(corporate contributions) talk and residents and voters are not first class citizens in Henderson. Wait for more info on Henderson doing the bidding of a bad HOA board.
Senator Copening tells us she cleared working for Pulte Del Webb and Randy Watkins before accepting the position. But, who did she clear it with? Did she disclose that her first Senate Judiciary Committee actions this year would be SEVEN (7) anti-homeowners bills that would be highly profitable for her Del Webb/Pulte bosses? Not one, not two, not three, not four, not five, not six but SEVEN anti-homeowner bills! Her actions have been so outrageous against homeowners that even some of her donors, democrats, independents and the most liberal democratic newspaper are condemning her. They were even forced to hurriedly form a Senate ethics committee to handle the complaint(s) against her. We are left to wonder who she actually "checked with" before taking the seriously conflicted job with Randy Watkins, VP of Del Webb and CIC Commissioner? Developers are beginning to understand that her work is not creating the atmosphere that homeowners or investors desire before deciding to buy in Nevada HOAs.
This is clearly defamatory--false--and should be deleted.
"Bottom line: HOA management companies bill homeowners for HOA Demand fees. As a member of your HOA board, maybe you should read the fine print a little more closely before signing agreements that allow for such fees to be charged by the company managing your association."
As an attentive director, I know exactly the fees which are charged. Thanks for your concern. Still, you can't name one homeowners association and provide an example where homeowners are charged a fee just to find out what they owe to the community association. Not one. Nor has anyone else...in multiple days. Yet, I am attacked for not getting my facts straight or not reading the fine print. That's really not convincing.
As to CIC Commissioner Favil West, when he was president of the SCA board of directors he would order homeowners to "sit down and shut up." As board president, Favil West accepted an unqualified person as CAM. The new CAM was only provisionally licensed, had never been a manager of an HOA or anything else before, and was accepted without a reduction of the RMI contract charges. Accepted to manage one of the largest HOAs in Nevada. That is just a small example of the evidence of Commissioner West's incompetence. SCA paid the same to RMI for an unqualified CAM as a qualified one in the second largest NV HOA. Any wonder RMI is willing to donate to Favil's corporation/charity where he has a lifetime position as President/Chairman? And, who would be surprised that RMI was not forced to compete for a renewal of their contract in the past 5 years. I think it is called "scratch my back." Favil West is a fraud to be filling a homeowner's slot on the CICC. In my opinion, homeowners are paying three dollars a household to be (you fill in your word). That is a three dollar tax without representation, and the Ombudsman Office has totally failed to be implemented as stated in the laws. He and Randy Watkins live in SCA and have done nothing to resolve over one hundred complaints and have done nothing to try to reduce complaints except by trying to charge homeowners for filing a complaint after they have already been paying $3 per household for lack of true representation.
Apparently my reply to your post has not been published. Bottom line: HOA management companies bill homeowners for HOA Demand fees. As a member of your HOA board, maybe you should read the fine print a little more closely before signing agreements that allow for such fees to be charged by the company managing your association.
People who don't money cannot pay HOA fees. The issue should not be compounded by 3rd parties (collection agencies) with their egregious fees. This delays the transfer of property and therefore the payment of HOA fees.
I would be happy to sit with those who can formulate laws as to how this can be achieved with the most money going to the HOA's in the least amount of time.
Thank you, and good day, sir.
"Each and every one of them."
Sorry, but you are just wrong. I've served on 3 HOA boards now and I know this special fee is not charged by the HOA. Your hyperbole is noted.
"It would be extremely beneficial if title/escrow companies were subpoenaed for their records pertaining to every last homeowner who had a short sale fully approved in writing only to be foreclosed upon because of the collection companies' refusal to negotiate back-owed fees"
Sad story, but it's ultimately the inattention to HOA assessments by the homeowner (in other words, they stopped paying the fees) wanting to short sale their home which has cause the assessments to go into collections. The homeowner put themselves in that situation. Seems they are personally responsible for the situation they find themselves in.
I, like the majority of those in Nevada HOAs respect the deadline for when assessments are due and pay them on time to avoid having them go into collections. These people you are speaking of didn't respect the bill. I pay all of my bills on time to avoid extra fees and other problems. Once those fees are charged, I don't have an expectation they can be negotiated. I will ask, but I don't expect a positive answer. If I were not to get a positive answer I certainly don't go crying to the state legislature and demand investigations and subpoenas. People who do are quite frankly wasting the taxpayers money...money which we have less and less of and need more and more for vital programs beyond the special program to bail out a homeowner who doesn't pay their bills.
Each and every one of them. Maybe with the exception of the Summerlin HOA (but I'd have to check this before I confirm it). Ask them yourself, and if they tell you that they don't charge them, I can show you at least 1,000 HUD 1's on which HOA demand fees are, indeed, notated and assessed by the HOA's... Also, they charge extra if the Demand needs to be "rushed" (received in less than 3-5 days)... Been doing this for 20 years, and am well acquainted with the fees that are being charged homeowners. It is a racket, and the Nevada Real Estate Division is apparently powerless to stop it.