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Bill would cap fees collectible in HOA cases
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LAS VEGAS REVIEW-JOURNAL
A state senator is preparing a bill that would limit the fees that collection agencies may recover through superpriority liens on homeowner association dues.
"The premise of the bill is that the fees that a collection agency can charge will be capped, including itemized charges for letters and notices," state Sen. Allison Copening, D-Las Vegas, said in an e-mail Tuesday. "I do believe the collection companies will support it, but won't be thrilled, as they already know that overcharging is not acceptable to legislators and homeowners."
Copening's bill will focus on superpriority liens, which give homeowner associations first priority in recovering unpaid dues when houses are sold.
Collection agencies have contracted with homeowner associations to collect the dues, and these collection agencies add their fees to the total under superpriority liens. As a result, a house cannot be sold until superpriority liens for association dues and collection agency fees are paid.
Leslie Carver of Prudential Americana Realtors said collection fees often far exceed the amount owed in association dues. She mentioned a client who was trying to sell a house and owed $5,000 in fees to a collection agency on top of $500 in unpaid homeowner association dues.
To sell a home, the collection agency fees and association dues must be paid. The total is so large it often kills a deal to sell a home, Carver said.
David Stone, owner of Nevada Association Services, said he supports Copening's proposed bill to cap collection agency fees. However, Stone said he prefers that the fee caps be part of regulations, rather than a law that can only be amended during biennial legislative sessions.
Stone said he also supports a provision in Senate Bill 174, another Copening measure, that clarifies the law and makes it clear that collection agencies for homeowner associations can recover collection fees through superpriority liens.
"Senator Copening and I are in lockstep," Stone said Wednesday.
The Senate Judiciary Committee will consider SB 174 at 8 a.m. today .
Assemblyman James Ohrenschall, D-Las Vegas, also is expected to submit a bill dealing with superpriority liens for collection agency fees.
The Concerned Homeowner Association Members Political Action Committee believes Ohrenschall's bill would set lower caps on fees under superpriority liens, which the group would favor.
The group wants the Legislature to follow guidelines used by Fannie Mae, a government sponsored mortgage enterprise, and limit collection agency fees to $600, real estate broker James Eaton said. Also, the group favors a bill that would limit homeowner associations to collecting no more than six months of unpaid dues.
Rutt Premsrirut, director of CHAMP, said homeowner associations have no need for collection agency services on unpaid dues because the associations ultimately will collect their dues when the house is sold.
Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.
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It's the collection agencies that need reeling in. I missed a $250 HOA fee one year at a rental I own, and the next year, when I went to pay the next years dues, the HOA said I was turned over to collections. No notice or anything. The collection agency said they couldn't find me and charged me $2250. in fees. I told them they must be the worst collection agency in the world, I'm listed in the White Pages, or why didn't you knock on the tenants door. I know why, I had no recourse. The state wouldn't help, nobody would help. The states advice was, just to pay it, or I would loose the house to foreclosure. Can you believe it, $2250 in fines on a $250 bill, in one year! And the state would do nothing about it. Even when I showed how easy it was to find me, just open the phone book, or call the HOA. NOBODY would help!!! The HOA and the collection agency are in bed together. I wouldn't be surprised if there weren't kick-backs to the HOA employees to drag things out.
"Currently NRS 116 allows the HOA to collect no more than 9 months of dues post foreclosure. Federal loan underwritting guidelines allow 6 months."
Glad to hear that Nevada is protecting homeowners more than the feds would. It shouldn't be six months, or nine months...it should be ALL of the assessments which should be due by the new owner (bank or investor). I'm tired of paying other people's bills!
Jeff… A homeowner has the right to live as they please within the confines of the HOA rules and regulations. These rules and regulations, by law, are disclosed and provided to a prospective purchaser of a property within a HOA. If you don't like the rules then don't buy in that community. HOA's do a lot of good but can also be obnoxious in other ways... and yes incompetence does seem to run ramped in quite a few associations. Only solution for this is for the homeowners to unite and be more vigilant in determining who manages their HOA and the rules that are set for their community.
As for collection agencies, there is a need for them, but they are killing deals and forcing some property to go into foreclosure rather than short sale. Do to their exorbitant fees and their unwillingness to participate in sensible negotiation they are forcing unnecessary acquisition of property by the banks. Foreclosure hurts surrounding homeowners and values much more than short sold property due to abandonment, failed upkeep, vandalism, etc. I'm all for a reasonable limit to the fees that can be charged by a third party collection company. Everyone needs to get paid for a job and nothing is free... but what I've seen is exorbitant with collection companies tagging on anywhere from 3K to 8K in collection costs as soon as a file hits their desks. These collection costs are rarely accrued over long periods of time. Most of what we see is thousands in fees added on to missed HOA dues and penalties as soon as the lien goes to collections. Best way to avoid the collection companies taking advantage of the situation and killing your short sale is to continue making your HOA payments if you can, even if you can’t afford to make your mortgage payments, continue paying those HOA’s.
Jeff Durban is dead on. HOA's are a scam and should be made illegal. Anyone buying a home in an HOA community is going to be sorry.
Rich I know they don't buy the accounts. The problem is you think HOA's can seperate collection process from a homeowner that chooses to not pay to a foreclosure. That is wrong and would be near impossible to legislate as what happens when you send someone to collections, and a year later the house gets foreclosed on. Who is responsible for all the hard costs in collections? You saying that the original deliquent should of never been sent to collections for not paying? Who are you protecting the group already gaming the system walking away from homes and others who can't afford their homes because they baught to much or the people that are staying put and paying their bills? I vote for the people staying put and paying their bills. As well look at the fact of who is buying these distressed homes, over 50% of recent homes are cash purchases by investors not primary homeowners. This does not fix anything in the short term either. Do you know anything about true collection costs? I am a homeowner active in the community and sat down and looked at collection time lines, hard costs over soft costs and more. The fact that these fees get in the thousands is because of ignored notices for 9 months to a year if not more.
Collection agents do not buy delinquent HOA accounts or provide liquidity to the HOAs.
They do not speed the process which pays off delinquent accounts post foreclosure.
Collection agents attach THOUSANDS in fees to each home and stop home sales from closing. They game the system.
@ths...you are wrong !! The collection companies Do NOT pay up front any money to the HOA for the account. Wheather or not past due accounts are sent to collection, the HOA has to wait until the house is sold.
Currently NRS 116 allows the HOA to collect no more than 9 months of dues post foreclosure. Federal loan underwritting guidelines allow 6 months.
The collection agent's exorbitant fees do nothing to shorten the time it takes for the HOA to collect their 9 months of dues post foreclosure. Their fees are a road block in getting homes sold and occupied.
THE COLLECTION AGENTS ARE GAMING THE LAWS TO GET RICH OFF THE FORECLOSURE CRISIS.
Rutt Premsrirut is protecting the wrong people. As well if he says that HOA's should not send un paid dues to collections then are HOA's suppose to wait for all homes to be sold before getting paid and risk only 6 or 9 months of back dues. This concept would increase dues for all homeowners creating a lot of upset homeowners that are following the rules, paying their bills. Majority of people are happy with HOA's with almost half a million residents in 3000 HOA's in Las Vegas. All I have seen is a small # of unhappy people.
HOAs are out of hand and just create problems for homeowners. They are like mini dictatorships in alot of communities and led by incompetents. They must be limited in what they can do and quit harming the homeowner who has the right to live as they please.