Ruling restricts fees collection agencies can gather for homeowner associations

The decision issued Thursday limits collection agencies to nine months of back association dues and only permits fees as outlined under state statutes. Any added fees or charges must first be approved by the homeowners association.

Collection agencies add or inflate fees without the HOAs’ knowledge, claim some. HOA management companies sometimes contract with affiliated companies for the collection of dues. Notice and late fees, transfer and trustee charges, can sometimes be quintuple the total amount owed.  

A glut of foreclosures prompted new laws to go into effect last year to give homeowner associations more authority in collecting delinquent fees. The rules were meant to encourage better maintenance of neglected properties in order to prevent blight and depressed home values.

Nevada had the nation’s highest state foreclosure rate in October, with one in every 79 homes receiving a foreclosure notice — nearly five times the national average, RealtyTrac.com reports.

One attorney praised the ruling.

“Collection agencies have been exceeding what the laws allows,” said attorney James Adams, a principal with Adams Law Group Ltd. in Las Vegas. “The order is confirmation that these collection agencies have acted unlawfully by charging exorbitant fees that often dwarf original amount due.”

Another agreed.

“These are excessive fees,” said attorney Puoy Premsrirut, a principal with Las Vegas-based Brown, Brown & Premsrirut. “The fee amounts are arbitrary and capricious.”

But one industry official said the new ruling is nothing more than sneaky attack by investors who flip homes and reap huge profits without paying their bills. 

“We were totally blindsided by this. If we had an opportunity to present our case, I’m confident the outcome would be different,” Nevada Association Services President David Stone said. “These investors are simply shopping for a forum to find someone who will side with them. This is not a win for investors.”

Nine disgruntled investment entities filed a lawsuit in late January in Clark County District Court against several prominent local homeowner association collection firms, including those representing Aliante, Seven Hills and Silverado Ranch. The lawsuit accuses the agencies of charging more than allowed under state law. The case is continuing. 

“The declaratory order is inconsistent with a 2007 court ruling,” Stone said. “We will continue the fight to make this right. We have some aggressive plans forthcoming.” 

Contact reporter Tony Illia at 702-303-5699 or tonyillia@aol.com.