Las Vegas communities still dealing with empty condos

Q: We are a small community of less than 100 condos. We’ve been hit hard by the banks not taking action on foreclosure properties. The owners have long moved out, but after four or more years, the banks still haven’t taken custody of the property. We did take the units to a homeowners association foreclosure sale, but no one wanted the units because the mortgages attached are three times the current property value.

Since the owners moved out, the bank has done nothing while the residents fought squatters that took over the abandoned units and maintained the property. The HOA has not received a single assessment during this time. Now, one bank has approached our collection company and offered a plan where they’ll “allow” us to rent the unit so we can recoup our losses. We’ll also have to maintain the interior, carry insurance, deal with renters (all through a management company, of course, who also gets a cut) and all the other things you do when you’re renting a property.

The bottom line: We put the property back together, rent it for a bit and then when the value is back, the bank comes in and finally takes it over.

We were told that this is happening all over the valley and it’s hugely successful. I asked to speak to two board members from one of these HOAs to find out the first-person story and after 30 days still haven’t heard from anyone.

My instinct is that this is a program that benefits everyone else while the association takes the risks. The bank doesn’t have to do anything to get the property back in good shape. The collection company gets some of the money they’ve invested because the property is earning money. This management company wins because it gets paid for doing all the physical work and managing the renters. The benefit for the HOA is supposed to be getting the back-owed assessments. With a unit that hasn’t paid in four years, and considering all the other costs being discussed, that could take a while.

For now we’ve declined this option but wonder if we’re violating our fiduciary responsibility since we’ve been offered an opportunity to bring something into the association coffers from a unit that has been consuming our resources for more than four years.

Where can we get solid information on this from someone who isn’t vested for or against the process?

A: You should be sending your letter to every member of the Nevada Legislature that did not take seriously the issues that associations have with the lenders. Please take the time to send it. If every homeowner and association took the time to send these kinds of stories, maybe the Legislature would pass better laws to protect the everyday taxpayer whose dues support these vacant homes that the banks/lenders have failed to exercise their legal obligations to the associations.

I am president of my association which had similar problem. We rented the home. The bank just sat there and did nothing long enough for the association to recoup the delinquent assessments, paid bills that were related to the home and actually made profit (it is taxable). The funds were transferred to reserves.

An occupied unit is safer than a vacant one and that would be a plus for both the association at large and the individual homeowner members.

As to violating your fiduciary responsibility that is for the courts to make that decision. You need to find some board member or homeowner who is knowledgeable about the management and leasing of single-family homes that would assist the association. Talk to that person or persons for their advice. Speak with your legal counsel, then make a decision. For my association, it was a winning alternative. We eventually sold the home to an investor.

Barbara Holland is a certified property manager, broker and supervisory certified association manager. Questions may be sent holland744o@gmail.com.