Nevada HOAs, collection agencies lose two court rulings

Article Courtesy of VEGAS INC.

By Steve Green

Published June 19, 2011


Investors in foreclosed homes in Nevada didn’t abuse the legal system by challenging what they call inflated homeowner association assessments and collection costs, a judge has ruled.

Clark County District Court Judge Gloria Sturman on June 3 threw out a lawsuit filed by three big collection agencies against investors including Las Vegas attorney Puoy Premsrirut and her brother Rutt Premsrirut.

The collection agencies – Angius and Terry Collections LLC, Nevada Association Services Inc. and RMI Management LLC – lost as Sturman found their lawsuit appeared to be a "fishing expedition" aimed at gaining information about a larger group of investors that the collection agencies regularly tangle with.

In their March lawsuit, the collection agencies complained the Premsriruts and others – in challenging certain HOA assessments, collection costs and liens against the foreclosed homes they buy – were "achieving economic gain through intimidation and abuse of the legal system."

The Premsriruts and others regularly fight the collection agencies and HOAs in court, in administrative proceedings and in lobbying at the Legislature.

Attorneys for the Premsriruts fired back in the suit, saying this was a SLAPP lawsuit, or a Strategic Lawsuit Against Public Participation, and that such lawsuits are barred by Nevada law as they chill free speech.

Sturman sided with the Premsriruts during a hearing in which she dismissed the case.

"It’s a fishing expedition to try to link up and somehow show some big conspiracy between all the people in this community who are working against homeowners associations, that they’re all linked because some of them have a common attorney or some of them have common elements of ownership," Sturman said.

"The only allegation against these people is that they’re wealthy real estate investors. But even wealthy people have rights," Sturman said. "I have a hard time understanding that anything about this case is anything other than exactly what the SLAPP statute is directed at doing, which is these people have the wherewithal to try to fight what they view as an improper activity on (the part of ) homeowner associations and the agencies that collect."

In a second ruling on June 2, Clark County District Court Judge Elizabeth Gonzalez ruled that homeowner association "super priority" liens against homes for unpaid assessments are limited to nine times the monthly HOA assessment, plus costs for needed emergency repairs.

This lien (not counting emergency repair costs) can include penalties, fees, charges, late charges, fines and interest – as long as it doesn’t exceed an amount exceeding nine months of assessments, Gonzalez ruled in a case involving the Peppertree Homeowners Association in Henderson.

This is an issue that has been extensively litigated and is likely to be decided by the Nevada Supreme Court, as HOAs and collection agencies say they need to recover all expenses that pile up against foreclosed homes – not just those within the nine-month cap.

Gonzalez’s ruling on the nine-month cap was similar to a November ruling on the issue by the state Financial Institutions Division, which regulates collection agencies.

Collection agencies gained an injunction in December against the division’s ruling and the division appealed to the state Supreme Court, which has not yet ruled.

With the Nevada Legislature declining at the last minute to establish new rules on what collection costs homeowner associations can require homeowners and investors in foreclosed homes to pay, litigation is continuing in state and federal courts and the Nevada Real Estate Division over the issue.