Southern Highlands HOA sued over liens on foreclosed homes

Article Courtesy of The Vegas Inc

By Steve Green

Published September 30, 2011 


In their latest blast at Las Vegas-area homeowner associations, investors in foreclosed homes have filed a class action lawsuit against the Southern Highlands Community Association.

Like many pending lawsuits over the same issue, the new suit charges the Southern Highlands HOA has been requiring buyers of foreclosed homes to pay "unlawful lien amounts’’ and "excessive’’ amounts under the association’s recorded covenants, conditions and restrictions (CC&Rs).

The suit was filed in Clark County District Court by lead plaintiff and investor Prem Deferred Trust, which is represented by Adams Law Group.

Prem and Adams Las Group regularly litigate against Nevada HOAs and their collection agencies over charges investors in foreclosed homes have been required to pay excessive collection costs, HOA assessments, fines and fees that accumulated while homes sat vacant awaiting foreclosure.

Adams Law Group is also involved in separate litigation charging collection agencies for HOAs are unlawfully threatening to foreclose on homeowners over what Adams calls inflated collection costs for delinquent assessments and fines.

One such suit is active after U.S. District Judge James Mahan denied a request by collection agency Nevada Association Services that it be dismissed.

The HOA and collection industries insist their fees are fair, that the investors are just trying to make a quick buck and if they succeed, HOA budgets would be decimated.

The Nevada Supreme Court is expected to weigh in anytime with a decision on whether the state Financial Institutions Division, which regulates collection agencies, can limit collection costs related to HOA assessments, fees and fines.

Even before the Supreme Court ruling, Clark County District Court Judge Elizabeth Gonzalez ruled June 2 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 the new lawsuit, Prem Deferred Trust said it purchased two foreclosed properties in Southern Highlands but then was forced to pay off excessive liens the HOA and its collection agencies had filed against the properties.

In one instance, collection agent Alessi & Koenig LLC demanded Prem pay $2,742, the suit says.

"Much of the payment exceeded the amount plaintiff was required to pay pursuant to (Nevada law) and the CC&Rs,’’ the lawsuit charged.

In another instance, Prem said it was required to pay $1,984, which it said was an "incorrect and unlawful amount’’ as according to the CC&Rs, Prem was liable for just $330.

Prem charged in the lawsuit that "in hundreds of instances over the last several years,’’ the Southern Highlands HOA had improperly obtained money from Prem and other potential lawsuit class members with these alleged overcharges.

Besides seeking class action certification, the suit seeks unspecified damages and an injunction blocking the HOA from "filing, claiming or asserting any demands for unlawful lien amounts, excessive CC&R amounts or any unlawful or improper amounts related thereto.’’

The Southern Highlands HOA has not yet responded to the lawsuit. A request for comment on the lawsuit was placed with an attorney has represented the HOA in related litigation.