Published Tuesday, Dec. 7, 2010 | 6:23 p.m.
Updated Wednesday, Dec. 8, 2010 | 10:05 a.m.
A state commission decided Tuesday that homeowners associations will be limited in what their collection companies can charge for late assessments and other fees.
The state Common Interest and Communities and Condominium Hotels Commission set a cap at $1,950 in response to complaints from investors buying foreclosure homes, as well as lenders and homeowners, who said collection companies were unfairly gouging them for thousands of dollars in some cases. The Nevada Legislature directed the commission to set collection costs for HOAs.
The cap was proposed by collection companies since a proposal earlier this year said it should be lowered even further. The cap doesn’t apply to court costs and other hard fees.
Investors buying foreclosures have complained that the fees they paid for collection companies have been a burden and cut into the amount of money they could invest in the home to improve it.
The collection costs are already on top of the nine months of delinquent fees that HOAs are charging on past due assessments.
Investors argue state law limits HOAs to nine months, including collection costs, and have tried to fight the case through the courts and with the Financial Institutions Division, which regulates collection companies.
George Burns, the FID’s commissioner, handed down an order in November sought by investors that collection companies could only get nine months of delinquent fees, including the assessments, but not collection fees.
Collection companies obtained a temporary restraining order Dec. 3 and District Court Judge Susan Johnson met with the parties Tuesday to decide whether to grant a preliminary injunction. No decision has been made and a timeline wasn't announced. The temporary restraining order remains in effect for 15 days.
Collection companies feared Burns’ ruling could place them in jeopardy of getting their license revoked.
Rutt Premsrirut, one of the investors whose suing HOAs and collection companies over their fees, called the fee cap “one-sided and unfair to struggling homeowners” who would have to pay it for an overdue assessment.
They could get hit with more than $3,000 in collection fees on top of back due assessments, he said.
“They gave everything the HOA management and collection industry asked for and more,” Premsrirut said. “Not once did they try to examine costs line by line to determine what’s reasonable and fair to homeowners.”
Opponents also said criticized the commissioners for having conflicts of interest for ties with the HOA industry.