Las Vegas Sun

August 1, 2015

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Another lawsuit filed over HOA debt collection fees

Another lawsuit was filed Friday in the ongoing battle over fees Las Vegas-area collection companies charge to homeowners — and investors in foreclosed properties — over debts to their homeowner associations.

Two homeowners filed a lawsuit seeking class-action status in federal court in Las Vegas against debt collector Nevada Association Services Inc. and its president, David Stone.

The suit charges violations of the federal Fair Debt Collection Practices Act and other counts.

It claims Nevada Association Services has been demanding collection fees and costs that were never authorized by homeowner associations, never incurred by HOAs and never agreed to by homeowners in community covenants, conditions and restrictions (CC&Rs); “and thus did not constitute a ‘debt’ owed to the” HOAs.

Stone on Friday denied the allegations and said he’ll be fighting the lawsuit and filing his own suit against one of the attorneys who filed Friday’s suit.

The lawsuit charges no law or contract, such as HOA CC&Rs, allows for Nevada Association Services to impose directly upon homeowners “any amount of collection fees or other such charges at the sole discretion of the debt collector.”

The suit claims Nevada Association Services’ collection fees and costs billed to homeowners “have skyrocketed, often dwarfing the principal amount of the original debts.”

The suit also said the collection company’s practice “is particularly outrageous because defendants act to cloud title to the real property of the plaintiffs and the proposed class members by maintaining alleged liens against the properties for the unlawful collection fees.”

The suit also said Nevada Association Services has been threatening to record delinquency documents on homes when Nevada code doesn’t allow for the recording of such a document; and threatening to foreclose on homes over unlawfully-imposed collection costs.

“By suggesting in (initial demand letters) that the delinquent lien notice was a lien, when, in fact, the document was not a lien, but merely a notice, defendants violated” the federal act regulating debt collectors, the suit charged.

“By stating that the HOAs would ‘soon proceed with a non-judicial foreclosure,’ when, in fact, defendants and HOAs had no intention of soon proceeding with non-judicial foreclosure auctions, nor did they have a legal right to foreclose because the amount demanded included collection fees and costs which were never expressly charged, approved or authorized by the HOAs, were never incurred by the HOAs, were never expressly agreed to by (homeowners) in the CC&Rs, and thus, did not constitute a ‘debt’ owed to the HOAs, defendants violated” the act, the suit says.

The lawsuit, which seeks to represent thousands of homeowners as class-action members, seeks among other things an injunction barring Nevada Association Services from violating state and federal law in demanding and collecting “improper or unauthorized collection fees.”

The suit was filed by attorneys including James Adams, who regularly litigates against HOAs and their collection companies.

Stone denied the allegations in the lawsuit and said he plans to sue Adams for abuse of process.

“He’s been unsuccessful in state court and he’s just forum shopping,” Stone said.

The lawsuit comes at a time when HOAs, hit hard by a shortage of dues because of foreclosures in their communities, need the revenue his company generates, Stone said.

“If he (Adams) had his way, all the HOAs would be bankrupt and unable to pay their bills,” Stone said.

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