Bill to cap collection fees when HOA bills are past due stays alive

By David McGrath Schwartz

Sunday, June 5, 2011 | 5:07 p.m.

CARSON CITY - A bill that would put a $3,300 "hard cap" on collection fees when a homeowner becomes delinquent on HOA dues is still alive during the final scrum at the Nevada Legislature.

Senate Bill 174 got a hearing in the Assembly Judiciary Committee, where members expressed skepticism about the limits set on collection fees, hard costs to file paperwork and attorney fees.

Assemblywoman Olivia Diaz, D-North Las Vegas, referred to them as "junk fees."

Sen. Allison Copening, D-Las Vegas, said the bill is designed to help homeowner associations forced to tap into reserves or raise fees on existing homeowners because of the plague of foreclosures in Nevada.

"This is about helping homeowners, helping HOAs stay solvent," she said.

Two HOAs that she knows of have gone bankrupt, she said. On the other side, investors have pointed to exorbitant collection fees of thousands or tens of thousands of dollars on late payments of a couple of hundred dollars.

Investors are suing collection agencies over the fees, and Senate Bill 174 would clarify the law in favor of collection agencies. Copening said collection agencies are necessary to help homeowner associations remain whole.

She spent a good portion of the last two years working on bills related to homeowner associations. She also took a job late last year with a homeowner association, which she mentioned in the committee hearing Sunday.

The state put regulations in place, establishing a $1,950 cap on some fees. Copening said SB174 represented a "hard cap," unless a property has to go through further litigation.

The bill was idling in the Senate Finance Committee as of Sunday evening. The legislative session ends at 1 a.m. Tuesday, and is expected to see a flurry of controversial bills trying to get out.

Assembly Judiciary Chairman William Horne, D-Las Vegas, said he has concerns about the bill, but said, "There are still some good components in the bill."

Garrett Gordon, a lobbyist with the firm Lewis and Roca, which represents some HOA companies, said the bill represented a "definite compromise." He referred to collection agencies as "a necessary evil, if you want to say, but necessary."

Assemblyman Mark Sherwood, R-Henderson, noted that HOAs would only get the nine months of past dues they currently get.

"The testimony is that collection agencies are a necessary evil," he said. "Right now, they're just evil."

He questioned using the squishy cap of $1,950 in existing legislation to necessitate the need for the new legislation.

"The testimony makes is sound like right now we have a really, really bad law and regulation for homeowners. And now this would just make it a bad law," Sherwood said.