Monday, Aug. 16, 2010 | 5:24 p.m.
A lawsuit filed by investors claiming homeowners associations are bilking them out of thousands of dollars in collection fees when they buy foreclosed homes is headed to mediation.
Last week, District Judge Kathleen Delaney dismissed a lawsuit against homeowners associations just as District Judge Jennifer Togliatti did in May regarding the investors' action against collection agencies hired by the association.
The dismissal of the cases doesn’t mean the cases are completed. The judges ruled that state law requires such cases be mediated first. If that fails, the lawsuits can be refiled in district court, and investors’ attorney James Adams of the Adams Law Group said that is likely to happen.
The investors claim the homeowners associations’ collection agencies are charging them more than state law allows for assessments, fines and interest and other costs that accumulate when the previous homeowners stopped paying their dues. They argue they shouldn’t pay more than nine months of assessments, and not thousands in fees charged by the collection companies.
Collection companies maintain the fees are necessary to cover their costs and homeowners associations have supported steps to recover past due money needed to balance association budgets.
The state Common Interest Communities and Condominium Hotels Commission is considering a cap limiting collection companies to charging $1,950. A decision is expected by the end of the year.
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