One HOA fee lawsuit dismissed

By Buck Wargo

Friday, May 14, 2010 | 3 a.m.

A District Court judge last week dismissed one of two class action lawsuits filed by investors buying Las Vegas-area foreclosed homes, setting the stage for at least some compromise with collection agencies the investors claim are overcharging them.

On May 4, District Judge Jennifer Togliatti in Las Vegas dismissed a lawsuit filed in January on behalf of investors who claim homeowners associations’ collection agencies are charging more than state law allows for assessments, fines, interest and other costs that accumulate while foreclosed homes sit vacant.

In her ruling, Togliatti said that before the filing of such lawsuits, such disputes must be mediated by the Nevada Business and Industry Departments’s Real Estate Division.

The two sides have already been talking about future fees, and a commission with the authority to regulate collection fees that homeowners associations charge is expected to hold a workshop in June to obtain input on a proposal for a fee cap.

Chris Yergensen, corporate counsel for RMI, a property management company and its affiliate, Red Rock Financial, a collection company, said he remains hopeful that a compromise can be reached on what can be charged in the future.

That sentiment was shared by former U.S. Sen. and Gov. Richard Bryan, an attorney representing investors before the Common-Interest Communities and Condominium Hotels Commission.

“The group is trying to work out a compromise, and I think we are close to a compromise,” Bryan said.

But a compromise over future fees wouldn’t deal with past claims.

James Adams, whose Adams Law Group filed two lawsuits against homeowners associations and collection agencies, said that although the case against the collection companies has been dismissed for now, he is amending the second complaint to add to the list of hundreds of homeowners associations named in that complaint.

Adams called the dismissal of the lawsuit by Togliatti a procedural move, with her ruling that the issue is covered by covenants, codes and restrictions of homeowners associations and therefore had to be mediated before a lawsuit can be filed.

Adams said the homeowners associations covenants’ law shouldn’t apply to the case and said it would be refiled if mediation fails. He said the process could take about three months.

“It would be nice to get a resolution, but I am not that optimistic,” Adams said.

Pat Reilly, an attorney with Holland & Hart who is representing collection companies, said that with dismissal of the case, he is seeking attorney’s fees and court costs on behalf of his clients.

Adams said the separate lawsuit against homeowners associations has yet to be heard by District Judge Elizabeth Gonzalez, but it’s possible she could make the same determination as Togliatti.

Investors are balking at what they claim has been homeowners associations and collection companies overcharging them hundreds and thousands of dollars when they acquire homes from foreclosure.

Collection companies said 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 commission met May 5, but put off making any decision on limiting fees. In March, the commission said it is leaning to a $1,950 cap on collection-related fees.

Gail Anderson, Real Estate Division administrator, reported commissioners said they want more input before moving forward on a proposal. She said no date has been set for a workshop, but it’s likely to be held in June.

The next commission meeting isn’t scheduled until July, and the one after that is October, Anderson said.

Yergensen, who proposed the cap, said he still supports it, but some homeowners associations are concerned that it would hamper the collection of money that is owed.