By Deborah Goonan, Independent American Communities
Despite the existence of Nevada’s Real Estate Division (NRED), homeowners are in a crucial fight for their rights, especially if they own property in an Association Governed Community.
This week alone, there have been two reports of outrageous HOA abuse.
Darcy Spears of KTNV Channel 13, known for her “HOA Hall of Shame” investigative series, reports on the combined problems of squatters and the practice of HOAs punishing property owners with excessive fines.
According to the report, linked below, after purchasing a home in Southern Highlands, Terrance Flowers moved his family to Florida a few years ago, and put his Nevada home on the market. But squatters moved into his vacant home and trashed it.
That prompted the HOA to issue multiple violation notices to Flowers, and resulted in weekly fines beginning in October 2014. Flowers says that by the time he realized that his two HOAs (sub-association Solaro and master association Southern Highlands) were charging him for damages done by the squatters, his property had racked up a lien of almost $112,000. The homeowner had to temporarily move back to Nevada to appear in court to evict the squatters, and file claims with his insurance company for repairs to his home.
But, in the meantime, at least three sale agreements have been cancelled, when cash buyers learned of the exorbitant HOA fees – now approaching $158,000.
Flowers cannot seem to get an accurate accounting of his massive HOA fees. And his Realtor says that, up until this point, neither HOA, managed by Olympia Management Services (OMS), has been willing to negotiate a settlement on the lien, so that Flowers can sell his home and move on with his life.
You would think that the HOA would want to facilitate a sale to owners who will take care of the property, rather than thwart a sale and make the home a target for more squatters.
Interesting fact about OMS: it is a developer-owned management company, created in 2006, to manage Southern Highlands.
Here’s the report from Darcy Spears. Hopefully, the HOAs will now negotiate a fair settlement with Flowers.
13: Extreme HOA fines prevent home sale
10:45 PM, Feb 3, 2017
11:29 PM, Feb 3, 2017
LAS VEGAS (KTNV) –
It’s HOA Hall of Shame meets Squatter Spotters. Contact 13 found a pair of homeowners associations that are adding to our valley’s squatter problem by holding a house and homeowner hostage to extreme fines.
Terrance Flowers put his Southern Highlands home on the market when he moved his family to Florida. And it wasn’t long before squatters broke in.
“They damaged all of the doors,” Flowers says as he showed us his property. “They took the pool equipment apart.”
Flowers upended his life for a temporary move back to Las Vegas to confront the squatters.
“They asked me, ‘Who was I?’ And I told them, ‘I’m the owner of the house.’ And they said, ‘Well, we stay here now’ and slammed the door.”
He had to go through a formal eviction process to get them out and file a claim with his insurance company to repair the damage.
“The squatters took the doorbells.”
Flowers put the house back up for sale and returned to his family on the east coast.
But then it came to a screeching halt.
“I have no clue. The house was sold three times. Cash offers. And it just blew my mind … how all of a sudden the sale is no good.”
Turns out, fines from his HOAs were stopping the sales. They were coming from both Solaro, the sub-association, and master association Southern Highlands.
The fines are for violations such as missing shrubs, dead trees and weeds, even the driveway gate, which the squatters destroyed.
“The HOA started fining me every week for that,” Flowers says.
The amount of fines and fees that have racked up against this house isn’t just high, it’s almost unheard of. In fact, it’s so much you can literally use that money to buy a house.
“$111,000 for fines, fees. It doesn’t happen,” says Flowers’ realtor Julia Suarez.
She says she’s lost five buyers on this property. People who’ve walked away because of the HOAs.
“They will not negotiate at all,” Suarez says.
Flowers says he got no notice that the fines were racking up.
And when Suarez asked how they got to that exorbitant amount?
“We’re not getting a complete detailed printout of $111,000,” she says.
The numbers on the documents don’t add up. A demand letter from Southern Highlands shows a total amount due of $111,932.19, while the Resident Transaction Detail given to Flowers shows a balance of $57,950. That’s for October 2014 through September 2016.
Read more (VIDEO):
NV Supreme Court rejects obligation of HOAs to uphold Constitutional property rights
In addition to an epidemic of squatters and HOAs charging outrageous fines and fees, property owners in Association Governed Communities are facing another assault on their rights. According to a report in the Review Journal last week, the Nevada Supreme Court issued a ruling that investors who have acquired homes through nonjudicial HOA foreclosures can indeed own those properties free and clear of the original mortgage.
Nevada Supreme Court rejected the lower court argument that the lender’s and homeowner’s due process rights had been violated, by allowing a condominium unit to sell for less than $7,000, wiping out an $82,000 mortgage in the process. That created a windfall for the investor.
Thousands of such unconscionable HOA foreclosure sales have occurred in Nevada following the real estate meltdown.
Also, as reported, last week’s Supreme Court ruling conflicts with a contrary ruling by the 9th circuit Court of Appeals. So this issue is far from settled.
But in the meantime, thousands of individual property owners (and their lenders) have become sacrificial lambs in a high stakes gamble on real estate in the state of Nevada.
Why would anyone want to buy proeprty in the state, especially in an Association Governed Community?
Nevada Supreme Court ruling upholds nonjudicial foreclosure process
Review Journal, Posted January 26, 2017 – 9:40am Updated January 26, 2017 – 6:16pm
By SEAN WHALEY
REVIEW-JOURNAL CAPITAL BUREAU
CARSON CITY — The Nevada Supreme Court ruled Thursday that a nonjudicial foreclosure process used by investors and speculators to acquire HOA properties at bargain basement prices during the great recession does not violate the constitutional protections of original mortgage holders.
The court found that the process does not violate the Takings Clauses of the U.S. and Nevada constitutions. It also found that due process rights were not violated because the foreclosure process does not constitute a state action.
The ruling is significant for thousands of individuals and groups in Las Vegas that acquired foreclosed homes at a fraction of their value by paying off the super-priority liens held by homeowners associations.
The Nevada Supreme Court had previously ruled that paying off the superpriority lien held by an HOA extinguished all other pre-existing liens, including the original mortgage. The unanimous ruling issued Thursday affirms that prior decision.
The Nevada Supreme Court decision is at odds with a recent ruling by the 9th Circuit Court of Appeals in a different Nevada case that found in a 2-1 ruling that the state process does violate constitutional protections.
The different decisions will now have to be reconciled.
The dispute over the foreclosure sales dates to the foreclosure crisis that began in 2008. The law was changed by the Nevada Legislature in 2015 going forward to resolve the notice issue and other concerns.