By Deborah Goonan, Independent American Communities
In a follow up report on Lamplight Village, KTNV’s Darcy Spears interviews an attorney representing homeowners who were blindsided by the February verdict of $20 million against their HOA.
You read that right. Homeowners say they were completely unaware of the lawsuit until they began reading about it on social media.
Homeowners under cloud of $20M swing set verdict demand answers from HOA (KTNV)
10:45 PM, Mar 5, 2018
1 hour ago
LAS VEGAS (KTNV) – In a clubhouse guarded by security, Lamplight Village homeowners gather tonight, hoping for answers in the wake of a $20 million verdict against their HOA in Centennial Springs.
“People are really, really nervous. They’re scared. They don’t know if they’re going to lose their house, if it’s gonna be foreclosed, if they can sell,” said homeowner Dahl Hansen.
In late February, a jury handed down the verdict after a swing set crossbar in the Lamplight Village common area fell on a 15-year-old boy’s head, causing permanent brain damage.
Court records show the HOA did not have a maintenance and inspection plan on their playground equipment.
“The whole chain of command from the insurance company QBE and their lawyers, Pinnacle Property Management, our HOA board… they did not protect these homeowners,” Hansen said.
The HOA and its insurance company were given multiple chances to settle the case for the policy maximum of $2 million, but they refused and lost at trial, so homeowners may be left holding the bag to the tune of as much as $90,000 each.
“I thought it was a joke, a hoax!” said homeowner Steve Lopez, who, like Dahl Hansen, said he learned about the case on social media.
They say neighbors were never informed by the HOA.
Read more (Video):
Attorney Alex LeVeque says he is looking into the possibility that the HOA management or insurance company acted with “negligence or intentional misconduct.”
According to the transcript of the report:
But LeVeque says there are some options for homeowners to protect themselves, like adding lien assessment coverage to their individual insurance policies and filing homestead declarations.
“There’s a very strong argument that a Declaration of Homestead will protect the homeowners here from a judgment lien execution on a judgment that’s been entered against the association.”
However, it’s unlikely that Lamplight Village homeowners will be able to secure lien assessment or loss assessment coverage at this point, now that the insurer and homeowners are aware of an imminent special assessment.
And, although Nevada makes it relatively easy to declare homestead exemption, it can only be claimed for a primary residence. Owners of second homes or investment properties probably won’t get away with declaring a homestead exemption.
And even if a homeowner can claim the homestead exemption in Nevada, there’s no absolute guarantee that the owner is protected from the forced sale of a property in a covenant-restricted association-governed community.
NRS 115.010 (see reference below) disallows the homestead exemption for HOA properties, unless the owner can prove he or she holds allodial title. Allodial title in Nevada refers to property that is owned “free and clear,” with the exception of the property owner’s obligation to pay ongoing property taxes. In other words, the owner can only consider applying for allodial title if the home is mortgage-free, and has no other liens.
And according to an illuminating recent post by George Staropoli, the HOA industry’s intent has always been to deny a homestead exemption for liens created by mandatory assessments.
Even if Nevada homeowners can meet narrow criteria for avoidance of a foreclosure sale, can they escape their obligation to repay the lien for a special assessment? Will homeowners have to repay from the proceeds of the future sale of their homes? Can the HOA garnish wages to collect on the unpaid assessment debts of homeowners?
These are serious questions for legal experts.
Can the homeowners escape financial liability?
As for shifting all or part of this enormous financial liability from homeowner members of the association to individual HOA board members, Pinnacle Management, and/or the insurance company, the facts of the case will need to be carefully examined.
A recent interview of the Plaintiff’s attorneys reveals that members of the HOA board and management company knew about problems with their play equipment for years. In fact the equipment failed three times before Carl Thompson suffered a brain injury.
Swing set collapses on teen’s head, jury orders HOA to pay $20 million
Watching this Fox5 Vegas video, I immediately recognized the manufacturer’s label on the remnants of the swing set. Playworld manufactures residential and commercial play equipment right in my back yard, here in Lewisburg, Pennsylvania.
But Playworld did its part, by issuing several recalls.
Here are the recall announcements involving swing sets just like the one installed at Lamplight Village, as well as additional recalls involving slides.
According to reports, Playworld settled out of court with Carl Thompson.
And, in addition, Playworld offered an equipment maintenance plan for $150 per month. That plan, according to the details presented in the jury trial, was rejected by Lamplight Village HOA.
Attorneys for the Plaintiff also note that they offered to settle with the HOA for its $2 million insurance policy maximum. But Lamplight Village leaders and its insurer elected to go to trial, where the jury awarded ten times the out-of-court settlement offer.
An important discussion point of this case is how the association-governance model serves the public interest, when its member-owners face such enormous financial risks.
Here’s what Nevada law says about the Homestead Exemption. It does not apply to HOA liens
NRS 115.010 Exemption from sale on execution and from process of court; amount of exemption; exceptions; extension of exemption.
1. The homestead is not subject to forced sale on execution or any final process from any court, except as otherwise provided by subsections 2, 3 and 5, and NRS 115.090 and except as otherwise requmired by federal law.
2. The exemption provided in subsection 1 extends only to that amount of equity in the property held by the claimant which does not exceed $550,000 in value, unless allodial title has been established and not relinquished, in which case the exemption provided in subsection 1 extends to all equity in the dwelling, its appurtenances and the land on which it is located.
3. Except as otherwise provided in subsection 4, the exemption provided in subsection 1 does not extend to process to enforce the payment of obligations contracted for the purchase of the property, or for improvements made thereon, including any mechanic’s lien lawfully obtained, or for legal taxes, or for:
(a) Any mortgage or deed of trust thereon executed and given, including, without limitation, any second or subsequent mortgage, mortgage obtained through refinancing, line of credit taken against the property and a home equity loan; or
(b) Any lien to which prior consent has been given through the acceptance of property subject to any recorded declaration of restrictions, deed restriction, restrictive covenant or equitable servitude, specifically including any lien in favor of an association pursuant to NRS 116.3116 or 117.070,
Ê by both husband and wife, when that relation exists.
4. If allodial title has been established and not relinquished, the exemption provided in subsection 1 extends to process to enforce the payment of obligations contracted for the purchase of the property, and for improvements made thereon, including any mechanic’s lien lawfully obtained, and for legal taxes levied by a state or local government, and for:
(a) Any mortgage or deed of trust thereon; and
(b) Any lien even if prior consent has been given through the acceptance of property subject to any recorded declaration of restrictions, deed restriction, restrictive covenant or equitable servitude, specifically including any lien in favor of an association pursuant to NRS 116.3116 or 117.070,
Ê unless a waiver for the specific obligation to which the judgment relates has been executed by all allodial titleholders of the property.
5. Establishment of allodial title does not exempt the property from forfeiture pursuant to NRS 179.1156 to 179.121, inclusive, 179.1211 to 179.1235, inclusive, or 207.350 to 207.520, inclusive.
Allodial title in Nevada