Forclosed Homes for Sale and HOAs

by Simon Lindsay on cities

Some homeowners in Las Vegas, Nevada are accusing their homeowners’ associations (HOAs) of using unpaid fines as reason for forclosed homes for sale. Some said that they were slapped with accumulated collection agency fees and late penalties by their HOAs over as menial a reason as failure to submit on time paperwork for converting a grass lawn to desert landscape.

Nevada Association Services President David Stone explained that HOAs can only repossessed properties for the reason of failure to pay monthly assessment fees and not for penalties and fines. He pointed out a state law that sets a limit of $50 on collection fees of $250 to $500.

Stone pointed out that community associations do not want to add to the number of forclosed homes for sale that is why they are willing to work with delinquent homeowners. He added that the Nevada Association Services, a licensed HOA collection agency, initiated thousands of foreclosure proceedings in 2008 but only six distressed properties went to foreclosure.

To help homeowners, the Nevada collection agency conducted a seminar in which legal process and consequences of bank foreclosures, HOA foreclosures and bankruptcies were discussed.

Meanwhile, HOAs struggle for solvency when homeowners who experienced some mitigating circumstances such as divorce, job loss or health problems and who are facing foreclosure or filed for bankruptcy, refused to pay their HOA fees.

2008 ended with a 17.7 percent loan delinquency rate in Las Vegas, representing a 14 percent increase in September of last year. Furthermore, pre foreclosure fillings reached a peak of 11,000 in March 2009.

Stone noted that contrary to market data, most Las Vegas homeowners are not facing forclosed homes for sale and they have no intention to lose their properties which they purchased with their hard earned money to foreclosure.

He encouraged HOAs to intensify their collection activities because homeowners would do anything to keep their properties away from foreclosure.

On the other hand, Stone explained that when banks take hold of the first property deed, it becomes their responsibility to pay the HOA assessment. In the event that the bank failed to pay, the case will be handed over to the Nevada collection agency. It is the tasked of the agency to file a notice of lien.

Bank owned properties are not included in forclosed homes for sale initiated by the Nevada collection agency in 2008.

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