Bill to limit HOA charges could be tabled for state regulation

CARSON CITY -- A state senator seeking to limit penalties that collection agencies can force homeowners association members to pay might drop her bill and get the state to just change the rules.

Sen. Allison Copening said Thursday she might pull her bill and instead back a proposed regulation that would limit to $1,950 the maximum amount of money collection agencies working for homeowners associations could receive.

The Las Vegas Democrat made that comment after a three-hour Senate Judiciary Committee hearing, during which a long line of homeowners, association board members and lawyers argued about the proposed $1,800 limit in her Senate Bill 243.

She noted the Commission on Common-Interest Communities and Condominium Hotels has drawn up a tentative regulation with its slightly higher limit, but which could go in effect more quickly than her bill. The commission also could make changes to its regulations more rapidly than the Legislature, which meets every two years, Copening said.

"It is a complicated issue," she said. "But the whole point is to prevent collection agencies from taking advantage of homeowners. Collection agencies are crafty. They will look for ways to get around this bill."

Copening said the whole point of her bill and the tentative regulation is to prevent collection agencies from collecting $5,000 or more when a resident in a homeowners association fails to pay required monthly fees for landscaping, upkeep, swimming pool maintenance and other costs.

"What they charge is ridiculous," she said. "There is nothing in the statutes or regulations now to prevent them from doing it."

Senate Judiciary Chairwoman Valerie Wiener, D-Las Vegas, took no vote on Copening's bill. She said the commission first must hear a bill by Sen. Elizabeth Halseth, R-Las Vegas, that would limit the collection fee to $1,200. That hearing was set for April 7. For any of the bills to survive, they must be passed out of the committee by an April 15 deadline.

While Gov. Brian Sandoval has placed a one-year moratorium on new regulations from state agencies, Copening said that she spoke with the governor and that he will let the commission regulation go forward.

In addition, Assembly Majority Leader Marcus Conklin, D-Las Vegas, will hold an emergency meeting of the Committee on Regulations to approve the regulation with its $1,950 collection fee limit, Copening said.

But the caps in the regulation and in Copening's bill also would allow for "reasonable attorneys' fees" absorbed by a homeowners association on collecting on debts. That prompted complaints from several witnesses who questioned how "reasonable" would be interpreted.

"What is reasonable to me may not be reasonable to the collection agency," testified homeowner Jonathan Friedrich of Las Vegas.

Besides attorneys' fees, there are about 20 other costs that homeowners associations can charge for performing services. Some of these costs are on top of the $1,800 maximum in her bill, Copening said.

For example, they can charge $75 for writing a letter to a homeowner stating they intend to record a notice of a delinquent assessment.

This charge upset Sen. Ruben Kihuen, D-Las Vegas. He contended the association can send out the same form letter to numerous delinquent homeowners and merely change the name and address.

"I want to know where this $75 came from," he said. "This is just a template letter. How do you justify a letter for $75 when all you do is take the name off and just insert a new name?"

But Chris Yergensen, corporate counsel for RMI Management and Red Rock Financial Services, called Kihuen's question "disconcerting."

"There are many things we have to do. We have insurance and payroll costs. We have many costs going into operating a business. It is not as simple as pushing a button."

He said his company has 10 employees who do nothing but answer calls from homeowners and eight who just receive payments.

Stephanie Cooper Herdman, an attorney and licensed collection manager, said the costs charged by collection agencies are exorbitant. She noted they could collect $1,800 when the homeowner has just missed a $20-a-month assessment.

Homeowner Ronna Goodman said association boards and collection agencies don't bother contacting homeowners by phone of their delinquencies. She said she was president of one association whose management company sent letters to a delinquent homeowner who was out of the country. Eventually they foreclosed on him for being $112 behind on his required assessments.

The owner never knew he was delinquent because his renter received the letters and never told him of the problem, she said.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.