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IN BUSINESS COURTS NEVADA HOAS WIN RULING OVER COLLECTION COSTS By Steve Green senior staff writer N that didn't comply with its new cap. Attorneys for evada homeowner associations and their collection agencies have prevailed in the latest court ruling in disputes over collection costs for unpaid HOA as- sessments. The Nevada Supreme Court on May 23 ruled the state Financial Institutions Di- vision (FID) was wrong to cap the assess- ments and collection costs that purchas- ers of foreclosed homes must pay. These assessments and costs typically accumu- late for months while the homes sit va- cant during the foreclosure process. The state agency, which regulates col- lection agencies, in November 2010 is- sued an advisory opinion and declarato- ry order capping the lien that HOAs can place against foreclosed homes at an amount equal to nine months of assess- ments. That amount can include both assessments and collection costs. The FID also threatened to penalize HOAs collection agencies successfully challenged the ruling in a Clark County District Court lawsuit, arguing that the state Real Estate Divi- sion, not the FID, regulates HOA collec- tion costs. The lower court ruling was appealed to the state Supreme Court. The Real Estate Division has a board regulating HOAs called the Commis- sion for Common Interest Communities and Condominium Hotels (CCICCH). In 2010, it issued its own opinion interpret- ing Nevada law, saying that HOA liens can include collection costs and inter- est on top of the past-due assessments. The assessments in the liens are limited to either six or nine months depending on the circumstances. The CCICCH did cap most collection costs at $1,950. "The CCICCH and the Real Estate Divi- sion are responsible for regulating and administering" the chapter in Nevada law governing the collection costs, the Supreme Court ruled. "There is no provision granting any other commission or department the authority to regulate or interpret the language of wrote. the chapter," the court David Stone, president of collection agency Nevada Association Services, which had challenged the FID opinion, called the order "a huge victory for Ne- vada homeowners residents." associations and "This order from the Nevada Supreme Court affirms that the Financial Institu- tions Division overstepped its authority when it issued an advisory opinion re- garding HOA law NRS 116. We continue to be committed to protecting Nevada homeowners associations and those who reside in them," Stone said. The order likely isn't the last word on GAMING, MINING, RETAIL AMONG THOSE OPPOSING INITIATIVE TAX INITIATIVE, FROM PAGE 7 for his initiative, which is all over the map when it comes to subject matter. Wiese also refused to extend a fast-ap- proaching deadline for Waters to collect signatures for his initiative, likely leaving the Nevada Supreme Court as Waters' only hope to get his measure on the 2012 ballot. Attorneys who showed up to fight Wa- ters represented the mining and retail in- dustries as well as the Las Vegas Chamber of Commerce, the Nevada Development Authority and the Nevada Taxpayers As- sociation. These same parties will all likely collide again in the federal part of the case and in Waters' planned state Supreme Court appeal. "The last thing Wall Street wants is for this to go to a vote of the people," Waters said. "They run this state like a planta- tion." The miners and officials from other affected industries regularly interject themselves into initiative issues, legisla- tive debates and other forums to protect themselves from tax hikes. In the Waters lawsuit, they're represented by two in- fluential law firms — Jones Vargas and Brownstein Hyatt Farber Schreck LLP. Also opposing Waters are attorneys for the Nevada Legislature and Secretary of State Ross Miller. 10 TROUBLED WATERS: Kermitt Waters led the last successful initiative petition in Nevada, a 2006 measure to protect property owners in eminent domain situations when government takes their land. He argues that cumbersome requirements lead to many filed petitions not making the ballot. Even the gaming industry, while ex- empted from Waters' latest initiative after he targeted it in an unsuccessful 2008 ini- tiative, opposed him. That's because Waters is trying to "un- ravel many of the procedures and safe- guards of the initiative process," and that could hurt the casino industry down the road, attorneys for the Nevada Resort As- sociation told Wiese. Waters, however, called the Resort Asso- | 4 JUNE 2012 | STEVE MARCUS proposing initiatives gather signatures and file them with the Nevada secretary of state. That creates a process by which affected parties can challenge them with lawsuits that must be filed in Carson City. Instead of going through that process, Waters in January filed suit against the state in hopes of clearing such roadblocks in advance. ciation "an intermeddler" trying to block him from proposing a "fair, broad-based tax." He said it was trying to intimidate Wi- ese and will try to intimidate the Nevada Supreme Court should he appeal. "Like mining, most Nevadans are not aware that gaming pays to Nevada the lowest gaming tax in the United States," Waters said. Usually in the initiative process, groups His suit complained the Legislature had created a "death trap" by requiring initia- tives to cover just one subject, requiring backers to write short "description and effect" summaries of initiatives and then requiring initiative backers outside of Carson City to travel hundreds of miles to the state capital to defend them in court. Because of these requirements, he said, initiative petitions are regularly filed but don't qualify for the ballot, often because of actual or threatened legal action. In his January lawsuit, Waters turned the tables on the Legislature, claiming it had violated the Nevada Constitution by passing election bills in 2005 and 2011 that violated the single-subject rule. His suit sought to invalidate those bills or to have Wiese declare that his new ini- tiative doesn't violate the single-subject rule. Wiese, however, said in his ruling that case law has found there's a liberal interpretation for the single-subject rule for the Legislature and a strict interpreta- tion for initiatives. the matter, as investors in foreclosed homes are pressing several against HOAs. lawsuits The investors claim they are being gouged when purchasing homes by be- ing forced to pay unauthorized collec- tion costs that accumulate while the homes are in foreclosure. They expect one of their cases to re- sult in a ruling by the Supreme Court interpreting Nevada law on the issue and are pressing a massive lawsuit al- leging fraud against hundreds of HOAs and lenders over the issue. The HOAs and the collection industry, however, say the investors are just try- ing to profit at the expense of HOAs that have seen their budgets challenged by a surge of foreclosures. The HOAs say assessment payments are down and they need all the revenue they can get to maintain community common areas and services.