A wild story was broken this morning by the Las Vegas Review-Journal. A member of the Nevada state board which oversees Homeowners Associations says financial conflicts of interest on his own board essentially render it impotent and dysfunctional.
Jonathan Friedrich is one of the most prominent Homeowners Rights advocates in Nevada. Earlier this year he was appointed as one of seven members of the Commission for Common Interest Communities and Condominium Hotels. But Friedrich has been frustrated in his efforts to reign in some of the more outrageous behavior of many Homeowners Associations.
A prominent example is the habit of Homeowners Associations to tack on huge collections fees and legal costs on fines issued to homeowners. A fine of a couple hundred dollars often soars to thousands of dollars, far exceeding what state law allows. But HOAs really don’t bother to follow state statutes. They just want the money. And four of the seven member State Commission in Nevada apparently have no intention of enforcing the law.
HOAs have super-priority liens on all housing meaning they collect their money before the mortgage company gets a chance to collect. And that’s led to a vast number of Nevada houses sitting vacant. No prospective buyer wants to invest in a house which has thousands, sometimes tens of thousands of dollars in liens that have to be paid off. Even the federal government, which owns a large number of foreclosed homes, can’t get rid of its Nevada inventory.
Friedrich says a majority of the members on the state panel have conflicts of interest: They are representatives of the Homeowners Association industry. They personally profit from sheltering HOAs and their illegal fines. And they oppose any move to force HOAs to abide by state limits on how high a homeowner’s fines can go.
Not covered in the Review-Journal article linked below is that one of the commission members who’s thwarting HOA reform has said he’s a founding member of CAI, the powerful money-guzzling Community Associations Institute. And at least two other commission members are CAI members.
Conflicts of interest, illegally excessive fines, flouting of state and federal law: It’s really no surprise in the HOA industry.