Dear Board Members,
Welcome to our first quarterly newsletter of 2017. I hope you enjoy the content.
John F. Kennedy once said, “There are risks and costs to action. But they are far less than the long-range risks and costs of comfortable inaction.”
As early as 2007, there was a movement to get legislation passed to clear up the question concerning whether collection fees were part of the super priority payment. These fees were necessary to collect delinquent assessments, of which there were many, but there was confusion about who should pay those fees. Should the bank pay the fees as part of the super-priority, or should they be paid out of the association’s budget? There were few participants in this legislative movement as the foreclosure boom was just getting started. Few could have imagined the eventual cost associated with inaction in that 2007 legislative process.
Over the next three legislative sessions, the issues around the super priority payment and collections fees continued. As the foreclosure crisis reached its peak, the threat of lawsuits and eventually an avalanche of legal action became commonplace. Finally, in the 2015 legislative session, new language was placed in the law and we had clarity about the super-priority and collections cost issue.
While the 2015 session brought clarity on a go-forward basis, unfortunately, it did not solve the problems created by past inaction and became a very expensive lesson. The costs associated with this issue are in the millions of dollars. Associations struggle to get insurance coverage, and if they do, the deductible for anything to do with a wrongful foreclosure suit generally starts around fifty thousand and goes up from there.
Winston Churchill said, "Those that fail to learn from history, are doomed to repeat it." With the 2017 legislative session upon us, we’re hoping not to repeat the past.
The upcoming legislative session has the potential to be as consequential as the 2007 session was. Several potentially very expensive issues are likely to be presented before the legislators. At the top of that list will likely be an effort by the banks to get rid of the super-priority altogether. This action alone will cost associations in Nevada millions of dollars. When a homeowner becomes delinquent and the bank forecloses on the unit, the nine months’ worth of assessments that are currently being paid by the bank must be absorbed by the paying homeowners of the association. This will certainly require an increase in the assessment amount.
So how do we stop the past from repeating itself? The answer is simple…we act!
On March 28th, we are sponsoring the second FirstService Residential Day at the Capitol. This will be an opportunity for board members to have their voices heard…a chance for board members to meet face-to-face with the people making decisions that will have a dramatic impact on your association. This one-day event gives you the opportunity to act and to have a say about the future of your association.
Look through this edition of Connections for more information about this important event. The industry needs your help. Your actions will make a difference!
Sincerely,
Steven Parker
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