HOA collection practices cost us all more than you think

What makes our property values go down?

There has been a lot of concern expressed about how having – or not having – a restaurant lowers property values.

There have also been concerns expressed that owners calling for a removal election or complaining about how they were being treated would make this community unattractive to purchasers.

I think those issues, as serious as they are, pale in comparison to the impact HOA collection practices, including SCA’s, have had in suppressing the property values in HOAs statewide.

The Reno Gazette-Journal reported last July that an  academic study provides evidence for this claim.

Click here for the  7/7/17 Reno Gazette-Journal news article that ran under the headline:

HOA foreclosures tied to more than $1B in lost Reno, Vegas home values

In my blog The house that took over a life“, I wrote about how my late fiance Bruce’s house was snatched by SCA’s former agents and sold for pennies on the dollar.

You might have felt bad for me, but you probably didn’t think that foreclosure, and the other foreclosures that have occurred, lowered your property value as well.

The recent study by UNLV LIED Institute for Real Estate and Nevada Association of Realtors claims it did.

In fact, the study supports the claim that the entire system is flawed, and ALL homeowners pay a price every time their HOA’s debt collector kicks an owner out of their home and then (on the owners’ dime) tries to beat the bank out of their security interest in court.

Survey says:
Homeowners are not happy with HOAs

Part of the research included surveys of Clark and Washoe County residents that I’ll report in another blog, but generally, those surveyed were not pleased with HOAs.

In particular, those academics’ research (Click here for executive summary of report) showed that many Nevada residents (81%) are unhappy with HOAs’ having “super-priority” status to foreclose for delinquent assessments because it hurts them (all the other owners in the HOAs).

One of the study’s conclusions:

“The LIED Institute found that every HOA foreclosure reduces the sale price of every property in the HOA by 1.7%. Thus, LIED inferred that every property, even the ones that have not sold, has suffered this same value reduction. “

           –Analysis of HOA foreclosures in Clark and Washoe counties from 1/1/13-6/30/16 

At least $1 Billion Loss in Clark & Washoe Counties alone

What happened to my late fiance’s house as well as my analysis of public records of multiple foreclosed properties has led me to conclude that this finding,

…every HOA foreclosure reduces the sale price of every property in the HOA by 1.7%“,

underestimates the impact on ALL homeowners’ property values by a large margin.

But, I’ll share that analysis with you in another blog.

We ALL pay

Those personally victimized by unfair HOA foreclosures are not the only ones damaged financially by them. My detailed review of the study shows there were even more significant financial impacts on ALL HOA homeowners statewide, and from more causes, than those identified in the UNLV/NAR study.

Why do HOA foreclosures lower property values?

The study identifies a few major reasons why HOA foreclosures bring down the values of ALL properties in the HOAs:

  1. Depressed sales price – Properties are sold at HOA sales for a  small fraction of the property’s fair market value (FMV). Since the buyer pays pennies on the dollar of what it is worth, ALL community property values go down.
    Study says: Every home in an HOA loses 1.7% when the HOA forecloses.
  2. Banks charge more for loans in HOAs to cover the risk of loss if the HOA forecloses. HOAs’ super-priority extinguishes the bank’s security interest (mortgage) and the study estimated how much banks have lost after  the banks’ loans were cancelled.
    Study says: Banks lose 100% of the loan balance on every property sold at an HOA sale, and Federal and Nevada courts disagree about how to handle this.
  3. Corruption within HOAs, particularly when management agents have a financial connection with the debt collection agent as was happening at SCA until 2015 when FSR, our managing agent, was financially intertwined with, and was the license-holder for SCA debt collector, Red Rock Financial Services
    Study says:

“…80% of respondents would support a law prohibiting HOA management companies from also owning and operating their own HOA collection agencies.” 

So what?

This series of blogs is intended to put SCA’s collection practices within a much larger context so you can see how we are all affected.

  • SCA is just one of over 2,500 HOAs in Nevada in the LIED database.
  • Nevada is just one of 22 states that have huge problems with HOA agents, using the HOA’s power to foreclose, such that

1) both the homeowner and the bank lose 100% of their property, 2) the HOA gets very little they are owed, and
3) the debt collector gets very, very rich, frequently by taking more money under the table than the law allows them to charge.

  • My late fiance’s house is just one little house, but it is a stark example of what happened many thousands of times in the wake of the 2008 economic collapse.
The foreclosure system is broken and needs to be fixed

Whenever you have economic turmoil and large reversals of fortune, you have a breeding ground for corruption. I want to show you how the limitations in the legal and judicial system have allowed some unscrupulous individuals (and institutions) to wildly profit at your expense and mine.

Did SCA Board members profit at owners’ expense?

No. Certainly not me.
I did not, and will not, profit from exposing any of this.

No other SCA Director profited from any of this either.

As you peruse these next few blogs about how SCA collection practices affect your personal bottom line, please note:

  1. I did not ever place a matter before the SCA Board from which I made, or could have made, any profit. No matter what action the SCA Board takes, or doesn’t take, related to collections or foreclosures has any impact on the quiet title decision of Judge Kishner, Nevada 8th district Court.
  2. I don’t believe any current or former SCA Board member personally profited from the foreclosure of any SCA property.
  3. I believe SCA Board members have simply trusted and followed the advice of SCA’s agents without suspecting that the agents had set the process up to unjustly enrich themselves.
  4. I don’t believe anyone on the current SCA Board understands that the SCA Board has legal alternatives for handling collections that could prevent many of the downsides using self-serving debt collectors who unfairly profit from foreclosures and the huge volume of litigation that ensues.
  5. However, I believe the current SCA Board is culpable for REFUSING to even examine flaws in SCA’s collection system or to consider more humane options which would benefit ALL SCA homeowners financially more than SCA’s agents benefit.

HOA Boards and homeowners have frequently been victimized by their agents (managers, debt collectors and attorneys) who can take advantage of their ignorance or inattention.

The HOA Board must ensure all assessments are collected. That’s a given.

But, in general, volunteer boards do not have the expertise to select the most cost-effective and humane method for doing so.

Our SCA Board has been duped by all three (or four or five) debt collectors SCA has used. They have all unjustly profited by conducting foreclosures without following the statutes, by retaining proceeds from the sales that they were not legally entitled to, and/or by tricking the Board into believing that their costly methods were the only legal option.

Our cost when agents serve themselves

It’s tragic how easy it is for HOA agents who play fast and loose with the law to unjustly enrich themselves. Lax enforcement of the laws on the books, such as they are, is ineffective to stop their fingers from reaching into our pockets.

Statewide, a much stronger regulatory system is needed to prevent such institutionalized corruption from getting a stronghold, and to protect HOAs and homeowners from getting ripped off.

Why would a debt-collecting agent derail his gravy train?

Telling the SCA Board that there are more cost-effective options to successfully collect assessments than using the SCA association legal counsel as the debt collector would drastic reduce The Clarkson Law Group’s big, fat bottom line.

Agents are supposed to act solely and exclusively for the benefit of association membership, but the temptations for a quick buck are just too great!

It’s much more lucrative to keep the Board in the dark about how much the costs of collection exceed the amounts collected.

Or better yet, the attorney/debt collector can bully the HOA Board into believing he is the final authority and that the lucrative (for attorneys) litigious process is only legal option available.

Sound familiar, Mr. Clarkson?

 

 

 

 

 

 

 

Telling lies, ruining lives

“As I understand it, Ms. Tobin was prevented from running for the Board not because she has opinions that are critical of the Board and SCA management, but ONLY because she is involved in litigation against SCA from which she might stand to gain a financial benefit.” -David Berman

Poppycock.

My unlawful removal from the Board was completely 100% done in retaliation for my complaints of harassment and retaliation.

I presented the issues formally to the Board, the attorney, the GM, and the former CAM and to blogger David Berman as statements of intent less than two weeks before they acted in concert, without cause, without authority and without due process to strip me of my legal rights and my Board seat and to disenfranchise the 2,001 voters who had put me in office.

While I was on the Board those interminable 116 days (5/1/17-8/24/17), the GM, the former CAM, the attorney, David Berman and 5 of the 7 directors acted in concert to marginalize me from day 1. (Art Lindberg should get a pass since he was the only one who asked the right questions. The attorney lied to him too., and the pressure to conform was very, very strong.)

They made my life miserable, shunning, lying, berating me, denigrating my contributions, making false accusations, publishing false and defamatory statements, and making it impossible for me to be an effective homeowner advocate as a member of the Board.

They only came up with the convoluted ruse that I had put matters before the Board from which I could make a profit because, even relying on Adam Clarkson’s tortured reading of the law, they couldn’t say they were getting rid of me because I was an outspoken pain in the ass.

Execution was a complete non sequitur

The 8/24/17 letter which constituted my walking papers, signed by Adam Clarkson, was the totally unlawful and unethical response to my notice of intent to file a Form 530 Intervention Affidavit alleging harassment and retaliation.

Before that letter came out of the blue, there were many disputes between me and five of the other Directors, the attorney, the GM and former CAM, most of which you will recognize. I was transparent and vocal as possible as I sounded the alarm on deferred attention to owners’ concerns.

It’s pretty obvious why I had to go

And it was not because I did, or even could, profit from being on the Board.
My profit = ZERO

Did I mention I never made a dime off SCA before, during or after my Board service?

How much did the attorney make for creating the ruse that I did?

Attorneys’ profit for 2017 = $300,000+

2017 legal fees for “Director Issues”  = $40,000
January 2018 legal fees = $38,000

but they won’t admit how much of that was to unlawfully block owners knowing how much the GM’s salary was bumped up in 2018

Deny. Deny. Deny.

Accept no responsibility for ANY problems.
Then attack your accuser.
And kill her.
Sample of the problems I publicly said needed correction
  • No restaurant -Failing to comply with the CC&Rs and good business practices about the restaurant space study, letting only a couple of directors work on it, refusing to use an independent expert, too cozy with one bidder
  • Owner oversight committees – Refusing to allow appropriate owner oversight in areas where going to self-managed and changing legal counsel and debt collectors caused a high level of risk – personnel, compensation, legal services, insurance, investments; getting rid of the Golf Course Liaison Committee, the Communications Committee, and decimating Property & Grounds, making the GM the Board liaison to Pinnacle and other groups
  • Board agendas – Refusing to put my items on the Board’s open or executive session agenda as required by law, by Board policy equal to other directors
  • Secret meetings -meeting in secret without giving me or other owners the rights guaranteed by law or confining executive sessions to the four permissible topics
  • Excessive executive compensation – Refusing to conform to the law for access to data, to evaluate according to professional standards, or to fairly consider evidence to rebut the appropriateness of those salary levels; giving Tom Nissen excessive authority in this area and blocking me totally from it despite our differences in expertise or the appropriateness of substituting the judgment of ANY one director for the judgment of the Board; spending thousands on using the attorney to hide what her actual compensation is from the owners.
  • No GM performance standards – Not holding the GM accountable for meeting measurable, publicly-adopted performance standards
  • No management agreement – Violating SCA bylaws and failing to protect SCA by having no management agreement or even any written terms & conditions of employment. Although the GM is an AT-WILL EMPLOYEE, allowing her to usurp additional privilege to the detriment of SCA.
  • Unfair complaint process – Going beyond NOT having a customer-service rating system to aggressively attacking the 800+ owners who signed petitions and refusing to answer any of their complaints on their merits
  • Evicting FAS – The process for evicting the Foundation Assisting Seniors was flawed. They ordered me out of executive sessions. They did not act in the best interests of the homeowners. The GM was not held accountable for the failure. Civil action without required owner vote.
  • Debt collection process – Failing to do proper due diligence on debt collectors; refusing to evaluate the expensive, inhumane cost of collection for a more ocst-effective solution
  • Ill-advised recusal demand – Overreaching demand for me to recuse myself on ANY collection matter because SCA’s attorney/debt collector alleges there might be an “appearance of a conflict” for me, however remote, while ignoring the current attorney/debt collector’s obvious actual financial conflict and the fact that the last debt collector filed for chapter 7 bankruptcy without telling SCA and continued doing foreclosures by morphing into another LLC.
  • Bullying -On at least three occasions in executive sessions, using bullying, shunning, intimidation, threats and other demeaning and belittling marginalization tactics to try to make me conform with nonexistent policies or legal requirements
  • Failure to investigate – When problems are brought up, they are dismissed out of hand without conducting, or allowing, investigation on the merits
  • Inaccurate official records -Causing, or allowing the official SCA records to be corrupted and/or error-prone ALWAYS against the interests of homeowners and usually to protect individual members of the Board or management
  • Concealing SCA records from me alone, i.e., giving me incomplete executive session Board books, refusing to respond to ANY records requests
  • Abdication – Allowing the GM to use the association attorney as her personal attorney in violation of NRS and SCA bylaws
  • Election interference – Allowing the Board president, the GM, the CAM, David Berman, and the association attorney to interfere with the recall election process and to UNLAWFULLY COST OWNERS $90,000 BY STRIPPING THE VOLUNTEER ELECTION COMMITTEE OF THEIR CHARTER DUTIES to pay a CPA to do the EC’s job poorly.
  • Undue influence allowed – As it served the interests of the Board majority and management, David Berman, spokesperson for OSCAR, was allowed to have greater access to recall election information than I received as a director; he was allowed undue level of influence over the Election Committee to cut me out in retaliation for my attempting to protect the rights of the petitioners, including falsely accusing me what he himself was guilty of;  misrepresenting himself as an attorney; falsely accusing me of releasing “personal director correspondence” further defaming me by creating the false impression that I had released a legally privileged documents (absolutely not!)
  • Sanctions without notice or due process -Having meetings to sanction me without notice and to enforce policies that don’t exist
  • Unlawful orders issued by the attorney against me, e.g., cease & desist from representing myself as a director, or asking questions that I was not “authorized” to ask particularly regarding personnel and GM compensation
  • GM’s frivolous litigation threats – Allowing the GM to threaten to sue SCA for damages and to threaten me with personal liability; refusing to indemnify me as a director; falsely claiming I had violated my fiduciary duty without any evidence, a hearing or a finding
  • Misinterpretation of “employer liability” – Allowing the attorney to represent the interests of the GM over those of the homeowners. Accusing me of violating my fiduciary duty because I criticized the GM’s performance and because I requested a salary verification from her prior employer.
  • Abdication to attorney acting in the GM’s or his own interest -Telling me that the attorney had the authority to declare that I, as one of the seven directors, could be excluded from the right to vote on, or even know about, matters under the Board’s decision-making authority, unless he approved it (which in most cases, he has never approved to this day).
  • Abuse of privilege -Allowing the attorney to declare ANYTHING to be “attorney-client privileged” regardless of the lack of its meeting the legal definition of privilege in NRS 49 or NRS 116.31085.
  • Falsification of litigation reports -Allowing the attorneys to publish false statements in the litigation reports to increase the appearance of a conflict or to defame me and refusing to correct after evidence was provided.

It’s pretty obvious why I had to go

How SCA agents need to be exposed like Harvey Weinstein was

And not how he exposed himself…

Last night during the Oscars, the comment,

If you can’t trust your agents, who can you trust?”

got a big laugh. Everyone knew that powerful Harvey Weinstein was brought down after decades of abusing his power broker position, as in:

You’ll never work in this town again!

Such threats, spoken or not, had long been sufficient to keep his “casting couch” an open secret.

And to keep those who were being hurt from being heard.

Same agent, different result

But uncomfortable laughter also came from many who knew that agents abuse clients in other subtler ways, such as by not protecting all their clients equally well thereby enabling a discriminatory system to endure and making big bucks while doing it.

Kevin Spacey was disappeared from the shooting of “All the money in the World” after being accused of sexual assault by some young men he was supposed to be mentoring. Scenes were reshot to put Christopher Plummer in to replace Spacey as the lead actor. Mark Wahlberg and Michelle Williams went back to work to do their parts again, but they were far from treated equally. A vast difference in compensation was negotiated by the same agency both of the two actors:

Mark Wahlberg paid $1.5M for film reshoot that earned Michelle Williams $1,000.

Wow. That seems so obviously not okay now, but it the not-too-distant past, it might have passed by unnoticed.  At least, for now, #MeToo and #TimesUp have created a cultural shift. The pendulum has swung to a point where such a disparity is worthy of comment.

Let’s hope SCA is able to move to such an awakening in my lifetime, and homeowners don’t have to face abuse at the hands of SCA’s agents.

Am I saying that some of SCA’s agents have been abusive?

Yes, actually I am saying that. And I’m saying it needs to stop now. Time’s up.

And I’m also saying that the current SCA Board, the current SCA legal counsel/debt collector and the current General Manager need to stop protecting themselves and each other.

Their job is to protect us. Homeowners should not have to spend one thin dime to be protected from them.

Why I am speaking up

Many Hollywood women came forward to expose Harvey Weinstein after one spoke up. I hope my story will resonate with homeowners, not just in Sun City Anthem, but also with homeowners in HOAs throughout Nevada and will inspire others to not be silent.

Bottom line:
SCA agents have had their hands in our pockets.

SCA’s former agents, without any of the prior Boards feeling a thing,  slipped a house or two that didn’t belong to them into their pants pocket, and one of them was mine.
Note: I’m not saying anything bad about prior SCA Board members. Not a single one ever took a dime. I’m sure of it.  And I don’t think they were negligent. There was so much chaos after the real estate market collapsed in 2008, no one knew the difference. I certainly wouldn’t have known or cared had not one of those stolen houses been directly under my care. 

Who cares now? 

When SCA replaced Red Rock in mid-2015, SCA went from the frying pan into the fire by hiring attorneys, Alessi & Koenig, to be our debt collectors. Then when I showed the Board and GM how bad these guys were, they did the unthinkable and made it worse by hiring a new debt collector to also be SCA’s corporate counsel instead of re-thinking the whole process.

OMG! David Alessi wasn’t licensed as an attorney in Nevada, was named in litigation by 500 of the 800 HOA foreclosures A&K did from 2011 to 2015 when SCA hired them. By 2016, they had morphed into another sham corporation, HOA Lawyers Group, before SCA finally let them go.

And still, SCA managed to get strapped into even a worse deal by contracting with the Clarkson Law Group to be both the debt collectors and corporate counsel.

In a stunning opening act of abusive overreach, Clarkson protected his business interests as well as those of SCA’s former agents by ordering me to recuse myself as a new Board member from ALL SCA collection matters.

Then, to protect the GM, he restricted my access to any SCA records and continues blocking access to GM compensation data to this day. He protected the Board majority from recall and caused the members to pay $85,000 for a CPA to bungle it.

Next, he used his corporate counsel magic powers to create a technical sleight of hand to knock me off the Board on false charges without a trial.

I’m the only attorney in this room. We’re in charge here. Shut up and get out.

How HOA foreclosures take money from all our pockets will be the next topic

A recent study showed that every home in that HOA loses an average of 1.7% of its value when there is a foreclosure by that HOA.

Next time I’ll break it down for you. I think you’ll see why Adam Clarkson, SCA’s current debt collector/legal counsel, is going to such extremes to try to silence me.

 

 

 

 

Who gets to decide who is eligible to serve on the Board?

Who authorized the Clarkson Law Group to block me from running for the Board?

Not the law. Not NRED. Not the SCA Board. I believe Adam Clarkson and his whole Law Group should be re-trained to better understand who their client is. No Association attorney has legal decision-making authority to control who is eligible to sit on a Board of Directors.

Follow this link for a 2012 article by Barbara Holland, “HOA directors should be held accountable“, in which she noted:

The majority of the people who have been found guilty in the current FBI investigation of the massive Southern Nevada HOA scandal have been on boards of directors.

Holland argued that HOAs needed to be protected from fraud, but note her warning about the potential for abuse

There should also be some discussion as to whether a homeowner should be disqualified from being placed on the ballot when he or she is currently in violation of the community’s governing documents.
Now, this is a touchy subject as this proposed law would be used improperly by HOA boards that could try and block homeowners from sitting on the board.

Why didn’t Clarkson disclose his former employment to SCA when it could be perceived as a potential conflict?

Adam Clarkson’s resume submitted to SCA during the 2017 RFP process did not disclose where he practiced law after he passed the Nevada bar in 2006 until 2014 when he incorporated the Clarkson law Group. Last September, AnthemOpinions reported that Clarkson was had been an associate attorney for the firm of Quon, Bruce, Christiansen early in his career.

Law Partner Nancy Quon was a principal player in the HOA corruption scandal from 2008 until her suicide in 2012. The massive conspiracy involved rigging HOA board elections and taking over HOA boards to steer legal and construction defects contracts to specific firms.

Adam Clarkson was never charged with a crime or even accused of knowing of the conspiracy that purportedly was led by Nancy Quon, a partner in the law firm that employed him. However, given the job Clarkson was applying for, shouldn’t he have disclosed to SCA, that his prior employment “would appear to a reasonable person to result in a potential conflict” ? Shouldn’t he held to as high a standard of disclose as he is imposing on me?

When I went on the Board, Clarkson demanded  that I “voluntarily” relinquish some of my legal rights to “avoid even the slightest appearance of a conflict” by signing an agreement to recuse myself from ALL SCA collection matters . This demand far exceeds the conflict of interest requirements in NRS 116.31084 and NRS 82 and seems pretty self-serving.

In fact, forcing me to recuse myself from current SCA collection matters did not protect SCA or homeowners one iota since my quiet title claim is for unlawful acts by SCA’s former agent, FSR.Stripping my access to information about collections as a Board member, and now trying to prevent my getting back on the Board, appears to a reasonable person to only protected Clarkson’s interests.

Clarkson Law Group is both SCA’s general counsel and debt collector which in my book creates a potential conflict of interest. Oh yeah, one of the ways Clarkson justified deeming my board position vacant was saying  I “put matters before the Board from which (I) stand to make a profit” when I proposed to the Board that some remedies to my complaint of harassment and retaliation would be to:

So who has the greater appearance of a conflict – me or Clarkson?

Clarkson has overstepped his authority

I am not in violation of any governing documents. I am a member in good standing. I have no financial claims against SCA. SCA is still in the quiet title litigation only because they refused at least eight attempts on my part to resolve the issue without litigation and before I got on the Board.

Why have homeowners had to pay the Clarkson Law Group tens of thousands of dollars to:

  • order me to cease and desist asking about the GMs excessive compensation
  • falsely accuse me of making a profit on my Board position,
  • having undisclosed  or “potential” conflicts, c
  • reating “employer liability”?

Did the Board declare me ineligible to run?

Not the Board. There was no Board vote to declare me ineligible to run.
At least there was no agenda or notice of a Board meeting to take such a vote.

There is no provision in law, SCA governing documents or SCA Board policy that creates a mechanism for the Board to take such an action. Compare this Clarkson/Seddon edict that I am ineligible with the FBI Russia investigation:

Even if the FBI investigation produced a finding that Russia manipulated the vote enough to make Trump win the Electoral College, there is still no mechanism in law for the Attorney General to invalidate the election, declare Trump ineligible, or to put Hillary Clinton in Trump’s place.

So, absent action by the Board, who decided I was ineligible and on what legal authority?

The GM, probably just did the same thing she did when she wanted legal cover for interfering in the recall election and cost homeowners $84,866 unbudgeted dollars to hire a CPA to make sure the recall failed.

But, given how Clarkson has buffaloed the Board into thinking that an Association attorney has higher decision-making authority than an Association Board, Clarkson might just as easily taken this action on his own initiative.

But whichever one did it, he or she acted without legal authority. And the Board let him or her or them do it.

Clarkson and the GM have done a fair amount of monetary damage to the Association that they have fought like hell to keep you all from finding out about.

I’m just saying.

Don’t you think it is weird that the same attorney who insists that I am a financial threat to SCA is the same joker who charged SCA $39,635 in 2017 for legal fees just to write me threatening letters and to help the GM threaten to sue SCA if the Board didn’t stop me from asking questions about her pay.

And it didn’t end. Clarkson sent me letter last month demanding that I  stop asking for SCA records that the law says are available to any owner. He sent another one to the KTNV keep Sandy Seddon’s pay confidential to protect her privacy. All SCA owners will have to pay $325/hour for these letters and for Clarkson to handle the NRED complaint. See a pattern?

Why is it a problem for the Board to act only “on the advice of counsel”?

Opportunity Costs – What owners had to give up to pay attorneys

A lot of it is unnecessary. A lot of it is by creating conflict, and common sense remedies are rebuffed. No effort to do best practices is rewarded when attorneys work on the principle of using the legal minimum as legal restraints.

This is the same guy that advised the Board that it was somehow magically exempt from black letter law in NRS 116 on such trivial matters as freedom of information and owner rights to know how their money is being spent.

This is same guy who says the GM can spend money that isn’t budgeted on her own initiative without measuring the opportunity cost to owner services where those funds were supposed to be spent. I personally would have much rather SCA spent some of the money that was wasted on attorney fees on

  • a better sound system for group exercise classrooms or
  • better pay for the fitness instructors or
  • enough funding to not cancel exercise classes.

This is the same guy who had no trouble with SCA’s 2017 expenditure for legal services that was triple the already ample $90,000 budget.

Really, in 2017, this Board expended 300% of what prior Boards needed to govern responsibly. Of course, those other Boards didn’t have a legal counsel who told them it was a violation of their fiduciary duty to make any decision without the approval of the attorney.

This same crackerjack attorney told me it would be considered practicing law without a license if I told people they didn’t need a legal opinion every time someone blew their nose.

My commitment is to owners

Whether I get on the Board or not, I will fight for Board action to

1) prevent the overuse of attorneys,
2) prohibit the GM from using the attorney as her personal counsel against the association or individuals or groups,
3) require the Board policy manual section 4.10 be rigorously followed,
4) prohibit the use of attorneys in debt collection  prior to foreclosure,
5) use foreclosure as a last resort and not ever to benefit the debt collector over the homeowners,
6) to get the NRED or CIC Commission to rule that any fines or monetary damages come out of the attorney’s pocket so that he not be paid for causing the Board to violate owner protection laws and that he not be paid for the unlawful, abusive and threatening letters he sent me both during and after my time on the Board.

What’s the big picture statewide?

This interference in HOA elections is a much bigger issue than what happens to me. It affects every HOA in Nevada. The Clarkson Law Group claims to represent 300+ associations in Nevada, an amazing career trajectory for  firm that incorporated only three years ago. Adam Clarkson is the President-elect of the Nevada Community Associations Institute, a lobbying group geared primarily to serve the interests of the HOA agents – attorneys, managers, debt collectors, construction defect-related agents. CAI is NOT a homeowner advocacy group.

If Clarkson is allowed to get away with influencing the composition of the SCA Board for his or the GM’s profit or to support the political advantage of compliant and docile Directors, he could do it anywhere.

In fact, I bet he already has.

 

.

The house that took over a life

Six years ago today my fiance Bruce died, leaving me to deal with an underwater house that has consumed many of my waking hours to this day.

The story of this house, the source of so much aggravation, is the poster child for how homeowners and HOAs have been victimized by banks, debt collectors, managers and attorneys in the aftermath of the housing market crash a decade ago.

Long story short starts with the banks

  • Housing market crashed.
  • Bruce died at the bottom of the market.
  • He left a trust with one asset – an underwater house.
  • The banks would not refinance it nor approve any short sale.
First plot twist

In the vast majority of the legal battles over an HOA foreclosure, the homeowner is gone before the fight.  The homeowner doesn’t fight if the delinquent debtor was a deadbeat, debilitated by debt, or died.

I am not a deadbeat, or even the debtor, nor debilitated nor dead.

I am a fiduciary, fighting for the rights of Bruce’s trust.

Back to the bank….
  • After B of A botched several sales, I refused to keep paying maintenance costs, such as HOA assessments and utilities.
  • B of A took possession but would not take title and did not foreclose nor accept a deed in lieu offer from me.
  • Nationstar took over servicing from B of A, but Nationstar’s investor also refused to close any deal no matter how good the offer was.
Enter SCA agents to try to beat the bank
  • Story continues for a couple of years.with SCA agents starting and stopping, scheduling and then withdrawing a threatened  foreclosure for delinquent assessments
  • B of A tendered the super-priority portion of delinquent SCA assessments, but SCA’s agents (FSR and Red Rock Financial Services) refused to accept less than their version of full payment – very similar to the $55,000 Citibank settlement Rex reported out from the December 7 Board meeting.
  • After SCA’s agents cancelled the foreclosure sale multiple times, they sold it in 2014 to a Realtor for 18% of its value, $63,100 without ANY notice to me, my agent, or the bank. This Realtor worked in the Berkshire-Hathaway office where my listing agent worked.
Unbeknownst to the SCA Board, its agents were secretly working for themselves
  • SCA’s agents told the Ombudsman that the sale was cancelled, but then secretly held the sale anyway and did not EVER report to the Ombudsman that a foreclosure sale had occurred.
  • After the surprise sale in 2014, SCA agents credited SCA with only $2,700 of the $63,100 sale proceeds as payment in full, and SCA agents unlawfully kept the $60,400 balance.
  • FSR did not ever report in HOA records that the house was sold to the Realtor, or that the Realtor ever paid any assessment enhancement fees or new owner fees.
  • HOA records (created by FSR) are in direct conflict with recorded documents and show that a dentist took possession after the foreclosure, not the Realtor named on the foreclosure deed created by FSR.
  • There are two recorded title changes in the county records that do not exist in SCA’s records for which FSR has some explaining to do.

SCA is in, but can’t win

Three lawsuits to quiet title from 2015 to the present have thousands of pages of documents filed.

SCA is in the middle of this complex litigation even though there is nothing SCA can win and where there is nothing to lose but attorney fees.

Lawsuit 1

The dentist who currently has possession of Bruce’s house sued SCA and B of A for quiet title in 2015.

Records conflict about when the dentist took possession of Bruce’s house. It was either in 2014 after SCA agents foreclosed (which is what SCA records say), or he took possession in 2015 when he recorded a fraudulent quit claim deed (which is what County records say).

The court issued a judgment of default against B of A who did not respond to the summons. SCA was still in the lawsuit because the dentist inexplicably never served SCA a notice to appear.

Lawsuit 2

In 2016 Nationstar sued the Realtor who held the foreclosure deed, but then found out about lawsuit 1.

Nationstar took B of A’s place in the lawsuit. even though neither bank is owed any money from the mortgage.

Lawsuit 3

On behalf of Bruce’s trust, I sued all parties in 2017 to claim the title should be returned to Bruce’s trust because the foreclosure sale was conducted unlawfully in SCA’s name by SCA agents.

The dispute over the title to Bruce’s house is between me, the dentist, and the bank.

SCA has no financial interest in the title and was already paid in full for delinquent assessments in 2014.

Why is SCA being sued for its agents’misconduct?

SCA’s former agents foreclosed under SCA’s  statutory authority.

SCA is responsible for its agents, and the SCA Board is responsible for ensuring that its agents act lawfully.

SCA Board President Rex and SCA’s current agents refused to negotiate or do anything whatsoever to attempt resolution without litigation.

SCA could have gotten out of the litigation without cost by simply stating that the Board did not authorize SCA’ former agents to conduct the foreclosure sale unlawfully and affirming that no current or former Board member profited from the non-compliant sale.

How does this all relate to the big picture of protecting homeowners from being forced to pay for agents’ misconduct?

What happened to Bruce’s house has happened a thousand times in Nevada in the last decade.

After getting rid of FSR, SCA jumped from the frying pan into the fire and hired Alessi & Koenig in 2015 to be SCA’s debt collector attorneys without noticing that they had been sued in 500 of 800 HOA foreclosures they conducted between 2011-2015.

The situation worsened when Alessi & Koenig hid their assets from creditors, dissolved their corporation and morphed into HOA Lawyers Group. SCA continued to use HOA Lawyers Group after they were put on notice of the fraudulent scheme.

The downward spiral in how SCA handles debt collections continues to this day by contracting with the Clarkson Law Group despite their unethical practices designed to prevent these problems from being disclosed to the membership.

A 2017 UNLV/Association of Realtors study showed that HOA foreclosures have cost the real estate market $1 billion due to the approximately 700 cases they identified  Clark and Washoe Counties alone between 2013 and early 2016.

HOA Boards statewide have been duped (like SCA Board has been) into facilitating this major rip-off contrary to the financial interests of the associations and their members.

Next time:

The high price of protection
Analysis of the UNLV study estimating $1 billion property value loss due to HOA foreclosures in Clark and Washoe Counties alone.

Rating Rex’s Self-Management Report Card

Demonstrating all the transparency and humility we have come to expect from our supreme leader, Rex Weddle once again used SCA’s official house organ, the Spirit, to stroke the ego of the Board and GM by giving a glowing Self-management Report  Card. Although Rex didn’t give any letter grades, let’s fact-check his assertions of outstanding performance, and I’ll offer the letter grade I think is warranted:

SCA made the right decision to be self managed.

True. The former Boards’ grade should be a B for taking action based on specific plans and goals to correct deficiencies.
The current Board should get an F for failing to follow through on good work done by prior Boards.

SCA’s management company FSR needed to be replaced, but for more reasons than either Board acknowledges. FSR was double dealing by being both the managing agent and the debt collector following the collapse of the real estate market.

Even with a solid management agreement, previous Boards did not keep FSR from grabbing profits from abusive collection practices. Prior Boards were unaware of the negative impact these abuses had on owners’ property values. Their attention was overly focused on deterioration of property values caused by excessive deferred maintenance of the common areas.

The current Board has also over-emphasized catching up on deferred maintenance, and has not held itself or the GM accountable for other critical areas (customer service, owner relations, transparent communications, fair and open culture, strategic planning, protection of individual property values, and maintenance of high quality amenities and other lifestyle options). Ultimately, this Board has a failing grade because their lack of accountability to owners is supported by paying an attorney to say that the rules don’t apply to them.

According to Rex, a Human Resources model was included as part of the transition.

False. This Board scores an unequivocal F.

Adequate human resource systems are not in place needed to protect SCA from “employer liability”. It is a disgrace that since 2015, the GM has not presented ANY plans or timetables for developing these internal controls or for incorporating essential expert owner oversight. The most important feature of transitioning to self-management is that SCA is now an employer. This failure has already resulted in:

  • excessive management compensation (the GM gets $100,000+ more than the market requires and three other managers annually take in more than a quarter million dollars more than SCA should be paying);
  • lack of performance standards (GM bonuses provided without justification despite massive owner dissatisfaction with her performance);
  • lack of contractual service level expectations (they remain undefined and unmeasured);
  • lack of written terms and conditions controlling GM employment (no management agreement makes her an “at-will employee” who is subject to the SCA Personnel Handbook. Unfortunately for SCA owners, SCA’s attorney has fabricated imaginary“rights” for her that she has asserted against SCA in threats of frivolous litigation and that allow her to act like a “super Board member” rather than as staff).

No 2018 assessment increase.

True, but the grade is still D.

Assessments were increased without clear justification in 2017, and those excess funds have been repeatedly used as validation of the quality of self-management. But, many questions remain unanswered:

  • Why were rates increased in 2017 if $300,000 in budgeted transition costs were saved by reducing the 9 of the 12-month budgeted overlap of the GM and FSR?
  • Why was a 12-month overlap of the GM and FSR budgeted anyway?
  • Why was the entire 2017 rate increase transferred to reserves? If the assessment increase was intended to reserve for walls & fences, what happened to the construction defects settlement for the walls if there was no remediation of the defects?
  • Was the 2017 increase intended to bring up the reserves funding level? If so, that has nothing to do with the difference in operating costs between using a management company and being self managed.
  • Was it for the Liberty Center? If so, why was it not a one-time assessment?

Whatever the reason the 2017 assessments were increased by over 10%, it can’t be ignored while the Board congratulates itself and the GM for not having another assessment increase in 2018.

Per Rex, Tom Nissen’s December Board report comparing SCA to other self-managed HOAs, shows the transition is going well.

False. The grade is D.

Tom should be given credit for researching other HOAs, but should be given no credit for answering the wrong question and deserves no credit for  timeliness and no credit for owner participation.

Tom’s report simply reaffirms that going to self-management was the correct thing to do. It might also support the idea that it was good that the Board adopted a policy to increase the reserves by increasing assessments in 2017. Regardless, neither of these have anything to do with whether the Board and the GM are doing a good job in the transition to self-management.

Showing that SCA’s assessments are relatively low says nothing about cost-effectiveness or about any differences between using a management agent and being self managed. Further, comparing assessments with other HOAs is not really informative unless you eliminate all gated communities from the comparison.

“The Board has made it clear that the complete transition would take a minimum of three years. There is still much to do and more culture change to undergo.” -Rex

True, and yet, the grade is still a big, fat F.

If there is another 1 ½ years to complete the transition, what specifically is planned?

  • Why are there no written plans and timetables?
  • Why is there no transparency and no standards for GM accountability?
  • Why is this Board resisting the necessary culture change by treating owners who are even mildly critical of the Board or GM with such disdain?
  • Why has the Board strenuously rejected developing the committee structure needed to provide expert owner oversight over HR, legal services, insurance and other amenities that has been successful in other self-managed HOAs?
  • What steps has the Board or GM taken to change SCA’s culture to be more inclusive, fair and transparent?
  • What steps has the Board taken to ensure that SCA owners won’t be taken advantage of by unscrupulous agents?

The transition to self-management is very successful in handling deferred maintenance.

True. The grade could be an A, but since there is no transparency, no way of measuring cost effectiveness, and no standard for defining priorities, I can’t be that generous. But remember, no matter how well this portion of property management is done, the grade for it should count only as about 25% of an overall grade for a successful transition to self management, not be given the nearly 100% weight the Board has given it. 

December 7 Board meeting: Part 4 Penny wise, pound foolish

SCA agreed to pay $55,000 to settle dispute over $4,400 delinquent dues

In his President’s report, Rex reported the Release and Settlement of A-14-702071-C.  SCA agreed to pay Citi Mortgage  $55,000 as full and final settlement of all claims in a case where the homeowner defaulted and so the fight was between SCA and a bank. This is an example of how the Board is very wasteful by not avoiding problems or solving them when they are small. The excessive use of attorneys is a core failing of this Board under Rex.

Rex stated that Citi insisted on confidentiality and so he could not comment further. I seriously doubt that because what I’m going to tell you is in the public record. I happen to be familiar with this case from before I went on the Board. I learned nothing about it as a Board member because I was forced to recuse myself from ANY SCA collection matter “so as to prevent even the appearance of impropriety” regardless of whether it had any bearing on my quiet title case whatsoever.

Long story short.

In 2014, SCA’s agent RRFS refused to accept Citi ’s tender of the $825 super-priority portion of SCA’s lien for delinquent assessments claiming it was less than the full super-priority amount due. After four years of nonpayment of assessments ($275/quarter x 16 quarters = $4,400), RRFS claimed Citi owed $17,591.81. Citi paid it under protest, and RRFS cancelled the SCA foreclosure sale. Citi filed to get $16,766.81 back from RRFS that the NV Supreme Court said it was unlawful to force Citi to pay more than $825, the amount that has “super-priority” over the bank’s loan.

The Court ruled in Citi ’s favor against SCA, a year ago, stating:

…(SCA’s) position ignores the question presented in this action, whether a homeowners’ association can force a first-security lienholder, or agent acting on its behalf, to satisfy the entirety of its lien, rather than pay the super-priority piece to protect its secured interest. The Court concludes it cannot.

Even though this overcharging was done by SCA’s former agent’s, SCA was on the hook for it since RRFS was acting on SCA’s behalf. I don’t know why SCA even stayed in the fight. Why didn’t they make RRFS pay it and get out of the litigation years ago? Anyway, SCA deposited $5,000 with the court last December toward the $16,766.81 the Court ordered SCA to pay Citi . Then,  Citi demanded $51,000+ in attorney fees and court costs.

Bottom line:

SCA owners are on the hook for $55,000 to settle with a bank over the misdeeds SCA’s former agent in collecting delinquent assessments of less than $5,000.

  • Wouldn’t writing off $3,575 in delinquent assessments have made more sense?
  • Or even better, shouldn’t SCA handle assessment collection in house rather than being on the hook for the wrongdoing of unscrupulous attorneys and debt collectors?
  • Can you see any risk SCA homeowners face by my telling you about all this?
  • Can you see any way I would profit by sharing this information with owners?

I guess you can see that the real risk is to the attorney’s profits. That’s why attorney Clarkson (SCA’s current legal counsel and debt collector) insisted that I be forced to recuse myself from all SCA collection issues even if they are not remotely connected to my quiet title action. 

Cost of collections and fraud by SCA agents are other reasons SCA needs to be (better) self-managed.

Here is another reason SCA needed to go to self-management that Tom didn’t mention and probably isn’t even aware of. FSR was actually unfairly profiting from failing to pay SCA asset enhancement fees and new owner set up fees when there was a foreclosure. This happened twice with my late fiance’s house so it’s a better than even bet that this scam was done when other houses were snatched for a few dollars of delinquent assessments.

October Financial Report

This issue is also connected to a good reason why SCA needs to be self-managed, but also needs to have better control over its agents and managers.

The CFO reported that the revenue from Asset Enhancement Fees are $103,268 over budget. SCA gets 1/3 of 1% of the sale price when a home is sold, and other fees associated with home sales are up a similar amount. This is due to an increase in the number of sales reported to SCA which is, in small part, due to SCA’s former agents not crediting SCA with these fees upon sale of foreclosed properties. Title to my late fiance’s house was transferred three times in country property records, and FSR twice failed to record that SCA was paid any of those fees as if two of those three sales never happened. Those two incidences can’t be the only times that SCA was shorted fees due to us.

I mention this not just because it’s something nobody else would notice, but SCA’s way of handling collections is flawed and when I offered evidence of it, I was seriously and wrongfully attacked. I reported this problem to Lori Martin and Rex Weddle before I decided to run for the Board and they refused to even talk to me about it, let alone assess the degree of loss to SCA. I included it in my court filings in the quiet title case, and our current attorney (who is also SCA’s debt collector) used it as a bogus justification for kicking me off the Board (putting matters before the Board from which I could make a profit) rather than looking at how SCA was getting ripped off by our agents who are supposed to be fiduciaries.

CFO Jim also reported that there are 45 cases in collections with $77,000 outstanding. This is a small amount, a fraction of the nearly $9 million in annual assessment revenue, but it is a completely unsatisfactory level of accounting and reporting to prevent problems. This level of Board control/owner oversight is insufficient to prevent possible mismanagement, theft or fraud by SCA agents.

Turning collections over to attorneys when there is only a budgeted projection of having to write off $12,000 in 2018 is a gross waste of money. It is truly fighting fire with Napalm, and then making owners pay for all the collateral damage.