Large institutions stiff associations on dues

     By Barbara Holland, CPM
      Q. Our board is running into several problems with mortgage companies that take over liened properties and later sell them without satisfying the liens. We believed that when a lien was placed on a property, it had to be paid before the property could be sold with clear title. Why are they selling it without clear title?
      Also, why does the U.S. Department of Housing and Urban Development wait so long before foreclosing on a property when the owners have not paid their mortgage or dues? We have one property where the owner did not pay his mortgage or dues for five years. HUD never paid the dues and the unit was sold. We foreclosed on the property, had the deed placed in the association's name, and the property was sold without the lien being satisfied.
      We need to know what we are doing wrong, if anything, and how to correct this flaw in the system.
      A. You are not the only ones frustrated by mortgage companies, and state and federal agencies that constantly ignore the rights of associations to collect dues. It is simply outrageous how long a board or a management company must take and the merry-go-round chase that these organizations make in complicating the collection process.
      First, NRS 116.3116.2c allows the association to collect at least six months of dues from the point of ownership by any third party who now owns the delinquent unit and who had a security interest in the property. For example, let's say an owner is delinquent in his $100 monthly payment and now owns the association $1,200. If the unit is foreclosed and the lending institution or state or federal agency now owns the unit, the association can only collect the last six months of dues, or $600. To collect on the balance would require legal action against the former owner.
      Many mortgage companies that foreclose and receive notices of delinquent dues simply ignore them. The association may initiate a foreclosure against the lending institution (including HUD), which obviously takes time and money, and ultimately hurts the association financially because it is not receiving the necessary cash flow to operate properly. Formal complaints against lenders can be filed with the state Department of Business & Industry, Financial Division.
      One problem is the organizational structure of lending institutions. The division that forecloses is not always the division that is responsible for sales or payment of dues. Often, a mortgage company can sell the loan to a second company, or to the state or federal agency that guaranteed the loan. This can make it difficult to track down the owner to serve notice of foreclosure.
      For difficulties with HUD or other government agencies, contact your congressman. They should be aware of the problem and able to tell you who to contact at those agencies. For complaints against state agencies that have taken ownership of the home, file a complaint with the governor.
      A lien does give you statutory rights as to the ability of one party to transfer title to another. If those rights are ignored, the party that transferred the property can be sued as well as the third party, since the title is not clean. Unfortunately, some companies and government agencies don't believe the law applies to them.
      Questions for Barbara Holland may be sent to Association Q. & A., P.O. Box 7440, Las Vegas, NV 89125. Her fax number is 385-3759.
      Barbara Holland, Certified Property Manager, is president and co-owner of H&L Realty and Management Co. She is a member of the Institute of Real Estate Management and is the author of two books on the subject. Holland is a past president of the Greater Las Vegas Association of Realtors.