What happens when a city’s entire real estate market collapses, leaving only vultures behind?
A big, nasty fight ensues for the scraps.
Las Vegas, synonymous with gambling and vice, now has a new reputation: it’s the city where the housing bubble burst most spectacularly. One in 28 homes in Las Vegas were foreclosed upon in the first quarter of 2010, giving the city the highest foreclosure rate in the nation—one that is five times the national average, according to the Las Vegas Sun newspaper. The city now has one of the highest home vacancy rates in the nation, second only to Detroit, according to the U.S. Census Bureau.
That leaves few regular people buying houses in Las Vegas. Instead, the vast majority of home sales there involve investors looking to buy when the market is low and then sell at a profit, says Bill Uffelman, president of the Nevada Bankers Association.
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That normally simple process is made complicated by Nevada’s unique and vague real estate laws, which say that homeowner associations are entitled to nine months’ worth of unpaid fees after a home goes into foreclosure. The home’s new owner would be responsible for paying the HOA fees.
Does the law also force these new homeowners to pay collections agencies fees they incurred while trying to collect the unpaid debts, efforts that may have stretched back years before a home has gone into foreclosure?
Of course it does! That, at least, is what the collection companies say.
“These real estate speculators want to come in and make their profits and leave the neighbors paying all the bills,” says David Stone, president of Nevada Association Services, a collection company that serves only HOAs. “That’s not right, and the law recognizes that.”
Of course it doesn’t! Or so say the investors, who are left to pay the fees, which add up to millions of dollars a year.
“The law is very clear,” says James Adams, an attorney and one of the investors involved in the fight. “If these collection agents want homebuyers to pay their fees, they are more than welcome to go to the legislature like anybody else and ask that the law be changed.”
Ever since it started last summer, the fight has been nasty and personal. Each side accuses the other of being heartless, money-grubbing jerks that are abusing the legal system and hurting regular homeowners.
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“They’re filing all these lawsuits, and it’s all nonsense,” Stone says of investors. “These people just want to make millions of dollars while everybody else suffers.”
“They’re breaking the law, and they know it,” Adams counters.
In fact, their mutual vitriol and antipathy might be the only thing the two sides share.
Las Vegas, A Strange Place to Build a House »
Image by bbcworldservice,via Flickr
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