I-Team: Homeowners Hammered with HOA Arbitration Fees - 8 News NOW

Investigative Reporter Colleen McCarty and Photojournalist Kyle Zuelke

I-Team: Homeowners Hammered with HOA Arbitration Fees

Posted: Updated:

LAS VEGAS - The upside down flag outside 2405 Windjammer Way signals the distress of the homeowner within.

Jonathan Friedrich is engaged in suburban warfare with his homeowners association at Rancho Bel Air. "I'm not about to let a bunch of irresponsible people run me out of town," Friedrich said. "I will stand and fight." The self-styled consumer advocate boasts about his frequent complaints against the HOA, including a recent appearance before a District Court judge. "This is what this case has generated. I kid you not," Friedrich said.

In July of last year, a dispute over a budget ratification meeting went to non-binding arbitration under the Nevada Real Estate Division. It's a mandatory first step before going to court. Friedrich lost, and to the victor went the spoils. He was ordered to pay $22,000 in arbitration and attorneys fees. "I was expecting the worst, and the worst came true," he said.

Friedrich responded with a lawsuit challenging the arbitrator's authority to impose attorney's fees. It is a common practice among arbitrators selected by the Real Estate Division. Records obtained by the I-Team reveal a dozen recent awards in excess of $10,000 against homeowners. Some awards were as high as $20,000.

Robert Sullivan is Friedrich's attorney. "It's a trap for the unwary," Sullivan said. "That has a chilling effect on any homeowner that would bring a case. What homeowner can afford, on a simple issue with their homeowners association, can afford to risk essentially the cost of a new car, a nice new car, on this issue?" 

Sullivan argues the system is broken due in large part to the division's refusal to regulate it. But, Real Estate Division education officer Nicholas Haley explains that's not their job. "The role of the division is to help you process the claim," Haley said. "From there, it's an NRS-38 issue, and it's in the arbitrators' hands."

That lack of oversight, according to Sullivan, has prompted abuse. He says it has created a cozy relationship between the arbitrators and the HOA attorneys to the detriment of homeowners. "The percentage of these decisions that go against the homeowner speaks for itself, that the homeowner is not getting a fair shake," Sullivan said. "The pattern is so heavily favoring the HOAs, that you have to… even a skeptical person would be persuaded to think something is wrong with the system." So far this fiscal year, according to the Real Estate Division, 85% of arbitrations were decided in favor of the HOA. Friedrich's case is among them.

"The arbitrators love it. The HOA attorneys love it. It's a cash cow. It's just ca-ching, ca-ching, ca-ching," Friedrich said. He considers his expense an investment in justice, a chance to re-hang his flag in peace.

The arbitrator and the original HOA attorney in this case deny any wrongdoing. The attorney points to Friedrich as a significant contributor to the cost of the arbitration. The attorney also notes in his legal filings that Friedrich is a vexatious litigator who is targeting the HOA in bad faith. The case is now before a judge.

Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and KLAS. All Rights Reserved.
For more information on this site, please read our Privacy Policy and Terms of Service.