A big player in the Las Vegas residential real estate market has filed a lawsuit claiming it’s being blackmailed by a major title insurance company in a dispute over foreclosures.
The suit was filed in Clark County District Court this week by Nevada Association Services Inc., a big debt collector for homeowner associations, against First American Title Insurance Co. At issue is a dispute over payments for foreclosure services First American Title provides to NAS.
NAS noted in its lawsuit that part of its business involves pursuing foreclosures against homeowners over unpaid HOA assessments. NAS is also known for making sure HOAs get paid for past-due assessments when abandoned foreclosed homes are sold to investors or other parties.
In pursuing such foreclosures, NAS has contracted with First American for the title company to provide "Trustee Sale Guarantee" insurance as well as information needed to complete foreclosures.
That information includes the identity of the titleholder and the names and addresses of banks and anyone else formally seeking copies of notices of default and notices of sale.
NAS claims that, for several years, First American was paid for its services when the outstanding debt was paid by the delinquent property owner, when the property was sold or when NAS terminated its collection efforts.
In October, First American and its affiliates notified NAS they would require a different payment schedule for future foreclosures, the lawsuit says.
"While they proposed a new written agreement as to future foreclosures, they also have attempted to blackmail plaintiff by stating they would not provide (information) on pending foreclosures unless and until NAS paid all charges previously incurred on all pending foreclosures," the suit says. "The number of pending foreclosures that NAS is handling with defendants is in the many hundreds, if not thousands."
The blackmail allegation is akin to a claim that an auto repair shop is demanding payment for work in progress, and is refusing to turn the car over to the owner or complete the repairs until it's paid.
NAS contends First American committed a breach of contract. The company is seeking punitive damages and an injunction requiring First American to immediately provide the data to prevent further "disruptions and complications in the foreclosure process."
NAS says in the suit that if First American doesn’t provide the information concerning pending foreclosures, it faces problems because other title companies it does business with don’t want to get involved in the foreclosures First American is already involved with.
"Plaintiff will suffer irreparable harm, including significant disruptions and complications in the foreclosure process" and there will be disruptions to the operations of many HOAs "who may be delayed or denied the funds they need to operate," the suit says.
A request for comment was placed with First American, which is part of New York Stock Exchange-listed First American Financial Corp., of Santa Ana, Calif.