HOA board hires management company

Q: Is it not up to the residents to change management companies and decide who they want; not the board?

We finally fired our community manager, and the board decided on a new one. But us residents thought we should be involved. I know you are usually behind the management companies but as a homeowner do we have no choice?

A: No. The selection of a management company is made by the board of directors. Many associations have search committees where the members of the committee consist of board members and interested homeowners. But this is not required. Other associations survey their members or allow members to make comments and suggestions at board meetings prior to sending out the request for bids.

Q: My question is: Can a board vote to make a policy that allows purchases or services at a cost up to $500 with the approval of only one board member and not require the majority of board members to submit a written approval as required by Nevada Revised Statutes 82.271(2).

A: Under NRS 116.31083, board actions and decisions should be made at a board meeting where proper notice of the meeting has been sent to the homeowners. Under subsection 6 of this law, in an emergency, the board may take action on an item which is not listed on the agenda. Subsection 13 defines “emergency” as any occurrence or combination of occurrences that could not have been reasonably foreseen, or affects the health, welfare and safety of the unit owners or residents of the association, or requires immediate attention of and possible action by the board or makes it impracticable to comply with the provisions of subsections 2, 3 (notifications) or 6.

There are associations where either their covenants, conditions and restrictions or bylaws allow the board to take action without a meeting with some percentage, usually a majority, but I have seen cases where it must be unanimous, as long as there is written consent by the directors.

You refer to NRS 82.271 (2), which states the following: Unless otherwise restricted by the articles or bylaws, any action required or permitted to be taken at any meeting of the board of directors or the delegates, or of any committee thereof may be taken without a meeting if, before or after the action, a written consent thereto is signed by a majority of the board of directors or the delegates or of such committee. If the vote of a different proportion of the directors or delegates is required for an action, then the different proportion of written consents is required.

In your case, the board did vote to allow the one board member to make purchases or services up to $500. This is not unusual. Many associations vote to allow a director or the community manager to make purchases up to a certain amount, especially those purchases pertaining to maintenance issues of the association, which can be more efficient in resolving the issues.

If a director or manager made inappropriate purchases for their personal use, there obviously would be consequences. Directors, and specifically, the treasurer have an obligation to review their financial reports on a monthly basis. Inappropriate expenses should be caught.

Under NRS 116.31153, (2-3), money in the operating account may not be withdrawn without the signature of at least one member of the board, or one officer of the association and a member of the board. Now, there are exceptions to this law that allows electronic payments, such as transfers to the reserve account, automatic payments to utilities, etc. In 2023, the Legislature passed Assembly Bill 309, which now allows auto pay for all recurring payments.

Barbara Holland, CPM, CMCA, is an author, educator and expert witness on real estate issues pertaining to management and brokerage. Questions may be sent to holland744o@gmail.com.