HOA board members who do repairs create liability issues

Q: Have you written any articles regarding any statute language or simply listing reasons why board members should not do work, such as painting or simple maintenance repairs to the community? I am reaching out to the current insurance provider to get their opinion.

A: There are many reasons why board members should not perform maintenance in their community. It is a conflict of interest if the board member is paid for his services and is against Nevada Revised Statute 116.31187. To perform most maintenance and refurbishing work requires a specific contractor’s license, depending upon the job. Your board member and, consequently, your association would be violating the various local and state laws. That would be regardless of whether the board member was paid or not.

I have asked Mark Coolman, vice president of NFP Property and Casualty Services, to comment from an insurance view point. Many of you in our profession know Mark, who also teaches a variety of insurance seminars for the community managers. Here is his comments:

Associations are businesses with a main purpose: to preserve and increase property values. One way to do that is to keep future costs in check by providing prudent management. All associations should use licensed and insured contractors to perform necessary repairs and maintenance of homeowners association property. Employees trained to perform repairs needed are less likely to experience an accident or injury while working. Fewer accidents keep future insurance costs lower. A contractor is trained to follow OSHA (Occupational Safety and Health Administration) laws and regulations. Board members and volunteers may or may not have the necessary expertise to complete a task for the association. A board member repainting a fence may slip and injure himself. Faced with medical bills and loss of income he may make a claim against the association. My experience is that the association’s general liability carrier will reject the claim due to the workers comp exclusion. The insurance company’s position will be the act of what should be done by an employee. If the association does not have workers comp in place the association will have to pay the costs to defend, and any money owed the injured member. If they have workers comp the medical bills and rehabilitation costs should be covered but this is on payroll so lost income will not. Leaving the association to pay those costs. A head injury from a fall can easily end up a $500,000 claim. Then, because claims have been made, the future cost of insurance is increased. If contractors are used that have proper insurance and contracts include indemnity and transfer of risk clauses these liability issues are handled by the contractor not the association. So, it is important that the contractors used have properly vented so the risk is transferred.

Q: We live in Sparks, but happened across one of your articles. We thought you might be able to point us in the right direction for the following issue:

We would like to xeriscape our front lawn. We read the article about an HOA ordering xeriscape be removed in Utah.

Our application to xeriscape our rental property was denied even though our primary residence in the same subdivision was approved and was xeriscaped in 2017.

We are both in our mid-70s. We were one of the first homebuyers in (the community), and have lived here since 2004. We applied to the HOA Architectural Review Committee to xeriscape the front yard of our rental property in the fall of last year. We were turned down. They would only allow 30 percent of the sod removed. We believe this is an “arbitrary and capricious” rule and violates NRS 116.330. We asked for a hearing, which they granted more than three months later. It was virtual. They turned us down again.

We understand that we can go through the Nevada Ombudsman to report what we believe to be actions by our HOA president that violate state statutes. However, we don’t think it’s fair that homeowners should pay for lawyer fees that the president will demand to defend his position. It would cost him nothing to fight us.

We also know that homeowners could vote this president out of office. But getting volunteers to serve on our three-member HOA board has been difficult. Hence, he is elected unopposed. Apparently, this is not unusual in Nevada. We know this because my husband, Rob, was the first president of the board and served for many years.

We are members of two homeowners associations. The only reason our 62-home subdivision has a separate HOA is because the roads are narrow and do not conform to the Sparks’ regulations — an issue for another time.

(Since) we applied for xeriscaping last fall, (one board member has died, one moved and the third was a former president and now the current president). At the time of our hearing, we were unaware that two new board members had been appointed. (Neither of them applied or served on the board before.)

As you know, xeriscape is expensive. We will not be able to recoup our investment. However, we think it is the right thing to do, given Nevada is the most arid state in the nation, as you know. Only being allowed to remove 30 percent of the sod, not only makes no sense, but the conversion costs more as does maintenance. We would like to remove all the sod, as we did (in 2017) for the front yard in our primary home, just eight doors down from our rental.

A: My recommendation is for you to report your issue with the Ombudsman. They can investigate on your behalf. There is no fee involved. Under NRS 116.330 (1b), it states that the provisions are to be construed liberally in favor of effectuating the purpose of encouraging the use of drought-tolerant landscaping. The board shall not unreasonably deny or withhold approval for the installation. The board cannot unreasonably determine the drought-tolerant landscaping is not compatible with the style of the community.

File a complaint with the Nevada Real Estate Division and provide them with the appropriate documentation.

Barbara Holland is an author and educator on real estate management. Questions may be sent to holland744o@gmail.com.