Inexperienced HOA board can cause damage
Q: We purchased a home in a community roughly seven years ago and were satisfied up until earlier this year.
The association attorney is a friend or distant relative of a board member. In a recent decision he advised a few of them that in an emergency situation, a homeowner vote was not needed. Our covenants, conditions and restrictions are pretty clear about informing homeowners and what is required for approval.
Projects they got involved with ran severely over budget. One or two involved safety because electricity is likely involved. They were Band-Aided but not finished correctly. And some vendors are vanishing one by one, being replaced with, what a lot of us fear, cheaper, which usually means underinsured or substandard workmanship.
I need help as I am now acting president of a HOA after we fired the last president. In the past 18 months, our community management company and the former president have drained our reserve account for more than $421,000. I have gone to the Metropolitan Police Department, and they said it was a civil matter and to get a lawyer. I went to the Nevada Real Estate Division, and they said they could only pull the community manager’s license.
A: You have several concerns. The first being the lack of experience of the current board of directors. Associations that are having problems finding homeowners to serve should review how they operate and make modifications.
As to the attorney, NRS 116.31084 requires board members who stand to gain any personal profit or compensation of any kind are to disclose the matter to the board and are to abstain from voting on any matter. Regardless of the relationship, the attorney does have fiduciary responsibilities to the association, as a whole.
Generally speaking, in cases of emergencies that require spending, most governing documents would allow the board of directors to make that decision. The law has changed as to the soliciting of bids. If the association has fewer than 1,000 units, the board can make purchases up to 3 percent of its annual assessment budget, and if more than 1,000 units, up to 1 percent of the annual assessment budget.
If there are board members who are not aware of events or decisions, I highly suggest that they have a workshop meeting with the entire board, community manager and legal counsel to have a major discussion as to the operations of an association and what procedures are necessary.
You are assuming new vendors are not properly insured or that they provide substandard workmanship. To learn more, you could contact Nevada Contractors Board at 702-486-1100. It can provide specific information as to whether a contractor has proper insurance and licenses.
You have the legal right to ask for an appointment at the management company to review the financial activity of the reserve account. You can ask for copies of the invoices that were paid from that account with a copy of the reserve study.
By law, neither the community management company nor the community manager can sign a reserve check. Also, please note that there are no state licenses for community management companies, only the community managers and provisional managers are licensed.
Barbara Holland is a certified property manager, broker and supervisory certified association manager. Questions may be sent to holland744o@gmail.com.
