HOA still cannot pay for electric sign with reserve funds


Q: Your response from my June 2 inquiry about the $7,000 to $10,000 my homeowners association board was considering spending on an electric sign to notify homeowners about upcoming events said the funds cannot come from reserve accounts. I am still not sure what you mean.

Recently, the board sent out newsletters requesting input from homeowners about the sign. Now, the estimated cost is $25,000.

Could this newsletter notification be considered some kind of vote on the issue?

Also, I have lived in this community for 21 years and our dues are not bad for the amenities we have. I heard that our dues will never be lowered.

In addition, I have worked in an industry that had to spend allotted funds each year or the budget would be reduced the next year. Is it possible the sign could be a use-it-or-lose-it situation in that there is some rule that requires a reduction in dues if the funds in the reserve account gets excessive?

A: That's a lot of questions. I'll take them one by one. First, because the sign would be an addition to the personal property of the association, the money to pay for it must come from the operating account or a special assessment. State law will not allow the HOA to use money in its reserve account to pay for the sign because it is not on the reserve study. If it ultimately purchases a sign, it could add it to the reserve study and future costs to repair or to replace it would come from the study.

Second, a newsletter asking for input is not binding upon the board in making a decision about the sign. It is just attempting to receive feedback from the homeowners as to whether the sign should be purchased. The only way it could be considered a vote is for the information to be properly formatted in a resolution with a ballot that would have to be sent to each homeowner.

As for the budget, in general assessments are not reduced since most of the operating expenses continue to increase, especially with older communities, because of natural wear and tear of the common elements. Some associations have lowered assessments because of better money management, renegotiations of contracts, bidding of contracts or changing landscape to drought tolerant.

Budgets are projections. There could be many reasons why some funds were not spent during the year. There is a state law, Nevada Revised Statutes 116.3114, that addresses reducing or crediting homeowners when there are excess funds. It is a poorly worded section of the law and should be reviewed by the Legislature. Associations need guidance as to what truly constitutes an excess of funds. The association's covenants will override this state law.

Q: I am an HOA board member. Recently, we had a controversy about areas of responsibility, the HOA vs. homeowner, in common areas.

We had a water line break in the common area. Our covenants, conditions and restrictions state that maintenance issues in common areas are the responsibility of the HOA.

In addition to the water line break, which the HOA repaired, the water line in a common area that supplied water to the homeowner broke and leaked.

The homeowner received a higher water bill that month because of the leak. He requested the HOA pay the water bill, but it refused.

Our rules clearly state the homeowner's responsibility starts at her property line were utility lines enter house. What is your opinion?

A: If the break in the water line was located within the common area that caused the higher water bill, the HOA should pay for the excessive amount.

By contacting the Las Vegas Valley Water District, the homeowner and the HOA should be able to calculate the overage charges.

NOTE: The State Office of the Ombudsman has scheduled several free HOA classes in September. Some that are being held in the area are: Meetings and Parliamentary Procedures, noon-2:30 p.m. Sept. 20, Artesia HOA, 6601 S. Fox Ave., Pahrump; and Reserve Studies, 9:30- 11:30 a.m., Sept. 27, Greenbriar Townhouse HOA, 704 Greenbriar Townhouse Way, Las Vegas.

Barbara Holland, certified property manager, broker and supervisory certified association manager, is president and owner of H&L Realty and Management Co. questions may be sent to Association Q&A, P.O. Box 7440, Las Vegas, NV 89125. Fax is 385-3759, email is support@hlrealty.com. Holland is also available to speak at your organization or company.

 

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