Q: The board of directors in our homeowners association recently took out the fireplace that was in a step-down area of the clubhouse without notifying the homeowners, obtaining bids for the work or obtaining a Clark County building permit. The main room was redesigned, and new oil paintings and flooring were installed. The floor was leveled for safety reasons.
It appears they used unlicensed contractors too. The rumor is that a board member chose someone who worked in her house. Isn’t this malfeasance in office?
When questioned, a board officer said the HOA might spend up to $10,000 of the homeowners’ money without the knowledge or approval of the homeowners. One board member said that it was in the Nevada Revised Statutes 116. I cannot find a statute that allows that expenditure without homeowner input.
It was reported to the Clark County Building Department, but no action has occurred. Gas and electric outlets were involved.
Certainly, it is a desired action for the disabled homeowners, but it was an amenity that had been there for 50 years, and no vote was taken to remove it.
This HOA has had to add a special reserve assessment for the past year that will be extended for many years because of mismanagement of funds and the unwillingness to face reality and raise fees for recreational vehicle and clubhouse rentals, key fees, etc. The homeowners are very upset with this action. Can you please advise me on the bid issue and the money expenditure?
A: NRS 116.31086 pertains to bids. It says, “If the association solicits bids for an association project, the association must, whenever reasonably possible, solicit at least three bids if the association projected is expected to cost 3% or more of the annual budget of associations that have less than 1,000 units or to cost 1% more of the annual budget for associations with 1,000 units or more.”
If the $ 10,000 you mentioned represents either 1 percent or 3 percent of the annual budget, depending upon size of the association, the board would have the right to spend this money. But, generally speaking, associations try to stay on budget, which homeowners have the right to reject or to accept with the exception of emergencies or unanticipated expenses.
As to the removing of the fireplace within the clubhouse without homeowner approval, you would need to review the association’s covenants, conditions and restrictions. In general, community rules would require homeowners approval to change of one of the amenities.
As to rumors concerning permits or licensed contractors, you can contact the Clark County Building Department for verification.
Q: Our association recently had an election, and two new board members were elected. I nominated one of the members, who had been on the board for years but left because of health problems. Our current president, who has held the position for only two years, started arguing, saying our former president, who she really didn’t know, had no right to be president. The only reason I wanted a change is because of the dissension she (the current president) caused with our homeowners.
There were only four out five board members present with the vote being 2-1 as the fourth member refused to vote. Even after prodding, the fourth member made a motion to hold off until January for the fifth member to have a vote. The original vote that I had made was never even recognized. I believe our manager should have recognized my motion before accepting another one.
From what I understand since no vote was recorded, I believe that our whole board now has no officers just director status. If this is true, then none of us can sign checks, vote on any new proposals or anything else of importance. Because this could be disastrous for our HOA, could you please tell me the solution for this and if we are in fact all directors. Thanks.
A: In this case, the current officers would remain until January when you have five directors. As to your motion, if it was seconded, the board should have considered it.
Q: Our HOA has contracted with a management company for several years and has allowed it to raise its fees several times when renewing the contract.
This year, having served as an officer for another HOA (before I married my husband and sold my own house) for almost 10 years, and working effectively with a different management company, I suggested to our present board that they should entertain bids from other management companies, simply to compare prices.
The management company that I had worked with submitted a bid, with a proposed written contract, for more than $15,000 less per year than the one our HOA presently uses. They refuse to even consider either talking with the new company or negotiating with their present management company to lower their prices. Their only comments are, “We have a good working relationship with this company and have no need to change.”
The yearly budget is up for review and ratification in the next two weeks. We believe that the homeowners will not ratify the budget as it stands because their proposed expenditures are high. Their proposed budget even includes three “miscellaneous-type” line items for $1,000 each.
Who would we contact to investigate whether our present board of directors are meeting their fiduciary responsibilities? We pay $605 per year HOA dues, and the only amenities offered by the subdivision are a security gate (with unmanned gatehouse), and a small lot on the far side of the subdivision that has desert landscaping and is called a “park,” although there are no shade trees, no grass, no recreational amenities.
A: I don’t think this is an issue that requires investigation. The board’s proposed budget will be presented to the homeowners to either accept or reject. The fact that you are questioning some of the expenses does not mean that the board is not honoring its fiduciary responsibility.
As to your suggestion that the board entertain management proposals, the board is not obligated, especially when the board has indicated that they have a solid working relationship with the current management company. Selecting management companies is based on many different variables besides price, such as the stability of the management company, its record with the Nevada Real Estate Division, the professionalism of its managerial staff and the services that they render beyond what would be considered as “the norm.”
Barbara Holland is a certified property manager, broker and supervisory certified association manager. Questions may be sent to firstname.lastname@example.org.