Increased assessments could be appropriate

Q: The homeowners association fees in my development were $158 per month as of last year. This January, they raised the fees to $176 per month. Was this legal to raise it so much? Please advise me about this.

A: There are no state laws that restrict increases in association fees. As to your questions, you will need to look at the governing documents of the association to determine if the increase in assessments complied with the regulations. Also, the association had to comply with the Nevada Revised Statutes 116 laws pertaining to the budget ratification process. By checking out the governing documents and by confirming that the association followed the budget ratification laws, you will be able to determine if the 11.4 percent increase was consistent with these regulations.

As to a generic question, is an 11.4 percent increase a reasonable one? It depends upon the association’s history as well as its obligations and finances. When was the last time the association increased the assessments? Are the association’s reserves properly funded or is more money needed in the reserve account? What kinds of increases in services, besides utilities and fees? What is the condition of the amenities? All of these kinds of questions, the board of directors need to answer prior to proposing any increases in their operating and reserve budget. Depending upon the answers to these questions, the increase in assessment may well be appropriate.

Q: I must seek your advice again as it is customary for our executive board members to not respond to any inquiries during homeowners open forum.

My issue: An agenda item for our last board meeting was to discuss the potential award of a contract. An attachment to the agenda contained particulars to the bid. This I feel is a violation of the nondisclosure agreement that all board members signed. The released information is confidential until award.

A: Without knowing the particulars of your association, NRS 116.31086 addresses the solicitation of bids. This law starts by stating “if” an association solicits bids for a project, the association, whenever reasonably possible, should solicit at least three bids when the cost of the project is 3 percent or more of the annual budget for communities consisting of less than 1,000 units or 1 percent for associations that have more than 1,000 units.

Once bids have been obtained, the bids must be opened and read aloud at the board meeting.

In defining association projects, the law states, without limitation, a project that involves maintenance, repair, replacement, restoration of the common elements or professional services, such as legal services.

From your information, it appears the board was ready to discuss the potential awarding of a bid to some vendor at their board meeting.

I do not have a copy of the nondisclosure agreement that you say the board members signed. My qualified opinion is that the nondisclosure agreement would not be applicable in this case, assuming that the board followed the NRS statute pertaining to bids.

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