Condo HOA keeps raising dues

Q: I live in a condo association. I am wondering how often a homeowners association can raise the monthly dues. Since 2010, the dues have been raised three times. The fourth increase takes effect this month. This seems excessive.

Just to give you a little bit of the background, it was built in 2010 by a developer who went bankrupt after building two buildings. Then another company purchased it and built two buildings and the shell of a third. Then they went bankrupt. The third was finished by a builder from Canada. The third building has a different name. My question is why does the bankrupt developer still have three board members on the association board? We are only allowed one homeowner on the board. This seems wrong. Why are their employees on our board? They do not live here nor have any interest in our community.

The board seems to be run by the management team. HOA stands for homeowner association; why do we not have homeowners on the board who live here and care what happens here?

The so-called board hired a full-time maintenance man last year. Residents did not get to vote on his employment. It has cost so much money. He is supposed to clean the buildings and take care of the pool. The pool has had to be drained twice because he has screwed up the chemicals. We have been waiting more than three weeks now for him to even sweep in our building. I have sent all my concerns to the management company, and they say they will talk to him.

It is really too bad that I was lied to about the HOA when I purchased here. If I had known all the issues, I never would have bought here. The complex is beautiful, and I love living here, but the HOA has definitely been mismanaged. Every answer to any of my questions is always answered the same “this will be reviewed by the board.” Why is it our HOA representative never has an answer?

A: Technically, an association board can present a proposed operating and capital budget each year to the membership for ratification that has an increase in monthly assessments. Whether the increases are excessive or not, one would need to review, not only the collected income and delinquency, but also operating expenses. As each condominium building was completed, there would have been additional income and expenses that could have caused the assessments to be increased. What is not known from your comments is whether the projected number of units are less than what was originally projected by the first developer.

Reading between the lines, this association has had its developmental issues. There are various technical and legal issues as to whether each developer received the developmental obligations and rights from the initial builders that went bankrupt (special declarants rights per NRS 116.3104). I don’t know if each building was annexed into the association or if the builder from Canada has sold all of its units. Per state law, NRS 116.31032, there is a process for the transition of control over the association by the homeowners from the developer. This pertains to the percentage of units that have been conveyed. For example, in an association that has less than 1,000 units, not later than 60 days after the conveyance of 25 percent of the units that may be created, at least one member and not less than 25 percent of the members of the executive board must be elected by the unit owners other than the declarant (developer). The law does allow the developer to appoint members to the board who are generally their employees until each phase of conveyance has been reached where the end result is that the board members are homeowners. State law does not require board members to reside within the community. You may want to review the governing documents to see if such a requirement must be met in order to become a director.

Association management is based upon representative government. Directors are appointed or elected who have the authority to manage the association. The board has the right to hire a full-time maintenance person without the vote by the membership. You should review the covenants, conditions and restrictions of the association, as there should be a very explicit section that describes the power and authority of the board and describes what actions cannot be taken by the board without the vote of the membership.

Unfortunately, there are advantages and disadvantages of buying into a community that is still under development. As we know, Southern Nevada was hit hard by the Great Recession that absolutely hit many communities that were not completed around the same time period as your community. You may want to make an appointment with the community manager to discuss these issues in detail.

Barbara Holland is a certified property manager, broker and supervisory certified association manager. Questions may be sent to holland744o@gmail.com.