Q: I enjoy reading your informative weekly column and have three questions regarding architectural review committees.
Our community’s covenants, conditions and restrictions require that any external modifications to an owner’s property be approved “by the board, or by an Architectural Committee composed of three members appointed by the board.”
The bylaws state that committees having the authority of the board shall consist of three or more directors. Members of other committees not having board authority “need not be directors of the association.” The homeowners association’s architectural guidelines stipulate that all proposed external modifications shall be submitted to the Architectural Review Committee (ARC) for review and approval/disapproval. The guidelines further stipulate that an owner may appeal an adverse ARC decision to the board.
Here are my questions:
1. The board has had difficulty in finding owners willing to serve on the ARC. If the ARC does not have three members appointed by the board, as stipulated in the CC&Rs, may it take action on an owner’s proposed architectural changes?
2. Board members have declined to serve on the ARC, stating that doing so would present a conflict since the board is the appeal authority for adverse ARC decisions. Given the bylaws’ stipulation regarding committees exercising board authority, shouldn’t the ARC membership include three directors, at a minimum? The board is made up of five directors. The bylaws do not specifically address the ARC.
3. Given that the ARC exercises board authority, should any non-director members of the committee be covered under the association’s directors &officers (D&O) insurance or be otherwise indemnified by the HOA? I realize that the board has final, appeal authority, but an adverse decision by the ARC could expose its members to tort litigation, e.g., if a denial of a proposal (or a delay in responding to it) causes a delay in the project that results in a cost increase for the applicant who seeks redress through litigation against the HOA and the ARC members, individually.
A: I will answer your questions in order.
1. Yes. Unfortunately, this is a common problem for many associations in finding volunteers, especially homeowners who have experience in reviewing architectural requests.
2. I would question whether the Architectural Committee has the exact authority of the board. It is a committee that can make decisions, which can be appealed to the board. To avoid the conflict of interest, you should consider having two board members and finding a third homeowner to serve on the committee. This way, you would have three board members as your appeal body.
3. You can check with your insurance agent but, in general, committees are covered, regardless if they were a director or a homeowner serving on the Architectural Committee.
Q: Our HOA president has gone a little off the rails. This month, she installed landscaping lights on a stretch of common HOA property that happens to be in front of her yard and plugged them into HOA power without board or HOA approval. Several torch-and-pitchfork-wielding neighbors who like the lights — and enjoy the board president’s lovely cocktail parties — are claiming this is no big deal. Is it?
PS: I assume you keep all emails anonymous, but may I please request anonymity just in case. Our president is big on retribution, too.
A: Decisions that impact the association need to be approved by the board of directors. Your board needs to discuss protocol with the president and each director.
Q: What is usually required to change CC&Rs? Ours have been in effect for 50 years
A: Please review the amendment procedure in your CC&Rs, which would allow you to make changes subject to the homeowner approval. Some changes are considered “material changes,” which would also need approval by the lenders. Changes in Nevada Revised Statute 116 allow a process for the membership to change their CC&Rs even if the association did not receive any responses from the lenders.
Q: There seems to be enough ambiguity concerning this simple issue to make its potential outcome very disturbing.
If an HOA’s bylaws state that its board of directors may remove a board member for missing three consecutive unexcused board meetings, does the board have the authority to remove that member from the board entirely or only as an officer? How does NRS 116 support or refute such an action?
A: NRS 116.31036 pertains to the removal of a member of the executive board. Only homeowners can remove a director from the board. The board can only vote to remove a director as an officer and select another director to serve in that position.
NOTE: Here are some upcoming classes offered by the state Real Estate Division. To register online, visit www.red.nv.gov. All classes are held at Nevada State Business Center, 3300 W. Sahara Ave., fourth floor, Nevada Room. All two-hour classes are held from 1:30-3:30 p.m.
■ Jan. 13 — Understanding HOA Elections
■ Jan. 27 — Fiduciary Duty
■ Feb. 3 — 2019 Legislative Updates
■ Feb. 10 — Understanding CIC/HOA Meetings
■ Feb. 24 — Robert’s Rules of Order in a CIC/HOA
■ March 9 — Understanding CIC/HOA Record Keeping
■ March 23 — Sale of a Unit in a Common-Interest Community
■ March 30 — Governing Documents vs. NRS 116
Barbara Holland is a certified property manager (CPM) and holds the supervisory community manager certificate with the state of Nevada. She is an author and educator on real estate management. Questions may be sent to email@example.com.