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Some do’s and don’ts for HOA board members

Q: I have recently moved to Nevada, then into a very nice community. Being the type of person I am, I noticed issues that concerned me and have now gotten myself elected to the homeowners association board of directors, and then onto the president’s position. I have been following your articles since moving here and see that you are a fount of information, and I would like to ask your assistance.

I have gone through the Nevada Revised Statutes 116, the Nevada Real Estate Division’s website, (downloaded a few training presentations and documents that I considered important to me and my function). I have searched the internet for documents, information, guidelines, anything that I felt would be useful. Most of what I find is generated by companies or lawyers in California. Some of what I have found has been very interesting and useful. I have not found what I am looking for.

What I am seeking is general HOA board guidelines — “Do’s and Dont’s,” if you will. I have read our covenants, conditions and restrictions and bylaws, but there is no mention of what I am looking for. Maybe protocols would better describe what it is I seek. Now that I have bored you to death, my question is: Is there a publication, an article, a website relative to Nevada guidelines, etc., that would specifically provide what the board can do or cannot do. An example of what I am looking for: One of my fellow board members wants to have meetings in our homes (though we have not officially assumed our duties) to discuss association business. And, to say the least, I feel very uncomfortable about her request. I feel it may fall into the category of ethics. Could you please point in the direction I may need to go.

A: The best way to respond to you is to refer you to NRS 116.405, which are the regulations that also govern homeowners associations. Under NRS 116.405, the Commission for Common-Interest Communities and Condominium Hotels has determined that the following criteria will be the standard to determine if an association board has performed its duties, which include the “do’s” and don’ts”:

Don’ts:

■ Act outside the scope of the authority granted in the association’s governing documents.

■ Act for reasons of self-interest, gain, prejudice or revenge.

■ Commit an act or omission that amounts to incompetence, negligence or gross negligence.

■ Except as otherwise required by law or court order, disclose confidential information relating to another unit owner, a member of the executive board, officer, employee or authorized agent unless the disclosure is consented to by the person to whom the information relates.

■ Impede or otherwise interfere with an investigation of the Nevada Real Estate Division by failing to comply with a request by the division to provide information or documents — by supplying false or misleading information to an investigator, auditor or any other officer or agent of the division by concealing any facts or documents relating to the business of the association.

Do’s:

■ Keep informed of laws, regulations and developments relating to associations.

■ Cooperate with the division in resolving complaints filed with the division.

■ Comply with all applicable federal, state and local laws and regulations and the governing documents of the association.

■ Uniformly enforce the governing documents.

■ Hold meetings of the board with such frequency as to properly and efficiently address the affairs of the association.

■ Obtain when practicable at least three bids from reputable service providers who possess the proper licensing before purchasing service for use by the association.

■ Consult with appropriate professionals as necessary before making any major decisions affecting the association.

■ Deposit all funds of the association for investment in government securities that are backed by the full faith and credit of the United States or in financial institutions that are insured by the Federal Deposit Insurance Corp., the national Credit Union Share Insurance Fund, the Securities Investor Protection Corp. or a private insurance approved pursuant to NRS 678.755 9, which pertains to estates of a deceased person or property in a trust account.

■ Maintain current, accurate and properly documented financial records.

■ Establish policies and procedures for the disclosure of potential conflicts of interest and an appropriate manner by which to resolve such conflicts.

■ Establish policies and procedures that are designed to provide reasonable assurances in the reliability of financial reporting, including proper maintenance of accounting records, documentation of the authorization of receipts and disbursements, verification of the integrity of the data used in making business decisions, facilitation of fraud detection and prevention and compliance with all laws and regulations that govern financial records.

■ Prepare interim and annual financial statements that will allow the division, the board, homeowners and auditors to determine whether the financial position of the association is fairly presented.

■ Make the financial records available for inspection by the division.

■ Cooperate with the division in resolving complaints with the division.

■ Adopt and fairly enforce the collection policies of the association.

Under NRS 116.3103, the directors are to exercise the ordinary and reasonable care of the officers and directors subject to the business judgment rule and are subject to the conflict of interest rules governing the association under state law.

As to your specific question, associations can have workshops on association issues as long as decisions are not made at the workshops. For example, you want to change landscape companies and the board wants to discuss what specifications should be included in the request that will be sent to the landscape companies.

During the last legislative session, under SB 195 (5) executive session notice to owners, notice of executive sessions no longer must be mailed to all owners. This will allow a board to hold limited executive sessions when needed, rather than in conjunction with a regular scheduled board meeting. The association has to give notice to those homeowners who have been called to an executive session pertaining to violations.

As to good operational practices, you need to contact our local Community Association Institute chapter, which conducts monthly educational seminars pertaining to association management and laws. They can be contacted by calling 702-648-8408. In addition, you can ask for a catalog of materials that can be purchased on associations.

Barbara Holland is a certified property manager, broker and supervisory certified association manager.

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