Association board must abide by governing documents

Q: I am a board member of a townhome association. Our board has pledged itself to bringing our association into full alignment with NRS 116 as well as our governing documents.

One member of the board has a background in corporate law and as we are incorporated he insists that we must follow these laws to the letter, as well.

Other board members feel that these laws are too cumbersome and would make our job much more difficult than necessary.

In your opinion, must an association board function at the same level as that of a Fortune 500 company and if so to what extent? If your answer is in the negative would you please suggest what are the accepted operating procedures for association boards?

A: The 2005 Nevada Legislature also clarified that if there is a conflict between any organizational statutes, such as the nonprofit corporation statutes (NRS 82) and NRS 116, then the provisions of NRS 116 control (see NRS 116.11085). In the management of your association board, specific guidelines and required procedures and policies will be regulated by the governing documents of the association. The covenants take precedence over the bylaws and rules and regulations.

As long as your governing documents do not conflict with NRS 116, your governing documents will control.

There are many examples in NRS 116 which will start with clauses such as "except when the governing documents provide otherwise, or "unless the governing documents specify...," the association's governing documents will take precedence over sections in NRS 116.

In addition to the governing documents of your association and NRS 116, your association board is also bound to follow NAC 116, which is the regulatory code established by the state's Common Interest Communities Commission.

NRS 116 represents state laws that would take precedence over NAC 116, which are rules and regulations established by the commission.

If your association abides by their governing documents, NRS 116 and NAC 116, your association board will properly function as an organization. Corporate law, per se, is all inclusive to different types of businesses and organizations -- association organizations have their own specific laws that govern most of the business actions of a homeowner association.

You need not be a Fortune 500 company. A little common sense, objectivity and fair play are great combinations in maintaining a well-managed association.

Barbara Holland, certified property manager, broker and supervisory certified association manager, is president and owner of H&L Realty and Management Co. Questions may be sent to Association Q. & A., P.O. Box 7440, Las Vegas, NV 89125. Her fax number is 385-3759. Questions may be shortened and are subject to editing.