Association has right to impose fines

Q: Our homeowners are involved in a major dispute with the board. The board wants to create rules and a fine schedule without amending either the bylaws or the CCRs (covenants, conditions and restrictions). There is a section called "Enforcement," which states that "any owner or the association in its own name and on its own behalf or on behalf of any owner who consents can commence and maintain actions for damages to restrain and enjoy any actual or threatened breach of any provisions..."

We do not believe there is any authority in this section of the covenants to impose a fine schedule per NRS 116.31031 subsection 1b, which we are interpreting the phrase "if the governing documents so provide" to mean that the governing documents must affirmatively address fine schedules.

The relevant part of the bylaws state: "... adopt and publish rules and regulations governing the use of the common area and facilities and the personal conduct of the members and their guests and thereon and to establish penalties for the infraction thereof." Please note that this relates to common area only.

Finally, in the bylaws, it states: "... exercise for the association all powers, duties and authority vested in or delegated to this association and not reserved to the membership by other provisions..." of the governing documents. If this authorized the board to impose a fine schedule, wouldn't it also be subject to NRS 116.31031 subsection 1b?

The position of many of the homeowners is that none of our governing documents specifically and affirmatively give authority to impose a fine schedule and that we must first amend our governing documents. Are we correct in the way we are interpreting the state law and our governing documents?

A: The relevant section of the information you sent me is the bylaws that states: "... and to establish penalties for the infraction."

The association has the right to impose fines per this section of the bylaws.

What is missing is the section of your governing documents pertaining to assessments. Fines are actually special assessments that are imposed on individuals for non-compliance. You should also review this section.

The enforcement section just allows any owner to take action against another owner, or even against the association for breach of the association's governing documents. It also allows the association to take action in the enforcement of the association's governing documents.

The last section of the bylaws states that all powers, duties and authority rest with the association, unless otherwise delegated to the membership.

For example, the association board may not remove a director, only the homeowners could remove a director. This is an example of the limitation of the board's authority where the removal of a director is the decision of the homeowners and not the board of directors.

Bottom line: The association has the right to establish a fine schedule in order to enforce its rules and regulations.

Q: How can an association justify a transfer fee to the new owner of $450 and the demand statement is $150. Where does that fee go and how is it used?

A: It would appear that the transfer fee of $450 is excessive. You will need to contact the management company to confirm that no other fees were combined.

Generally speaking, transfer fees are paid to the management company, although there may be some associations where a portion of the transfer fees is deposited into their account as a form of additional income. The transfer fee charge is for the administrative cost of the processing of a new owner within a community; from creating the files; ordering coupon book; and inputting information in the computer system. The demand statement is for the information that must be delivered to the buyer and to the escrow company in order for the financial transaction to be completed in a sale.

The demand statement includes important financial information as to the amount of money that is owed at the time of sale, if there are any special assessments and if so when do they take affect.

The fee for the demand statement is paid to the management company.

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, or she can be reached by e-mail at support@hlrealty.com.

Barbara Holland

ASSOCIATION Q. & A.