Banks and lenders required by law to maintain foreclosed homes

Q: We have five foreclosed homes with the exterior of the property not being maintained by the lenders. This includes dead landscaping areas, swimming pools turning algae green, etc.

My understanding is that the lending institutions have a fiduciary responsibility to maintain the asset and that this situation should not be happening. Is it a law that they are to maintain these homes or can the homeowners' association take over the responsibility of the upkeep and bill the lending institution or put a lien the property and collect? Any help would be appreciated.

A: Once the bank or lending institution becomes an owner of the property, it has the exact same responsibilities as any resident homeowner -- it must pay its assessments, special assessments and abide by all of the governing documents including architectural rules and regulations. It can be fined for noncompliance.

If the banks do not pay their monthly assessments, the association can foreclose upon them for nonpayment. Under the new law, which will go into affect on Oct. 1, the association can make the necessary repairs and pass the expense to the banks or any other owner who has taken over the property through a sale with the bank -- the expense paid by the association is considered a super lien and must be paid by the bank or the new owner of record.

As to the swimming pools, call the Southern Nevada Health District since it can come to the property and either use chemicals or a special kind of fish to kill the algae. Any other work that the association would do to clean the pool could become an expense under the super lien law and be reimbursed to the association.

Remember that in order to execute these expenses as super liens, due process must be followed to inform the banks or owners of their violations in order to allow them time to correct the maintenance issues.

Q: I was told by our property manager that the board has to get three bids before repairing the heater for our pool as it falls under the reserve account. I think it should be budgeted into the yearly budget for pool repairs as all pool equipment has a relatively short lifespan.

I have read our covenants, conditions and restrictions as well as our bylaws and I don't see any provision that the board is required to get three bids. I think the company we have maintaining our pool should fix the pool equipment without any further bids. Please let me know how to proceed.

A: Normally, this column addresses specific regulations found in NRS 116. That is the body of law pertaining to homeowner associations. The Legislature allows the Nevada Real Estate Division and the Common Interest Community Commission to create a body of regulations that supplements NRS 116. This body of regulations is found in NAC 116.

Under NAC 116.300 subsection 15, it states to obtain, when practicable, at least three bids for any capital improvement project for the association. This is probably why your association is stating that it needs three bids.

When preparing an operating budget, the community manager and the board should examine their amenities, in this case, their swimming pool. They should discuss the condition of the swimming pool and possible expenses for the coming year with their pool service contractor and include those expenses in their operating budget.

In addition, the board and manager can review their reserve study to include those projected expenses for the coming year that would be part of the reserve budget.

Having made those statements, there are cases where a repair or a replacement was not anticipated, which could have been this case with the heater. Your pool service contractor would normally be the one who would purchase and install the heater.

It would be most unusual for an association to obtain three bids for the purchase and installation of the heater, especially since your pool service contract is exclusive to that pool service company. You do not want an issue that can occur between one company that installs the heater with your pool service company that maintains the pool and the heater, especially if the heater should be defective.

You could have the installer stating that your service company did not properly maintain the heater while the service company states that the installer did not properly install the heater in the first place.

Depending upon the size of the pool, a heater could cost $3,500 to $4,500 installed. That is a fairly standard range unless you have a very large pool, for example which would require a 750,000 btu heater that could cost $7,500 to $8,800.

Legally, only a licensed pool contractor that holds an A-10 or a A-10E can install a pool heater. Please be advised that the Southern Nevada Health District will absolutely make you change your heater if it is not the correct size and possibly if it finds out that it was installed by an unlicensed contractor.

What makes the cost so different is not necessarily the actual piece of equipment, itself, but the configuration of your pool as to how much labor will be involved in the removing and the installing of the heater, especially if someone did not properly install it before or if the heater has to be moved from a difficult location from inside the pool.

Barbara Holland, certified property manager, is president and owner of H&L Realty and Management Co. To ask her a question, e-mail support@hlrealty.com.