Bill modifies HOA election procedures

EDITOR'S NOTE: Again, Barbara Holland will take a break from her Q&A format to address Assembly bill 251 and Senate bill 253 that were passed into law during the last legislative session this summer.

AB 251 modified NRS 116.31034 that pertains to the election of the directors. Subsection 5 has been added and states the board may determine if at the closing period for "nominations" (Legislature should not have used the word, nominated, as that is not an accurate description of the process), the number of candidates is equal or less than the number of members to be elected to the board at the election, the secretary, or other officer specified in the bylaws, will generate a notice informing homeowners that the association will not prepare any ballots, and the candidates shall be deemed to be elected to the board.

An owner, who is qualified to serve on the board and did not originally submit his or her name when applications were requested, he or she could send an application within 30 days of the notice. If more unit owners submit their names, and this results in more candidates than positions, then the board would send out the ballots.

The intent of the proposed law was to help associations reduce costs. The amended version of the new law actually negates the intent by requiring associations to send another mailer to all of the members who did not respond to the first request, along with the candidate application forms.

If ballots are sent, the association is to include the candidate disclosures to each member with the ballots. If ballots are not sent, the disclosures of the elected directors shall be included in the next regular mailing of the association. Each candidate must make a good-faith effort to disclose any financial, business, professional or personal relationships or interest that would result or would appear to result in a potential conflict of interest.

Also modified, was NRS 116A.410.1 pertaining to the issuance of certificates. The new law states that the Common-Interest Communities & Condominium Hotels Commission establish a procedure for a person to reapply for a certificate and obtain one without undergoing any period of supervision under another community manager.

SB 253 made many changes, as follows: A board member who stands to gain any profit or compensation of any kind from a matter before the board shall disclose the matter to the board, and abstain from voting on any such matter. It states that a board member who has a member of his or her household or family who stands to gain any personal profit or compensation of any kind from a matter before the board shall disclose the matter before voting on any such matter.

Bottom line, the Legislature does not want "incestuous relationships." This new version of the law of gain or compensation does not include an employee or an affiliate of a developer who is a member of the board solely by reason of such employment.

The next change affects the way associations obtain bids. First, the bids must be opened during a board meeting. This includes association's projects such as maintenance, repair, replacement or restoration of any part of the common elements or services to the association. The board cannot open or consider bids in executive session and the board cannot in executive session enter into, renew, modify or terminate or take any other action regarding a contract unless it is between the association and an attorney.

SB253 made major changes as to the renting of units within an association. Unless at the time that a owner purchased his or her unit, the covenants, conditions and restrictions prohibited the owner from renting it, the association may not prohibit the owner from renting the unit. The same applies to the securing or approval from the association to rent or to lease.

Bottom line, if your CC&Rs do not now prohibit or restrict renting, you can no longer pass any amendments to the CC&Rs to prohibit or restrict the renting or leasing of a unit. In addition, if your CC&Rs now have a maximum number of units rented, that provision may not be amended to decrease that maximum percentage of homes that can be leased. If a unit owner is prohibited from renting a unit because the maximum number has been reached, he or she may seek a waiver of the prohibition from the board unless otherwise stated in the covenants of the association. The waiver must be based on showing economic hardship. The board may grant such a waiver and approve the rental. Finally, the units owned by the developer are not to be counted in establishing the number of units that can be rented or leased. (NRS116.335).

The CICCHC can now impose a $10,000 administrative fine against a person who violates NRS 116 or any other regulation. This was increased from $ 5,000.

Another major change will impact the public offering statement that will now require a statement of the transfer fees, transaction fees or any other fees associated with the resale of a unit.

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.