Communities can manage their own HOAs

Q: I'm new to the HOA scene, but I'm surprised and disappointed at how our homeonwers' association is beginning to fall apart. The builder just turned over the HOA to the residents about a year ago and already we've had a resignation and defeat of the incumbents, leading to one remaining original board member.

It seems that some folks that want to run for the board turn into not-so-friendly neighborhood Nazis, while others hide behind the management company when a bad decision is made.

As we consider alternatives, does Nevada law allow for something in between, or is it all or nothing? For example, can we have a self-managed HOA without an external management company? Any ideas you can provide would be greatly appreciated.

A: You can self-manage but I recommend that you hire a community manager who is licensed with the state. It is one thing to manage the daily physical operations of the community and another to know the laws governing documents and financial reporting requirements that fall under NRS 116. Following proper procedures for notices, elections, recalls and hearings are legal topics that have literally changed with each legislative session. So you need to be very current with these changes and how they relate to your policies, procedures and governing documents.

Q: I am on the HOA board of a small, 78-unit complex. We just found out from our management company that our roofs and concrete are not covered by our HOA insurance policy unless the whole of them are destroyed by an act of nature, etc. The roofs and concrete normal wear and tear are now the responsibility of each individual homeowner. However, we have been putting money into our reserves for the past 12-15 years for these items and have been paying owners for any problems they have had.

Now that we can take these items out of the reserve fund, should we lower our monthly fees and go after the people who have mistakenly been reimbursed for work they had done?

A: First, please contact your insurance company as to property coverage. Insurance companies will not pay to replace roofs because of wear-and-tear conditions. That is a separate and distinct issue from replacing roofs because of a wind storm that damages the roof. That damage, the insurance company would pay, less deductible.

Second, look at the reserve study. If the reserve study includes the roofs and concrete, then the association should fund replacements through its reserve funds. If it does not cover roofs and concrete, and your homeowners have been paying for these expenses through their monthly assessments, the homeowners should receive the appropriate credit based on the length of time that they have made payments to the association. You would have to calculate what dollar amount was funding these "reserve" items as to the refunds to the homeowners or as credits to their billing accounts.

As for homeowners who had their roofs or concrete replaced or repaired by the associtation, you would calculate the credit against the expense paid out by the association. If the credit is less than the expense, then the homeowners would pay their respective differences.

Don't forget to check the covenants, conditions and restrictions. Occasionally, the reserve study is not in line with what is required by the documents.

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