HOA board can accept construction defects settlement offer

Q: For two to three years, our homeowners association has been pursuing a construction defects claim against the original builder. About 1½ years ago, the board asked the owners to vote on whether we wanted to sue the builder. We voted to sue. Last year, at a meeting, the HOA’s attorney said he was entering mediation with the builder.

I recently learned the board accepted a $4.6 million settlement offer. The owners were not notified of the settlement offer until after the board accepted it.

My question is: Since the board needed the owners’ approval to file a lawsuit, did it have the authority to accept a settlement offer without the owners’ approval? To me, it looks as if the owners should have voted whether to accept the offer or go to trial. The was a mediation offer, not a binding arbitration decision.

In a recent meeting, when I asked board members about this, they felt they had the authority — naturally.

A: Unless your governing documents state otherwise, there is no state law requiring the board to obtain the homeowners’ approval.

Q: I live in a community where we have an HOA. I just learned that our board consists of one person. The conditions, restrictions and covenants state that the minimum should be three people.

So, please tell me:

1 .How do I call a special election?

2. What are the Nevada statutes for this situation?

3. What authority does the board of one have?

4. During this transition period, can this person execute anything pertaining to HOA issues and day-to-day operations?

5. How do we request transparent financial transactions?

A: Depending upon your governing documents, the remaining board member can appoint other board members who would serve only until your next scheduled director elections. Technically, the remaining board member should appoint the other directors to at least have a quorum as soon as possible.

Practically speaking, the association operations must continue. Someone must approve check-writing, sign checks, review financial reports and decide on maintenance matters, especially if something is broken.

The remaining director must walk a fine line and hopefully is being properly counseled by the management company and the association’s attorney.

If he or she wants to have a full-blown election, he or she can.

The process is for the association to notify all eligible homeowners to place their names in consideration. If after 30 days from the time of the notification, the number of candidates is equal to or less than the number of vacant positions, a second final 30-day notice should be sent to the homeowners to place their names in consideration.

If at the end of the second notice, the number of candidates are equal to or less than the number of vacant positions, the law would “duly deem them to be elected” without sending ballots for the homeowners to vote for them. If there are more candidates than positions, the association would send out ballots for voting by the homeowners, at least 15 days before the opening of the ballots in an open association meeting.

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 the Association Q&A, P.O. Box 80360, Las Vegas, NV 89180. Fax is 702-385-3759, email is support@hlrealty.com.

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