HOA budget is not final if it’s not ratified

Q: Our homeowners association board approved the 2015 budget to increase dues by 10 percent and institute special assessments each year for the next five years.

Less than a week after the meeting, three board members resigned including the president and treasurer. Temporary replacements have been recruited and should be appointed to fill the vacancies at the this month’s meeting.

Can the “new” board modify the approved budget and adjust the assessment scheme that was derived from a new reserve study and may have been influenced by the resigned treasurer? The new financial plan’s financial effect on homeowners will be severe.

A: I called you and you said the homeowners hadn’t ratified the budget. So, the new directors could modify the budget and present a revised version to the homeowners for ratification.

Q: Five candidate statements and ballots to elect three board members were recently mailed to homeowners. Immediately afterward, one candidate complained in writing to our management company that another candidate running for election was not a homeowner.

The management company immediately contacted this candidate about the issue.

It turns out that the home was recently refinanced. The candidate had the appropriate legal ownership document but it was never filed.

The attorney contacted by the community manager reviewed this information and stated in writing that without a doubt the candidate’s ownership was not in question. In Nevada, that document didn’t need to be recorded.

The candidate who filed the complaint was told that his complaint was invalid and that no further action would be taken.

However, at about that same time, an identical, but unsigned, copy of the original complaint was being circulated by email to our homeowners by someone who was not listed by our management company as a homeowner.

Doesn’t this influence, and likely reduce, the chances for election of the candidate whose ownership was in question? (Ballots were already being returned before the invalid claim was surreptitiously circulated).

A: This has always been a bone of contention. According to Nevada Revised Statutes 116.31034 section 12 a (2), a board candidate cannot submit to the association his informational statement that contains any defamatory, libelous or profane information.

But the law is silent about third-party fliers and letters that someone or some group sends to members that may or may not be accurate.

Unfortunately, those of us in management have often seen some pretty rotten fliers (of course, unsigned) that can severely damage a candidate’s reputation. Too often, a response from the candidate comes too late.

NRS 116.31107 pertains to the voting by owners and acts that are prohibited. Nothing in this law addresses the invalid claim that was circulated within your association.

It can be argued, “freedom of speech, press, etc.” But at what point does the flier cross the line? A jury, judge or possibly the Commission for Common-Interest Communities and Condominium Hotels would have to decide.

Can a new election be called? Yes, if the Nevada Real Estate Division or the Commission deems a new election be called. But, would that necessarily stop someone else or even the same person from circulating inaccurate information? No.

In the final analysis, the Division and the Commission could be brought into the picture.

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.