HOA governing documents aid in filing complaints about boards

Q: Four years ago I bought a condo that was an apartment complex that had been converted. I was not informed of this at the time of purchase or I would not have bought the condo.

When the economy tanked, the developer was stuck with over 50 condos that had not sold. Now with his 50 plus votes, the developer controls the elections and the outcome of the votes for pending issues.

He did not like last year's outcome for one issue because the board voted to change the property management company from the current one to the previous management company. The developer claimed that someone forgot to send him the nomination ballot so the election held again and this time he got the outcome of keeping the current management company.

Also, our board has three people who do not live in the complex, with two that never have lived here. I have written the Better Business Bureau of Southern Nevada, Consumer Affairs, my omsbudman and attorney general's office in Carson City. They all give some reason for why they can't do anything. I believe that the board at any condo complex should be made up people that live at the place. If you can give me any other organization that I can call or write, I would greatly appreciate it. What else can I do?

A: You have a unique situation. Your problem is not how the Legislature needs to control associations and management companies, but how the Legislature can protect the buyer from developers who are converting apartment buildings into condominium associations. Now, I do know that both city and county ordinances have changed pertaining to the conversion of apartments, from requiring more improvements to the property to informing the residential tenants of the conversion, etc.

In addition, NRS 116.310395, which was passed in 2005, provides additional protection to the buyer as the seller at the close of escrow is to deliver to the association of a converted building the reserve funds that are allocated to that closed unit.

When you purchased your unit, the public offering, per law, should have indicated to you that the property was a converted apartment community. The developer and the sales agent should have provided that information. You need to look over your closing documents and any other documents that you received during the selling process. (NRS116.4112).

Now, the person with the 50 units, if he or she is not the developer but just one of the owners, the current state law does not allow him to be on the board if he or she is associated with the management company. If he or she is the owner of the management company or if he or she works for the management company, he or she can not serve on the board. (NRS116.31034.6b). If that is the case then either he or she needs to resign or the board needs to hire another management company.

If he or she is the developer and if 25 percent of the total units have sold, there should be one homeowner board member who must be elected by the homeowners and not the developer. If 50 percent of the units have been sold then not less than 33 1/3 members of the board are to be homeowner members who again must be elected by the homeowners and not the developer.

If he or she is the developer, he or she does not have to transfer the control of the association to the homeowners until 75 percent of the homes have been sold or a period of five years after the developer has ceased to sell units. (For all of these percentages, the law kicks in after 60 days of conveyance, NRS 116.31032).

Your governing documents will tell you if an owner of the unit can be on the board without residing at the community. Most governing documents do allow a non-resident owner to be a board director since the nonresident owner is also a member of the association. There are some associations (in minority) that do not require a resident to be a board member.

If you believe that the election ballots were tampered by the board or by the management company, then you need to file a formal complaint to the Ombudsman Office as it is against the State law. (NRS 116.31034.subsection 8).

As you can see by my response to your e-mail, there is law already on the books for the issues that you have raised. According to the law, you need to contact the ombudsman office.

I do not know the exact events that occurred when you first discussed these issues. It is one thing to make complaints and another thing to be able to tie those complaints to your governing documents and or to the state law to demonstrate to the ombudsman that illegal activities are occurring at your community.

In addition, you need to be able to substantiate your claims. When the ombudsman investigates a complaint the other side, in this case, the association, must answer the complaint and show that they are not in violation. You would receive a written response to the from the ombudsman as to the disposition of your complaint.

Note: Nearly a dozen new acts passed at the 2009 Legislative session brought sweeping changes to the laws affecting Nevada's nearly 3,000 homeowners associations. Due process for violation hearings, mandatory audio recording, and modifications to election law, are just some of the new provisions requiring action by associations.

The Nevada Real Estate Division invites homeowners, board members and community managers to learn about key changes in HOA law at its Ombudsman Legislative Summary, which will be held throughout the second half of 2009. The first dates are July 24 and Aug. 10 in the Bradley Building, located at 2501 E. Sahara Ave.

Speakers will include Lindsay Waite, ombudsman for Owners in Common-Interest Communities and Condominium Hotels; Bruce Alitt, chief compliance investigator for the Real Estate Division; and Nicholas Haley, education and information officer. Attendees will have the opportunity to ask questions from the agency charged with enforcing compliance with the new laws.

Seating is limited and attendees are encouraged to register in advance. Call Haley at 486-4480 to reserve a seat.

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.