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HOA members have right to reject budget

Q: I just recently purchased a property in a Sunrise Villas. The board without any vote passed a reserve assessment because of low reserves. Having been on the board of another Sunrise Villas complex, I am somewhat familiar with the rules.

It has always been my understanding that if you do an assessment by any name it must be voted on, in this case by 51 percent of the homeowners. It was not.

I showed the management company a copy of the bylaws concerning assessments

The management company stated their policy was to assign the remaining cost to the new buyer and that if I did not pay they could start collection procedures against me.

The dues are $215 and the assessment $75. On the form sent to the title company, it showed the dues to be $285 monthly. The space for special assessments was left blank.

I had to pay $570 at closing — two months at $215.00 and two months at $75. I feel that the management company is way out of line and probably influenced the board to assess with out a vote. I would like your thoughts, please.

A: First, each year, boards are to send its members, not more than 60 days and not less than 30 days before the new fiscal year, the proposed operating and capital budgets. 

Homeowners attend a budget ratification meeting, at which time the members either accept or reject the budget. 

In order for a budget to be rejected,  a minimum of 51 percent of the homeowners, or higher percentage depending upon the governing documents, have to reject the budget. 

If the association does not have the required number of homeowners to reject the budget, it is automatically ratified, whether or not a quorum is present  (Nevada Revised Statutes 116.31151). 

Second, under state law, the association is required to properly fund its reserves, according to NRS 116. 31151. 1b. In NRS 116.3152. 1c.

The state law states that the board “shall make any adjustments to the association’s funding plan that the executive board deems necessary to provide adequate funding for the required reserves.”

You did not provide any real specifics as to why you think the homeowners did not approve the reserve assessment. Assuming they did not approve the reserve assessment, they would have followed the procedures listed above to reject the association’s budget.

As to the passing of delinquent assessments to a new owner, our state law recognizes the super lien on nonpaid assessments. 

NRS116.3116.2c allows an association to pass onto a buyer a maximum of nine months of delinquent assessments from the previous owner.

Finally, a number of communities when they were first established by the developer had a provision whereby any buyer would pay the first month’s assessment, plus additional assessments.

This is known as capital contribution, which may be why the you paid two months of assessments.

Unless other information is provided to me, it would appear that the association and the management company are in compliance with the state laws.

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.

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