Law sets guidelines on passing, rejecting budget

Q: Our homeowners association board of directors raised the fees $8, to $86, plus a special assessment of $30 for a total of $116 per month. The board president wrote a letter in November, explaining that the fees had to be raised because the previous board mismanaged the reserves.

I objected and never received an answer to my letter. The management company lady told me that 51 percent of homeowners had to be at this meeting in December to ratify or vote down the new budget. When I asked if there could be absentee ballots or proxies and she said that NRS 116 did not allow them and hung up.

There were only 39 members who showed up at the meeting, so we were told it was ratified.

I read some of NRS 116 and found that proxies are allowed. So if the homeowners were not allowed to vote by proxies, then isn't the ratification of the 49 percent increase illegal?

If the increase is legal without allowing proxies, then is there a state agency the board can write to get a reprieve or extend the repayment time period? Please do not send me to the ombudsman's office. This office is just a ridiculous waste of time and should be abolished!!! -- A.S., Vegas

A: State law, NRS 116.31151.3, requires the board of directors to hold a budget ratification meeting where homeowners vote to either ratify the budget or reject it. The law requires a minimum of 51 percent of the homeowners present at the budget meeting to reject the budget. If your governing documents require a larger percentage, then your membership would have to meet that percentage in order to reject it.

If a budget is rejected then the previous budget will be in effect until a new one is brought to the membership at a meeting to ratify or to reject it.

The law works in reverse, as it does not require the membership to approve the budget in order for it to pass. The budget has to be rejected. A budget would be passed if it is not rejected, at which time it becomes effective for the associations fiscal year. The board is the only entity that can grant extensions for the payment of assessments. No state agency can extend the payment period. If it was found that the budget ratification did not meet state requirements then the state agency or the courts could require a new budget ratification meeting.

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