Law states procedures boards should take to make decisions

Q: What are the Nevada rules and regulations for e-mail discussions and e-mail votes between homeowners association board members? Can action be taken outside of public HOA meetings and, if so, is an agenda, notice of the meeting and minutes required? I cannot seem to find this information in NRS 116.

A: Most associations have a section in their covenants called, "action taken without a meeting." It would state that the directors shall have the right to take any action in the absence of a meeting which they could take at meeting by obtaining the written approval of all the directors. Any action so approved shall have the same effect as though taken at a meeting of the directors. Some associations' version would state by obtaining the written approval of the majority of all of the directors.

Remember that most associations are also nonprofit corporations and are also governed by other NRS Statutes such as NRS 78,81,82 as examples. NRS 116 takes priority over the other corporate statutes if a matter of law is addressed in multiple statutes. (NRS116.11085). For example, the issue of election and removal of a director can be found in multiple corporate statutes but an association must follow the statutes written in NRS 116.

NRS 116.3108 pertains to the calling of meetings and to the preparation and sending of the agendas to the membership, whether the meeting is for the members, regular or special board meetings. Subsection 4b states that the agenda must consist of a list describing the items on which action may be taken at the meeting. It continues by stating in an emergency, the units owners may take action on an item that is not listed on the agenda as an item on which action may be taken. Please note that this refers to a meeting of the members.

NRS 116.31083 pertains to emergency meetings and defines the word, emergency. This section shortens the notification period of the minimum 10 day requirement to the membership of a meeting by the board. It first states that if practicable for the association to mail out the notification (electronic mail was previously included in the law), if not practicable to hand deliver to each unit or to post the notice in a prominent place or places within the community.

An emergency is defined as any occurrence or combination of occurrences that could not have been reasonably foreseen, affects the health, welfare and safety of the units owners or residents of the community or requires immediate attention and possible action and makes it impracticable to comply with the notification sections of the law.

There are sections of the law that explicitly states that the board has a meeting for example the opening and counting of the ballots or a meeting to approve the budget prior to sending the summary of the budget to the membership. There are sections of the law which explicitly state that the board cannot meet in executive session to take action as the newest law states that a board may not meet in executive session to open or to consider bids for an association project as defined in section 3 of this act or to enter into, renew, modify or terminate or take any other action regarding a contract. Please note in the law it refers to section 3 of this act. You will not find section 3 in NRS 116 but in the uncodified NRS under Senate Bill 253 which defines association projects to include without limitation, a project that involves the maintenance, repair, replacement or restoration of any part of the common elements, or which involves the provision of services to the association.

Obviously, the laws would indicate that a board make its decisions in open meetings with the exceptions of those actions which explicitly can be taken in an executive meeting such as hearings for alleged violations of the governing documents.

In the day-to-day operations of an association, decisions are made without a meeting. Boards consist of volunteer members most of whom work for a living and can not just meet at a moment's notice. A water pipe breaks in the middle of the night, the vehicular gate stops operating on a holiday weekend -- these are examples that require an action taken by the association that often are approved by electronic or faxed mail.

Often the association delegates specific actions that the management company may take in its behalf such as emergency actions to protect people and property. Often an association board at open meeting may vote to allow a committee or director in charged of a function for example, landscape, to make purchases for repairs not to exceed some dollar amount.

It is a fine line and one that should not be abused. Decisions should not be made to circumvent the law that could have been made at a board meeting. Could a homeowner challenge a decision made by the board that voted electronically on an issue? The answer is yes. Will that decision stand up to an investigation? It would probably depend upon the circumstances of the event or events. If any action of substantial nature occurred between board meetings, it is a good idea to address it at the next board meeting and a vote by the board affirming the action that took place.

One final comment, the ombudsman office and the commission take a very strong position as to the decision-making process occurring only during official meetings of the association.

Q: Can a board member holding title as our secretary also be our salaried manager or is this a conflict of interest? Also, our bids are being opened by her.

A: Per NRS116.31034 subsection 9a, a person may not be a board member or an officer of the association if that person performs the duties of a community manager for that association (unless that board member is appointed by the declarant, the developer's board member). As stated in a previous article, bids are to be opened at a board meeting. Your board member needs to make a choice -- stay as a director or be the manager of the association. If she continues to be a manager of the association, then she needs to follow the NRS 116 laws and you, as board members, have a legal obligation to supervise and monitor your manager.

Barbara Holland, CPM, and Supervisory CAM, is president of H&L Realty and Management Co. To ask her a question, e-mail support@hlrealty.com. To view a power point presentation of the new laws that were recently passed affecting HOAs, visit hlrealty.com, click on press release button on the left side, then click on article title, "The 2009 Legislation for common interest communities."