Legislature needs to find ‘balance’ in HOA issues

As you know there has been much publicity pertaining to homeowner associations, both in the newspaper and on television (the HOA Wall of Shame). The Legislature will be inundated with many bills pertaining to association management and association living. I have been writing this column on associations since 1996 and would like to share some thoughts with you that come from past and current readers who send me their questions.

In almost equal proportions, I receive letters from homeowners asking me how can they force their association boards to enforce the rules and regulations. The other half of letters pertain to homeowners who are complaining because they have received delinquent or violation letters that they believe were sent to them for some personal or board vendetta. Other letters pertained to homeowners who believe their boards or managers are not abiding by their governing documents or by NRS 116, such as notification of meetings and disclosure of information.

When someone's neighbor is violating the rules, we receive complaints that the association boards are not working fast enough in obtaining compliance. But when the table turns, and it is the reader who is receiving the violation letter, we get complaints that association boards are harassing. We can play the tit for tat game: For every unacceptable decision by some board of directors, we can find abusive individual homeowners who become nightmares for their neighbors and boards.

You will be amazed at the number of letters that I have received where the reader, who is in violation of some regulation, knew in advance before purchasing their home that the regulation existed, and still ask me the question, what can they do? In many cases, nothing can be done. Why? Because most of the rules, regulations and covenants were established long before the first shovel started the building of the community.

For many of the older associations prior to the 1980s, their governing documents are not easily amended as some require as much as 90 percent approval from the homeowners. The newer governing documents include many of the NRS 116 sections as part of the procedures and regulations of the associations. But even with these newer governing documents, change is still very difficult. Why? Because too many homeowners do not attend board meetings, read their newsletters or vote on surveys, vote on amending their governing documents or offering to run for a position on the board.

Here are some examples.

Many governing documents state that you cannot perform business from your home. This regulation was originally meant to preclude a mechanic's garage shop next door to your home. The reality in today's world is that business can be performed at home with your computer and the Internet and not one person, not one client or customer need come to your home. How do you change this regulation when it is part of the covenants? Usually you need 66 percent of your members to approve the change. Most associations would need multiple mailings to homeowners to obtain their votes on a topic that common sense dictates should be modified.

When I first came to Las Vegas, no one talked about drought-tolerant landscape. It took a state law to make the change because governing documents stated that architectural changes must be consistent with the architectural design of the community. At that time even if a board wanted to grant a variance to allow for drought-tolerant landscape in neighborhoods, they could not because they would need the homeowners to amend the association documents.

The state law allows the association to collect nine months of past-due assessments when there is a transfer of ownership and the previous owner was delinquent, what we call a super lien. State law also allows the association to charge back the collection costs that were incurred in order to collect the assessments.

Let's assume that I am your community manager presenting the current financial condition of your association and informing you that assessments must be increased. You know that you are paying your fair share of the assessments and are upset that your assessments will be increased because of the delinquency/collection process that can take over a year before the association receives money from that unit. You all ask me why? What are we doing to collect these delinquent funds?

As you know, there was a story on television of an association that turned off the water to a unit. Assuming that it had followed the law with the proper procedure and notifications to the owner, the law would allow the association to turn off the water since the water bills are paid through the association fees. This is not a covenant. This law was passed by the Legislature because of complaints from the paying homeowners, (who also are trying to survive the same economic conditions as the nonpaying homeowners) but who are, in essence, subsidizing those nonpaying homeowners who are not paying their fair share.

Do I personally think this was good law? No! Do I understand what the Legislature was trying to accomplish when this became law? Yes! Was this a law that was properly discussed as to its ramifications or just a knee-jerk reaction to complaints?

Back to the collection of fees. Say you are a buyer who wants to purchase a home and find out that there is money owed by the current homeowner or the previous homeowner depending upon whether you are involved in a short sale or foreclosure. It is pretty much a fact that close to a majority of the homes being purchased now are by investors. They are complaining that they are being overcharged collection fees.

In 2009, the Legislature instructed the Common-Interest Communities and Condominium Hotels Commission to develop regulations so that the buyers of homes would have equitable collection fees. We know that there have been a court case or two that has found in favor of the associations because of the laws. Investors will try to get the Legislature to make changes as to the amount of money that an association can charge.

If you really wanted to eliminate so much of the controversy, have the Legislature pass a bill that would require the banks to impound association fees just like most of them do for property taxes and insurance. Think of the many issues that would be resolved if such legislation were to pass.

I receive multiple letters from readers complaining that their assessments have increased but that their services have been decreased or even eliminated because of the financial conditions that have impacted Southern Nevada. If association fees were impounded, associations would be able to properly pay their bills and fund their services. Assessments would not have to be increased because of deficits and cash flow problems because of the amount of money owed by the delinquent homeowners.

You see the problem is with obtaining balance. People are asking the Legislature to create balance and too often the name of the game is not creating an equitable balance but whether you win or lose the game. Too often, our legislative representatives do not even try to obtain balance. They do not even invite the opposition to discuss concerns and to find some compromise.

I can tell you for a fact that many of the 2009 legislative committee hearings were not administered equally by the chairperson in allowing both sides of a proposed law to have equal time or ample time to state their position on the proposed laws.

This does not even take in consideration the fact that when both sides of the legislative houses met to resolve differences in similar laws that were passed that the committees made changes to the laws in these closed hearings that were never even brought forward during the public hearings.

Too often laws are passed as a knee-jerk reaction to some crazy situation and then we have regulations that impact all of us.

The pendulum changes depending upon the lobbying efforts, changes in technology or because of public issues such as conservation or recycling. Then new laws are passed, revised and then often eliminated at the next legislative session. There are too many examples of this back-and-forth set of changes to NRS 116 from fines, election of directors, recalls, audits and reviews, etc.

The fact that so many of the same sections of NRS 116 keep changing is indicative of the fact that the Legislature cannot find a proper balance in passing "good" law. It is indicative of the fact that there are too many knee-jerk reactions in creating law such as the turning off utilities and that real research and thought of the ramifications never took place. (Why would you pass such a law when there are too many laws on the books that state you can't disrupt utility service such as found in NRS 118A for example?)

What we need to have is a willingness for both sides of association issues to sit down together and discuss the issues and then come united to the Legislature with proposed solutions.

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.