New laws address HOA board recall, voting issues

Editor's note: Barbara Holland takes a break from her question- and answer-format to talk about the recent legislative session. This is the last column in a special three-part series.

Last week's article started to highlight some of the major changes to NRS 116 with the passage of SB 204. Today's article will conclude SB204, which was a significant piece of legislation.

There were a few bills that pertained to vacated board seats. This bill allows the board to appoint a director to fill the vacancy for the unexpired portion of any term or until the next scheduled election, whichever is earlier, unless the association's governing documents require an election by the homeowners.

The law clarifies the procedure for the removal of a director by incorporating the language found in NRS 116.3108 pertaining to petitions.

A recall election may be called by the unit owners constituting at least 10 percent of the voting members or any lower percentage allowed by the home association's covenants. The written petition is to be signed by the homeowners and delivered by mail, return receipt requested or served by a process server to the board or community manager. The secret ballots must be sent not less than 15 days and no more than 60 days. The board shall set the meeting date for the opening and counting of the ballots not more than 15 days after the deadline for the returning of the ballot and not later than 90 days after the date on which the petition was received.

NRS 116.3109 pertaining to quorums of the board was changed to state that in order for a motion or an action item taken by the board to be valid, there must be a quorum at the time of that vote. The previous law stated that a quorum existed throughout the meeting as long as there was a quorum at the beginning of the meeting. The bill also added that the association is to conduct its meeting per the latest edition of "Robert's Rules of Order Newly Revised" unless the bylaws or a resolution of the board adopted before the meeting provides otherwise.

NRS 116.311 was revised to allow unit owners to vote at a meeting in person, by absentee ballot or by proxy or when a vote is conducted without a meeting by electronic or paper ballot subject to the association's governing documents and requirements.

First, at a meeting, voting by voice, show of hands, standing or any other method as designated by the person presiding at the meeting will be valid. Unless otherwise stated in the covenants or by state law, a majority of the votes cast determines the outcome of the election (note it did not state a majority of the unit owners).

The association shall promptly deliver an absentee ballot to an owner who requests one as long as the request is made at least three days before the scheduled meeting.

Votes cast by absentee ballot must be included in the tally of the vote taken at that meeting. The association must be able to verify absentee ballots.

One change was made concerning proxies. They must designate the meeting for which they are executed, including any recessed session of that meeting (if the meeting had to be adjourned and continued to another day or time, the original proxy would still be valid).

Unless restricted or prohibited by its governing documents, an association may conduct a vote without a meeting if the following requirements are met:

• The unit owners are notified that the vote will be taken by ballot.

• The association shall deliver a paper or electronic ballot to every unit owner entitled to vote.

• The ballot must set forth each proposed action and provide a vote for that specific action for or against.

• Indicate the number of votes needed to meet the quorum requirements.

• State the percentage of votes needed to approve each matter other than election of directors.

• Specify the time and date by which a ballot must be delivered to the association to be counted, which may not be fewer than three days after the date the association first delivered the ballot.

• Describe the time, date and manner by which a unit owner may wish to deliver information to all unit owners regarding the subject of the vote.

Unless stated otherwise in the association's governing documents, a ballot is not revoked after delivery to the association by death, disability or attempted revocation by the person who cast that vote. Approval of an action item is only valid if the number of votes cast equals or exceeds the required quorum to be present at a meeting authorizing the action.

Section 45 pertains to insurance coverage, including property insurance of not less than 80 percent of the actual cash value of the insured property, commercial general liability and crime insurance.

It is imperative that board members and community managers contact their insurance agents to review the new law as well as reviewing the covenants. The insurance sections are 45-48.

For community managers, the bond law requirement for licensing has been eliminated. The association is to obtain crime insurance for all members of the board, officers, employees, agents, volunteers, and extends coverage to any business entity that acts as a community manager of the association and that business entity's employees. The insurance must be at least three months of aggregate assessments, plus reserve funds or $5 million maximum, whichever is less. The crime insurance section becomes effective Jan. 1.

The bill added one more requirement regarding community records to unit owners and the ombudsman office. The new law states that if the board fails to provide a copy of the records within 21 days of receipt of a written request, it must pay a penalty of $ 25 per day for each day it fails to provide a copy. I am assuming the penalty is paid to the ombudsman office.

Once again, the Legislature has passed two conflicting bills. SB30 states that the time period is 14 days and not 21 days.

SB 204 was very much a "house-cleaning" bill. Many sections were deleted, reworded or shifted to other sections of NRS 116, too many to describe for my column. Watch for news items of seminars that will be held during the year that you may want to attend which will review SB 204 and other laws that were passed.

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.