Pending legal actions against HOA should be disclosed

Editor's note: The following question was forward by GLVAR President and On the House columnist Paul Bell.

Q: Last summer the IRS commenced an audit of our homeowner association. Early this year the IRS ruled the association owed $1.3 million. That ruling is currently being appealed by the board with no firm date as to the final disposition.

I have been told by numerous, extremely reputable real estate agents that this information should be disclosed to potential buyers who are buying a house in this 7,000-plus homeowner association. However, none of them could quote me the specific law that requires this disclosure.

First, can you confirm for me that this information needs to be disclosed to potential home buyers? If so, would you please quote me the specific law which requires this disclosure?

Lastly, if in fact, our association should have been disclosing this information, but has not, would you recommend the association begin a process to notify all those homeowners who have bought homes since the IRS ruling?

A: Nevada Revised Status 116.4109 pertains to the resale of units. A unit owner, or his or her authorized agent, shall at the unit owner's expense furnish to a purchaser a resale package containing (among other items) a statement of any unsatisfied judgments or pending legal actions against the association.

By disclosing this information, the prospective buyer has the opportunity to either consummate the sales transaction or cancel the transaction.

If the association has failed to inform any of the new owners, the association should provide that information to them.

Q: After many unsuccessful attempts to reason with my homeowners association regarding a matter of damage to my personal property, I was forced to sue the HOA in small claims court. The judge ruled in my favor. Now, once again the delay tactics have begun. What recourse do I have to collect the money due me? I have been a responsible homeowner for many years abiding by the covenants, conditions and restrictions, rules and regulations. What about the responsibility of the HOA? Do I need to go to a lawyer to force the HOA to reimburse me? Of course, these unnecessary fees will need to be paid by the HOA since I already won this case.

A: If you have a ruling from the judge, contact the sheriff's department. You will need the judgment from the court. The sheriff's department can attach the association's funds.

Q: I was looking up the requirements for voting on executive issues (violations/fining, etc.). Votes must be indicated in the minutes on all issues, but I couldn't find any reference as far as indicating how to record board votes on executive issues in the minutes.

Because I couldn't find it, I thought it best to just indicate the amount of yeas and nays and whether the issue was approved or disapproved with special details if called for. This way if homeowners request a copy of the minutes of the hearing it will protect the identities of the board members and how each voted. Am I on the right track?

Reviewing some past executive minutes I noticed that there was no vote taken (hence the reason for my question). However because no vote was taken, can the determination of the board be upheld if challenged by a homeowner? I don't think so because the board cannot prove that the issue was voted on.

On yet another matter, under what circumstances other than a conflict of interest may a member abstain from voting? My board is of the opinion that if a board member doesn't vote it is a violation of a member's fiduciary duty and/or loyalty to the association. I don't agree as the board member may not have enough information to make a reasonable and intelligent decision on the issue.

A: NRS 116.31083 subsection 8d states that you are to record each member's vote on any matter decided by vote at a board of directors' meeting. This is not a requirement for executive sessions.

For executive sessions, the minutes should reflect that a motion was made, seconded and passed. You would not necessarily have to state the vote, i.e. how many voted for, against or abstained.

As a director, you do have the right to abstain from voting but if you have a director who never makes a decision and always abstains, you may want to ask that director to resign.

If it is too hot in the kitchen, then get out of the kitchen.

Board members should feel free to vote. If a board member is not comfortable with an open vote because of the sensitive nature, he or she can ask for a written vote, which under "Robert's Rules of Order," a director is entitled to do. Once that request is made, you would vote by written ballot.

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.