Proposed bill AB 34 is controversial

A couple of weeks ago, the state Committee on Judiciary held a hearing on Assembly Bill 34, which was sponsored by the Nevada Real Estate Division. There was much controversy about the bill’s contents.

The bill attempts to define what constitutes a board meeting. It defines it as any congregation of a majority of board members at the same time and place to hear, discuss or deliberate upon any matter that is within its authority.

The proposed law defines a board meeting as: board members meet with less than a majority of the executive board; a majority of members are in attendance; a meeting is held with the specific intent to avoid meeting notices (Nevada Revised Statutes 116.31083;) and a teleconference in which a majority of the board members who are in different locations are connected by electronic means through audio or video or both.

The bill then defined actions that did not constitute a board meeting. Those are: a social function where members do not deliberate toward a decision or take action on any matter that is within its authority; inspecting the community for violations of governing documents; and inspecting an association project. In essence, this law will prohibit workshops.

Prior to the adoption of NRS 116 most, if not all, Nevada community associations followed NRS 82 (the Nevada nonprofit corporation code, which still applies to associations where NRS 116 is silent). NRS 82.271 (2) allows the board of a nonprofit corporation to take action without a formal meeting by signing a written consent.

This law was superseded by NRS 116.3108, 116.31083 and 116.31085, which specifically requires that board’s actions take place at properly noticed and agendized meetings.

A true workshop is any discussion in which board members, with or without a quorum, take no action. In the absence of an action there is no violation of the current state laws.

It is interesting to note that our own Legislature conducts workshops as a fact-finding process in which to obtain information on various subject matters.

The subject of workshops has been discussed and debated numerous times before the Commission for Common-Interest Communities and Condominium Hotels.

It has never concluded that workshops should be prohibited and, in fact, it has acknowledged workshops are useful in many situations.

The problem with this specific provision is that the exceptions are too limited. Unlike local and state governments, associations do not have the same resources of administrative staff. Too often boards cannot even find volunteers to serve on the board, let alone find homeowners willing to work on committees.

Under this proposed law, a board could not meet to assign members to review its rules and regulations, or begin the process of finding a new landscape company prior to an official board meeting.

In between board meetings, board members would not be able to formulate an agenda, discuss whether to call a vendor when some unexpected maintenance issue occurs or even visit another community that a prospective landscape company has given the association as a reference.

Many community managers when they first take over a new association walk with the full board to inspect the community in order to better understand the physical components and or issues of the property.

Many associations have more than one board member serving on their architectural control committees; under the new law this would be prohibited.

In many associations, the community managers conduct educational workshops that train board members. These educational sessions would be prohibited by this bill.

The problem with this part of the bill is that the exceptions are too narrow and unrealistic.

The community manager could not even discuss items with more than one board member without being accused of attempting to circumvent the meeting rule.

By the time the legislative committee receives all of the number of possible exceptions that would need to be included in this law, the ending result would be a law that would consist of complex legal requirements.

Once the law is in place, it will be two years before it could be modified to include other exceptions to the law that were missed.

In my next column, I will talk about another controversial proposal to create a voting monitor for community associations.

Barbara Holland, certified property manager, broker and supervisory certified association manager, is president and owner of H&L Realty and Management Co. Questions may be sent to Association Q&A, P.O. Box 7440, Las Vegas, NV 89125. Fax is 702-385-3759, email is support@hlrealty.com. Holland is also available to speak at your organization or company.