Research HOAs and developers before buying home

Note: The Las Vegas Chapter of the Institute of Real Estate Management and Southern Nevada Multi-Family Housing Association will be sponsoring a Candidates' Night May 26 from 5 to 7 p.m. at the Greater Las Vegas Association of Realtors, located at 1750 E. Sahara Ave. Participants will be able to speak with the candidates individually. For more information, call Denise Razo at 878-0959 or e-mail her at lae@iremlv.org.

Q: My family wants to buy a newly built home. However, I am totally unfamiliar with homeowners' associations and their rules. Another concern is developers declaring bankruptcy, especially if the development is not completed. How do I go about finding information on HOAs and developers?

A: If you have never lived in an association before, it is imperative that you do some reading prior to purchasing your home. First, you want to see the governing documents of the association, from the rules and regulations to architectural guidelines to the bylaws and covenants as you will be governed by them. Pay particular attention to the rules and regulations and the architectural guidelines as many of the issues that confront homeowners who are assessed fines come from these two sets of documents. Review the maintenance responsibility of the association and of the homeowner, which usually are found in the covenants. Also in the covenants, you will find a list of restrictions of how you can and cannot use your home, along with the collection rights of the association if you fail to make your payments to the association.

You may wish to obtain a copy of the Nevada laws that govern homeowner associations, known as NRS 116. There are specific sections which govern the homeowner association as well as the developer (known in the law as the declarant).

When an offer has been accepted, there are a number of documents that the association is required to give to you as a prospective homeowner, which after reviewing these documents allow you to withdraw your offer. Some of the information includes the financial status of the association which is not to be confused with the financial status of the developer. You would also receive a copy of the reserve study that informs you of the money the association will need in order to repair or to replace capital improvements.

There are books and seminars that you can read or attend. A list of some of these seminars can be obtained at the Nevada Real Estate Division at its ombudsman office. It is located at 1750 E. Sahara Avenue.

As to bankruptcy filings, they are public information and you can contact the Clark County Recorder's Office for information on these builders. If a lending institution should become the owner of the unfinished community, the bank will most likely not be the developer and it may be some time before a new buyer is found to complete the development.

Q: Our current president's term expired in February, but he failed to have the nomination forms sent out and refuses to acknowledge that he is no longer a valid board member. We have a three-member board. I, along with one other person, was newly elected in January, so we were unaware of the president's term. When I approached our property manager about this situation, she advised us that this director was entitled to continue as president until we send out the nomination forms and ballots to our members. I believe that NRS 116 should address this.

A: When you were elected in January, the other board position should have been included in the election process. Now, your association will waste money and time in sending out candidate applications and then continuing the process of sending out ballots if you have more than one candidate for the position.

It has been a practice of some management companies that a director is not replaced until another director is either elected or appointed. That is not the law.

In your case, where you have two directors out of three possible directors, there is no reason to have the director with the expired term remain on the board.

If you do not obtain cooperation from either the management company of the president whose term has expired, then you need to contact the ombudsman office at the Nevada Real Estate Division for assistance by filing formal complaint or asking for intervention. I, personally, would ask for intervention.

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."