State laws trump association rules

Q: As you know NRS 116.31151, section 3 states that in order to reject an association budget, a minimum of a majority of unit owners, or any larger vote specified in the declaration, is required. Failing this requirement, the proposed budget is automatically ratified. For better or worse, the governing documents of our association of more than 7,100 units require a vote of 90 percent of the owners needed to reject a budget.

One of our candidates for election to our board has stated in his campaign literature that one of his goals is to require increases in dues to be approved by a majority of the homeowners. I have advised this candidate that I believed that his proposal cannot be implemented and would be illegal because of the NRS statute regulations on the approving of budgets. In our case, this proposal would cause fiscal paralysis to expect the owners of more than 3,500 units to appear at a meeting and vote to approve a budget.

Is my understanding correct, and could you conceive of a situation in which an association under current statute could actually establish a valid policy to specify an affirmative vote to approve a budget rather than an affirmative vote to reject a budget?

A: The state law as noted in this article takes precedence over your governing documents, both current and proposed. The proposal to change how dues are increased would be a violation of the NRS statute and would be illegal. No, I cannot conceive of a situation in which the association could change the voting procedure to the affirmative. It could only happen with a legislative change to the laws.

Q: Our regulations were established in 1989. The rules state that garage doors should be kept closed at all times except when leaving and entering. How can an association tell its owners when to open and close a garage door? I have files in the garage containing personal records. I cannot see opening the garage 20 times a day -- the wear and tear on the garage door and the power it takes to open and close seems excessive. Isn't this against my constitutional rights since I own the house and the garage door? I feel like I live inside prison walls.

A: You won't find garage doors in the constitution. When you purchased your home, you agreed to abide by the governing documents. If you did not like all of the restrictions in the documents, you had a choice not to move into the community.

Your covenants or rules probably also state that the use of the garage is for parking. Too many associations do not have adequate open parking. The garages are needed for the storage of vehicles and not storage of other personal belongings. Hopefully, you are exaggerating about accessing your personal records 20 times a day. If this is truly the case, those records need to be stored inside your home.

Finally, there is a safety factor. Open garages are not safe -- there are too many stories where someone has hidden inside the garage and has caused bodily harm, stolen expensive bikes or other vehicles, as well as causing arson by burning the garage and the home.

Bad people drive through communities just looking for someone to be their next victim.

From an aesthetic viewpoint, no one really wants to look inside your garage.

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. Her fax number is 385-3759. Questions may be shortened and are subject to editing.

Many home buyers, particularly first-time buyers, are very happy to see home prices dropping. However, they now face tougher requirements in finding mortgage financing for their newly purchased residence.

Mortgage interest rates have been slowly rising, but they are still low, compared with past years. That's the good news. But most lenders are now requiring larger down payments and higher credit scores before accepting an application.

During the period from July 2006 to June 2007, about 45 percent of first-time home buyers opted for 100 percent financing of their new homes, according to a report from the National Association of Realtors. The median percentage that first-time buyers financed was 98 percent of the home's price.

"No-down payment loans are still happening, but with a lot more restrictions than before," said Barton Pitts, president of Downers Grove, an Illinois mortgage firm.

Today's borrowers have to verify their income and their financial assets to lenders in most cases. There are few lenders who accept no-documentation or low-doc mortgage applications, noted Frank Nothaft, chief economist for Freddie Mac, a major government-sponsored buyer of mortgages.

"The FICO credit score of 660 to 680 is now the minimum most lenders will consider to prove a borrower's creditworthiness," Nothaft said.

Some industry leaders now say that a 5 percent down payment on a home purchase is the minimum amount typically required in today's market.

"First-time home buyers in many markets will soon need even more money for a down payment -- maybe a minimum of 10 percent," said Guy Cecala, publisher of Inside Mortgage Finance. "And I think before too long we're going to see the required down payment up to 15 to 20 percent."

In today's market, it's even more important to look for and find the right mortgage lender or broker -- there's many good ones out there. Look first for one with a solid, success-proven record as a true professional.

Then search for one who can offer the type of loan that meets your needs.

Q: Where are the most severe mortgage-related problems?

A: Florida, Nevada and Michigan are the states experiencing the greatest problems with mortgage foreclosures, according to a study and report by the Mortgage Asset Research Institute LLC, for the Mortgage Bankers Association.

"The current market conditions, compounded by mortgage fraud, are having a detrimental impact on our entire national economy," said David Kittle, chairman-elect of MBA.

Send inquiries to Jim Woodard, Copley News Service, P.O. Box 120190, San Diego, CA 92112-0190. Questions may be used in future columns; personal responses should not be expected.