HOA says it can’t afford management company

Q: I’ve been reading your great articles on homeowners associations in Nevada. I represent a small HOA in rural Smith, Nevada. The management company we hired has raised its prices to the point our 100-unit community cannot afford them.

Do you know if an HOA is required to have a licensed community manager? We would like to self manage but use a company that maybe can offer guidance. Do you have any suggestions or resources I can contact to get us on the right path.

A: You do not need a licensed manager if your board takes the responsibility of managing your association. There are many issues to address when you make that decision. Check your governing documents as there maybe a restriction to self-management. You also may want to check the latest regulations from Federal Housing Administration and Veterans Affairs as to the ability of your association members in acquiring loans. One of the most important decision to be made is whether your current and future boards will want to assume that full responsibility.

Other issues that will need to be addressed pertains to accounting, both the collection of assessments and paying your expenses, legal and enforcement issues from delinquencies to violations of your governing documents.

Your other options are to negotiate with your management company. There maybe services that can be charged on an as a use basis. Also contact other management companies and ask for bids.

Q: This email is too long. But there is a probably a useable column question at its end.

Prolog: I resigned my presidency of a medium-size condominium the day before moving to Las Vegas in 1995. I also put my Maryland real estate brokers’ license on the shelf. About a year or so later I was asked to run for a seat on another condo board even though I am now 2,000 miles away. I did and served until legally removed by a small group of vote-casting investors.

Last year: I moved into a community still controlled by its declarant (builder.) This HOA’s Architectural Review Committee has cited me for two violations. Its adherence to the fining protocol in Nevada Revised Statutes 116 and “master” HOA documents are a bit inadequate at best. The lack of pictures of the violations being one example.

Currently: I advised declarant’s “registered agent” (management company), via a certified (return receipt, which was signed) letter, citing the governing bylaw, that I wanted a public hearing. This after a short notice of a Zoom meeting. My letter mentioned my inability to participate in Zoom correspondence. I also wanted to present physical evidence that would contest the alleged violations. Perhaps, I should have called into question the NRS 82.271 provision that seems to allow negating a Zoom meeting. In this case that same HOA bylaw section provides for a public hearing.

Outcome: The board of directors advised by mail that it, in executive session, had assessed a fine for each violation. Evidence of this appears on my statement of payments and monies owed.

Subsequently: I sent a second certified (again return-receipt requested) letter to the managing company/agent with the board of directors in the address line. This referenced my first letter, mentioned my request for a public hearing and that it obviously had not been granted. One paragraph addressed that since my fining was now a public record that I had been injured and that this causation could be actionable — not involving mediation. I requested the voiding of the fine and again asked for a public hearing (even if I am limited to a three-minute presentation of evidence). I am left to wonder if the board of directors was even made aware of my certified letter. To this end, I included my request for a copy of the required notes from the executive session (with an offer to pay any associated costs).

Aside: One violation is that I had not replaced the builder-planted poisonous tree that I removed for my own safety. Somehow the visits to my property by ARC “inspectors” had not noticed that I did replace it — with a pine tree — last October.

My question: How does an HOA homeowner obtain assurance that a declarant-controlled board, seemingly insulated by a managing agent, has been made aware of correspondence? Especially, like in this case, that appertaining to the financial punishing of a homeowner. I have discussed this with an attorney who had no suggestion other than to write another letter.

A: Under NRS 116.31085 (4) an executive board holds executive sessions to hold hearings for an alleged violation unless the homeowner requests in writing that an open hearing be conducted. In your case, it appears the association management company and or board did not grant that request.

You should send a certified letter to the management company and to the board of directors that requests, once again, for an open hearing that any and all fines be removed from your account until such meeting takes place. This will allow you to present other facts and exhibits. If you are denied, you should contact the Nevada Real Estate Division for assistance.

Regardless of whether a board consists of the declarant’s members or whether the board consists of homeowners, the bottom line is that the community manager should be presenting to the boards any homeowner correspondence for their consideration.

Barbara Holland, CPM, is an author, educator and expert witness on real estate issues pertaining to management and brokerage. Questions may be sent to holland744o@gmail.com.