There are steps to removing board members

Q: A large group of us at Chateau Versailles want to know how to go about a recall of our board. We are involved in the current FBI investigation, with all of the possible culprits who have been named in the Las Vegas Review-Journal involved in our property. We would like to ask them to resign, but if they resist, we want them out. Can you help with the information we need?

A: According to recent news in the Review-Journal, a number of the associations involved in the FBI investigation were able to successfully recall individuals on their boards and were able to elect new directors.

Given this information, the homeowners should first ask for the director or directors to resign. At this point, you would like to assume that the director or directors of this association would just resign without the association initiating the formal recall process. If the person or persons refuse to resign, here is the recall process.

NRS 116.31036, removal of a member of board states that not withstanding any provision of the declaration or bylaws to the contrary, any member of the board may be removed with or without cause, if a removal election is held. The number of votes in favor of the removal must obtain at least 35 percent of the total number of voting members of the association to vote favorably and that at least a majority of the votes cast in the removal election supports the removal.

If you had 100 members, and 85 members voted, of which 35 voted to remove and 50 voted not to remove, the recall would fail because the 35 members who voted for the recall did not represent the majority of the total votes cast.

The removal must be conducted by secret ballot. The secret ballot along with a return envelope, prepaid mail, must be sent to each of the unit owners. The unit owners must be provided with at least 15 days after the date the secret ballot is mailed to return the secret ballot to the association. The secret written ballots must be opened and counted at a meeting of the association. A quorum is not required to be present when the ballots are opened and counted.

The incumbent members (current directors) and members being subject to the recall may not possess, be given access to or participate in the opening or counting of the ballots.

NRS116.3108 states that special meetings of the owners, including the removal election, may be called by at least 10 percent or any lower percentage specified in the bylaws of the total number of voting members of the association. The owners must submit a written petition which is signed by the required percentage which is mailed, return receipt requested or served by a process server to the board or to the community manager for the association. The board shall then set the date for the meeting, to be held not less than 15 days or more than 60 days after the date on which the petition is received.

If the board refuses to initiate the removal election, the homeowners would have to contact the Ombudsman Office at the Nevada Real Estate Division.

Q: Can you tell me if it's possible to modify certain terms of HOA rules and under what circumstances? Does it matter if residents would generally benefit from the change? I read your column though I'm not in property management and find your expertise timely and informative.

A: The board of directors can modify rules and regulations as long as they are consistent with the covenants of the association. Prior to enacting changes to the rules and regulations, the board needs to give notice to the homeowners of the proposed changes in a newsletter stating the date and time of the meeting where the board will be considering and voting on the proposed changes. This notification allows homeowners to comment in writing prior to the meeting as well as allowing the homeowners time during the homeowner meeting to discuss the proposed changes.

Note that the changes to the rules and regulations only need the vote of the board.

If you are referring to the changes in the covenants or bylaws, that is a different story. It is a more difficult, time-consuming task. Once the proposed changes have been noticed to the homeowners and approved by the board, the association then has to mail information about the proposed covenants and or bylaw changes to its membership to explain the purpose of the change and then to ask the homeowners to vote on the changes.

This can be implemented by mail and votes are cast on ballots returned to the management company. The reader will have to refer to the governing documents of the association to see what percentage of homeowners must approve the changes in the covenants or the bylaws. Some changes to the covenants require the approval of the lending institutions.

These kinds of changes are generally called material changes. For example, the association proposes a change in the number of votes for each unit. A home with two bedrooms would have two votes and a home with three bedrooms would have three votes as opposed to its current covenant of one vote per unit. (Note this proposed change is simply to illustrate the point.)

The lending institutions would have to be notified of the change and allowed to vote on the proposal in order for the change to pass, assuming that the homeowners have approved the proposal.

You would have to review the covenants and the procedures for the notification and voting process for the lending institutions.

Often material changes to the governing document require a different percentage needed for approval of the change.

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, Box 7440, Las Vegas, NV 89125. Her fax number is 385-3759, or she can be reached by e-mail at support@hlrealty.com.

Q07170108 LAWSUIT INFORMATION

I AM ASKING FOR YOUR GUIDANCE IN THIS MATTER. MY PRIMARY INTEREST AND CONCERN IS OBTAINING ACCURATE AND CURRENT INFORMATION REGARDING OUR HOMEOWNER'S LEGAL ACTION.

OUR ASSOCIATION HAD ITS QUARTERLY MEETING. THE PRESIDENT AND THREE OTHER BOARD MEMBERS WERE PRESENT INCLUDING THE WIFE OF ONE OF THE BUILDERS BEING SUED BY THE ASSOCIATION FOR BUILDING DEFECTS. THE PRESIDENT IS THE SON-IN-LAW OF THIS BUILDER AND HIS WIFE. THE ATTORNEY FOR OUR LAWSUIT OF SEVERAL YEARS DID NOT SHOW. HIS PRESENTATION WAS SCHEDULED FOR THE OPEN BOARD MEETING ON OUR AGENDA.

TWO ATTORNEYS APPEARED AS THE OPEN BOARD MEETING ENDED. THE PRESIDENT AND A BOARD MEMBER BOTH ARE RELATED TO THE BUILDERS BEING SUED, THE LENGTH OF TIME THE LAWSUIT HAS EXISTED AND THE LACK OF ANY INFORMATION RELATED TO THE LAWSUIT MAKES ME VERY UNEASY.

IT WOULD APPEAR THAT THE ASSOCIATION BOARD HAS AN INHERENT CONFLICT OF INTEREST SINCE THERE IS A RELATIONSHIP BETWEEN THE PRESIDENT AND THE BUILDER WHO IS BEING SUED. I AM NOT QUITE SURE HOW LEGAL COUNSEL REPRESENTING THE ASSOCIATION HAS RATIONALIZED THIS INHERENT CONFLICT IN HOW THE ASSOCIATION IS MAKING DECISIONS, LEGAL STRATEGY AND MAINTAINING CONFIDENTIALITY.

THIS MAY BE AN ISSUE THAT REALLY CALLS FOR THE ASSOCIATION'S PRESIDENT TO RESIGN OR TO RECLUSE HIMSELF OF ANY DISCUSSIONS PERTAINING TO THE LAWSUIT.

THE ASSOCIATION SHOULD BE PROVIDING SOME INFORMATION AS TO THE STATUS OF THE LAWSUIT. THERE ARE TIMES, SENSITIVE TIMES, WHEN VARIOUS NEGOTIATIONS ARE BEING DISCUSSED THAT CAN NOT BE IMMEDIATELY DISCLOSED TO THE MEMBERSHIP. THIS DOES NOT PREVENT THE ASSOCIATION TO STATE WHAT HAS BEEN DONE, I.E. INTERROGATORIES OR DEPOSITIONS ARE NOW BEING HELD OR THAT THERE IS A SETTLEMENT CONFERENCE SCHEDULED, ETC.

THE READER SHOULD SEND A FORMAL LETTER TO THE MANAGEMENT COMPANY AND ONE TO THE BOARD REQUESTING AN UPDATE ON THE LAWSUIT. IF THERE IS NO RESPONSE, THE READER MAY WANT TO DIRECTLY CONTACT THE ATTORNEY FOR AN UPDATE. IF NO ONE PROVIDES ANY INFORMATION TO THE READER, THEN THE READER WILL NEED TO CONTACT THE OMBUDSMAN OFFICE FOR ASSISTANCE.