Developer hands over checkbook, no records

Q. When our association was turned over to us about a year ago, only a checkbook was given to the board -- no records of receipts or expenses, a reserve study, nothing. The board contacted the developer to obtain these records without success. What should we do? Who can we contact to do our own study?

A. Nevada statutes clearly define the responsibilities of the declarant during the transfer of management to homeowners.

Within 30 days after the homeowners elect a majority of the board members, the declarant must deliver to the association all property of the homeowners and association. These items may include: the original or certified copy of the recorded covenants as amended, articles of incorporation, bylaws, minutes, and other rules and regulations; accounting and financial statements, starting from when the association first received money; the association's money or control thereof; plans and specifications used in the construction of improvements that were completed within two years before the declaration was recorded; insurance policies; certificates of occupancy; renewable permits that are required to be kept on the premises; written warranties in effect; roster of owners and mortgages; contracts for services in which the association has an obligation to pay a fee (The association may terminate any of its contracts signed by the developer without penalty as long as it provides a 90-day notice to the other party.); and employment contracts.

In 1999, the Nevada legislature required the declarant to have a reserve study, a reserve account, and a written disclosure regarding the amount by which the declarant has subsidized the association's dues.

Your association should file a complaint against the developers with the ombudsman's office at the state's Real Estate Division. If the developers are licensed with the division, a separate complaint should be filed against their license. These steps should be taken before contacting an attorney.

The division has specific qualifications for people who prepare a reserve study and the information they must include. The cost for a professionally prepared reserve study ranges from about $1,200 to $2,000.

I recommend that boards do not prepare their own reserve studies. Some studies indicate that associations are underfunded and that dues need to be significantly increased to fund the reserves properly. The board does not really want to place itself in a position where homeowners do not have faith in the study's validity or credibility.

Q. We have a management company that is seriously neglecting us. Is there any way that the board members and homeowners could take over and run the association themselves?

A. First, read your covenants. It may specifically state certain restrictions which may limit your options.

To self-manage, you would probably have to obtain a property management permit from the state's Real Estate Division. This would require completing property management courses and state law classes, including NRS 116 and NRS 118.

If you're unhappy with the management company, start interviewing others and make a change.

Questions for Barbara Holland may be sent to Association Q. & A., P.O. Box 7440, Las Vegas, NV 89125. Her fax number is 385-3759.

Barbara Holland, Certified Property Manager, is president and co-owner of H&L Realty and Management Co. She is a member of the Institute of Real Estate Management and is the author of two books on the subject. Holland is a past president of the Greater Las Vegas Association of Realtors.

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