COLUMN: Directors abandon `sinking ship'

Q. The directors of our 2-year-old homeowners association resigned without appointing successors or calling a meeting for new elections. The property management firm, finding themselves managing an abandoned ship, resigned under advice from legal counsel.

Nobody is collecting dues or communicating with the developer regarding unfinished work. Nobody is managing the common areas or enforcing our rules and regulations.

Two options have been mentioned: Plan A, solicit legal assistance to obtain a court order for new elections and the appointment of an interim manager, then reimbursing the owners who pay for this counsel; and Plan B, have volunteers mail notices to all homeowners, which would call for a general meeting to discuss the options and to vote on Plan A or to elect a new board of directors. What do you think?

A. Plan B would be the better option. It is imperative to organize the management of the association as quickly as possible. Normal operations will be disrupted that could cause homeowners problems, such as the termination of services for nonpayment of utility bills, insurance, or contract services.

It is important that meeting notices are sent to all homeowners, including those out-of-state. The notice should be formal, calling for a general meeting of homeowners to elect a board of directors. Normally, the association would first send out a notice informing all owners who would like to be placed onto the ballot to complete a director candidate form. Since the association is in a crisis state, the notice could state that any owner interested in being nominated from the floor during the special meeting should complete the included director candidate form and return it to the sender who volunteered.

You will need a quorum, which could be difficult unless volunteers motivate homeowners to attend. Unfortunately, the Nevada legislature did not foresee such a problem. In the past, proxies could be used to vote for directors, but a change in legislation required owners to vote on a written ballot or be present at the meeting.

If there is no quorum, you could still have an informational meeting and find out who else would be interested in running for the board. A second notice would then have to be sent to the homeowners about a second meeting (which is called the adjourned meeting), and the written ballots could be included in this mailing. Volunteers must emphasize the importance of voting and returning the ballots.

Once the new board is in place, their first priority will be to hire a management company to assist them, because much work will need to be done quickly to restore some sense of normalcy.

Q. The contractor has stopped fixing problems in our townhome, which we purchased last year, and the one-year warranty is about to expire.

Does the fact that I have notified the contractor in writing protect our right to have the problems fixed, or should I start legal action before the expiration of the warranty? I plan to send a certified letter to the contractor asking for completion dates for the repairs. Is this a good idea?

A. Writing a letter, listing all of the problems and referencing any previous verbal and written communications, is a good idea. Besides asking for a completion date, you may want to add a paragraph informing the developer that if the work is not completed that you will be filing a complaint against him with the Nevada State Contractors Board and that you will seek legal representation.

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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