COLUMN: Authority of directors questioned

Q. Does the board have the right to approve any changes they want? To hire and pay contractors whatever they want? And maybe even pay themselves a salary without homeowner approval? I don't think this is democratic.

If we do not pay our dues, can the association sell our condominiums? Would our homestead protect us?

A. In an association, homeowners elect the board of directors. Association government is a republic form of government, where under the guidelines of your governing documents, the directors make decisions on behalf of the membership.

For example, the selection of a contractor is voted upon by the board, not the homeowners. As for how much they pay a contractor, the board should consider its projected operating budget, which is approved by the homeowners each year.

Board members cannot be paid a salary unless it is allowed in the governing documents. However, it is not against corporate law for a director, for example, to be the owner of a landscape company which services the association. If this were the case, the director would not be able to vote on any issue that pertains to the landscape contract or on any performance issue. In cases where a director is obtaining compensation, there should be complete disclosure to the membership.

However, homeowners can petition the board to change contractors, although it is not binding upon the board. Homeowners can file a petition to call for a special homeowners meeting for the express purpose of discussing a contractor and possibly hiring another.

As for the board selling your home, the process is called foreclosure and it is allowed by state law. Foreclosure can be initiated for nonpayment of association dues.

The process requires various notices to the homeowner during specific increments of time. At some point during the foreclosure process, the association is allowed to sell your home.

Your homestead would not protect you because you agreed to abide by the association's governing documents, which allow for foreclosure.

Q. I understand that if a condo complex has 50 percent in rentals, the Department of Housing and Urban Development will not make loans to new buyers. Can HUD or any other government agency deem the entire complex rental and I, as an owner, lose my equity and become a renter?

A. If you own your condominium and you have a deed that shows legal ownership, you are an owner, not a renter. It does not matter if everyone else in your association had renters living in their units, you are the owner of your home.

Please note that just as many homes are sold conventionally as are sold through FHA loans.

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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