COLUMN: President's surprise ballot threatens Chapter 11

Q. Our association president sent ballots to all of the residents in our community.

The ballot, which has upset many owners, states that we must vote for one of the following: cut $120,000 in expenses; raise monthly assessments, which could double; or file for Chapter 11. It further states that we must have 75 percent approval or go into Chapter 11.

The ballot lists how we can reduce our expenses by canceling the landscapers, security and pest control; closing pools; converting the grass turf; changing our lighting system; and shutting off the sprinklers.

The president has already canceled pest control and security, and has reduced the landscaping schedule. Now he wants to remove grass from our common areas.

I do not understand how we can go into Chapter 11 when we pay all of the bills every month and still have money left over.

What do you think?

A. If the association was in such a financial crisis, the president should have called for an emergency meeting of the homeowners, as an unexpected ballot with these issues is inappropriate.

For the membership to make an intelligent decision, more detailed financial information should have been enclosed, including copies of the financial statements for the past three years and this year's projected operating budget; a list of accounts payable; a summary of the outstanding dues and the status of collecting those dues; and the balances on all operating, savings and reserve accounts.

Members also should ask questions, such as when the books were last audited by a certified public accountant.

Also, was the board of directors aware of the ballot and the actions taken by the president in canceling security or reducing the landscaping schedule? If the president took these actions upon himself without board approval, then the actions are not binding.

If this is the case, the board should take immediate and affirmative action. Most governing documents would allow the board to remove him as president. He would still be a member of the board unless the homeowners voted to remove him as a director.

Finally, I recommend that the board obtain professional assistance from property management and accounting firms to review their operations and finances to prepare a plan for the association in handling its financial problems and establishing better policies and procedures.

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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