Q. I live in a 96-unit condominium building and have served on the board of our association for 16 years. There are nine of us on the board, seven of whom including myself are at the age where some owners younger than we are should be thinking about serving. The last five or so years not one owner has offered to run for the board; the two younger ones we do have were recruited (more like coerced) into that role. My questions for you is, what exactly happens when the older of us are no longer able to serve, and no one offers to serve on the board? Is there somewhere in the rules where a situation like that is spelled out? Is a situation like that handled through the courts?
If things are going well, owners seem to think their board will just continue to be there to get things done. I would like to have written confirmed information to present to them to let them know what possibilities would occur if they don’t start to show an interest in contributing to the future of their association. I would appreciate any information you could give me on this subject.
—Veteran Board Member
A. “Governing documents (CC&Rs, bylaws, etc.) for the homeowners association (HOA) should cover these types of situations,” says attorney Stephen Coston of the firm of Burdman & Coston in Las Vegas. “If there are not enough board members, the governing documents typically allow a special election and/or appointment of temporary board members by the remaining board members. One issue may be that your governing documents created a nine-person board for a relatively small community of 96 units. This amounts to nearly 10 percent of the community owners (or more if there are any owners with multiple units) and there are simply not enough interested homeowners. Nevada Revised Statutes (NRS) 116.31034 requires a minimum of three board members. The board may consider amending the governing documents to reduce the size of the board to seven, five, or the statutory minimum of three members. Amending the governing documents usually requires a vote of the members of the community, but it may be worth the effort to avoid a crisis when board members start retiring and there is no one to fill their shoes.
“However, you could have a larger problem if it becomes the case that no one is willing to serve as a board member. In this situation, the association could end up with no board at all and be put into receivership. Most HOAs will have a community manager, but a manager cannot take actions on behalf of an HOA without a board of directors. Pursuant to NRS 32.010 an action could be brought by "any party whose right to or interest in the property...is in danger of being lost, removed or materially injured." Receivers are not appointed very often for HOAs, but it does happen.
“There are two main disadvantages to having a receiver appointed for your HOA. The first is control. The receiver is not a member of the community and having a court and receiver making decisions on behalf of the community is usually not an appetizing concept for homeowners. The second is cost. While board members serve without compensation, receivers do not. A receiver could charge $150-$300 per hour for services that board members were doing for free.
“I would suggest informing the homeowners that their apathy could result in a receiver being appointed and the effect this could have on them. The additional costs of a receiver may eventually necessitate an increase in assessments. Even disinterested homeowners will usually pay attention when it affects their pocketbooks.”