Separation of mixed-use HOA no easy task, requires attorney

Q: I am a member of a mixed-use HOA, consisting of condos and private homes. This HOA was established approximately 40 years ago. I have been unable to get answers from the board or the management company regarding the following.

Is our relationship with the HOA contractual? What percentage of the budget is used for the condos and what part is used for the private homes?

My understanding is that there is an opt-out clause in the 1983 articles of incorporation, related to the private homeowners. I want this explained to me as a member and homeowner. The legal counsel for our HOA should be forced to issue an opinion on this matter.

I have been told that they are not required to give property specific allocations in the budget. I am not asking for property specific but rather an approximate amount of the budget that is specifically for the private homes. Our community has two or three circulating petitions intended to dissolve this union. Over half of the members have signed one or the other of these petitions.

As a private homeowner I want to know what I am paying for and what goods and services are associated with the private residences. I believe the dues have gone up over 25 percent, and with this in mind I believe an explanation is required. In my brief 50 years of business experience, billing is itemized. Basic math, nothing extreme.

When I have asked, I have been told to look at the budget, which clearly does not answer the above questions. The atmosphere is so hostile that the meetings are now being held via Zoom. My understanding is that the police were called at one of the last meetings. I was not there, so perhaps this is idle gossip. One would hope so. When I did try and attend one of the Zoom meetings, my mic was muted as soon as I said my name. In my experience this is a very secretive HOA, and I find that an unsettling situation for everyone.

A: It should be contractual. Check your deed.

The board treasurer or the community manager should be able to answer your question on the budget. In general, the percentage of the budget for the condominiums would be greater than the private homes depending upon the CCRs and what expenses are attributed to the two sections. When developing your association’s budget, the community manager or the treasurer should be able to answer your question.

Most articles of incorporation have an expiration date. It is not an opt-out clause for individual homeowners per se but a decision by the membership as whether they want to continue to operate under the corporation.

If the intent to opt out of the corporation is really a first step in terminating the association, you would follow NRS 116.2118. This is not an easy procedure or inexpensive procedure.

Dissolving the “partnership” of combining the condominium section with the single-family homes or actually terminating the corporation? There have been communities that were able to separate the parts and create two new associations. Again not any easy procedure. You would have to engage the services of an attorney who is very familiar with the process. A simple petition will not be sufficient unless the petition states in detail the financial and maintenance impact of the separation.

It may be necessary for you to file a complaint with the Nevada Real Estate Division as to obtaining the financial information for the association budget. As to any separation, legal counsel will be needed.

Barbara Holland, CPM, CMCA, AMS, is an author, educator and expert witness on real estate issues pertaining to management and brokerage. Questions may be sent to holland744o@gmail.com.