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Five tips for building solid HOAs

Did you know that the vast majority of homeowners are extremely happy with their homeowners association and totally satisfied with the results they are seeing from their HOA? Year in and year out, in survey after survey, owners state emphatically that they believe their HOAs are performing their jobs well.

You might not know this, because good news rarely grabs headlines. But I see it daily as I work with homeowners and associations in Las Vegas.

Issues linked to homeowners associations’ finances, governing documents and bylaws, and budgetary information rank among the topics likeliest to raise concern among HOAs if they’re handled improperly.

As a strong starting point, I recommend the five following steps for homeowners associations looking to run at peak efficiency:

Encourage owners to read the budget: I know, I know. It sounds as exciting as watching paint dry. But it’s crucial. Associations should encourage owners to read the budget and financial information that was provided to them at year’s end. Every association in Nevada distributes copies of its budget, detailing the planned expenditures for the year, to each homeowner. Do not confuse this paperwork with junk mail. It explains in detail how your dollars are being used. Reading the budget will improve owners’ understanding of the association’s finances and reduce unnecessary challenges to necessary expenditures.

Plan for fully funded reserves: Associations should try to reach full funding as set forth by the reserve study provided by their reserve study specialists, which helps ensure that the community’s appearance remains presentable and properties hold their value.

Plan and consult with homeowners before xeriscaping common areas: Have a comprehensive plan in place before opting to remove any green areas in an effort to save money on water usage or to gain a refund from the water authority. Switching to desert landscaping may allow an association, and therefore homeowners, to reduce water fees. However, in some cases it could potentially lead to a disastrous drop in homes’ market prices because the green space was providing so much value.

Establish and clarify solar policies: Clarify the rules and guidelines regarding the association’s solar policy, including the installation of solar panels on homes. For Las Vegas homeowners associations, Nevada’s general statutes override any HOA covenants that try to ban solar panels from a community. However, certain restrictions on the placement and installation of solar panels may be permitted. Solar power and other alternative energies have become a hot issue in Las Vegas and other states. We will surely hear more and more about this topic in 2015 and beyond.

Obtain a utility audit: Prepare an in-depth audit of the association’s usage of water, gas and electricity by working with local utility companies. These audits can identify leaks and other problem areas. It is the customers’ responsibility to monitor their utility bills. Identifying trouble spots can save money for associations while improving their members’ standing as good citizens of the community.

Adam Clarkson is the owner/principal of The Clarkson Law Group, P.C., which has offices in Las Vegas, Reno and San Francisco. His practice is dedicated to homeowners associations and he has published numerous articles on association issues. Reach him at 702-462-5700.

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