SCA Board did not comply with HOA meeting laws

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The sale of 2763 White Sage Drive is voidable.

Sale was not authorized by a SCA Board action taken in compliance with the provisions of NRS 116.31083 and NRS 116.31085

  1. NRS 116.3102 define the powers of unit-owners’ association.
  • NRS 116.3102(m) limits the association’s authority to sanction an owner for an alleged violation of the governing documents by requiring the association to provide notice and due process as delineated in NRS 116.31031 to the owner who may be sanctioned.

(m) May impose reasonable fines for violations of the governing documents of the association only if the association complies with the requirements set forth in NRS 116.31031.

NRS 116.3102(m)

With certain exceptions defined in NRS 116.31085, Board actions must occur at duly called Board meetings, compliant with the provisions of NRS 116.31083, i.e.,

  • that are open to all unit owners,
  • that provide meaningful notice of the actions the Board intends to take at that meeting,
  • that provide minutes of all Board decisions made and actions taken.

SCA Board voted in closed meetings

SCA board did not take any valid votes to authorize the sale of 2763 White Sage in any open meeting with agendas and minutes that complied with the requirements in NRS 116.31083  (2013)  and NRS 116.31085 (2013).

Therefore, the decision and the sale are voidable.

No compliant agendas announced an intent to foreclose

  • SCA did not publish notice of its intent to authorize the sale of 2763 White Sage Drive on any agenda for any meeting of the Board in the manner prescribed by NRS 116.31083(5) and NRS 116.3108(4).
  • According to NRS 116.31083(5), meetings of an association’s executive board must comply with the provisions of subsection 4 of NRS 116.3108. 
  • NRS 116.3108(4) defines requirements of notice and agendas:

(a)        A clear and complete statement of the topics scheduled to be considered during the meeting, …

(b)       A list describing the items on which action may be taken and clearly denoting that action may be taken on those items. In an emergency, the units’ owners may take action on an item which is not listed on the agenda as an item on which action may be taken.

(c) A period devoted to comments by units’ owners regarding any matter affecting the common-interest community or the association and discussion of those comments. Except in emergencies, no action may be taken upon a matter raised under this item of the agenda until the matter itself has been specifically included on an agenda as an item upon which action may be taken pursuant to paragraph (b).

NRS 116.3108(4)

No minutes of any SCA Board meeting, compliant with NRS 116.31083 and NRS 116.31085, document a Board action to authorize the foreclosure of 2763 White Sage Drive was ever taken, and therefore the decision is voidable.

  • NRS (2013) 116.31083 (8) (10) require the Board to maintain “the minutes of each meeting of the executive board until the common-interest community is terminated.”  that include the following specific information:

8. Except as otherwise provided in subsection 9 (Section 9 allows the Board to “establish reasonable limitations on materials, remarks or other information to be included in the minutes of its meetings.”) and NRS 116.31085, the minutes of each meeting of the executive board must include:

(a) The date, time and place of the meeting;

(b) Those members of the executive board who were present and those members who were absent at the meeting;

c) The substance of all matters proposed, discussed or decided at the meeting;

(d) A record of each member s vote on any matter decided by vote at the meeting; and

e) The substance of remarks made by any unit s owner who addresses the executive board at the meeting if the unit s owner requests that the minutes reflect his or her remarks or, if the unit s owner has prepared written remarks, a copy of his or her prepared remarks if the unit s owner submits a copy for inclusion.

IMPERMISSIBLE TO SANCTION AN OWNER IN A CLOSED MEETING without a hearing

  • The decision to foreclose on 2763 White Sage was made in a closed session which was not permissible under the terms of NRS 16.31085 (3) (4) and is therefore voidable.
  • NRS 116.31085(3) defines the only permissible topics of discussion and actions the Board is authorized to take in an executive session closed to owners

NRS 116.31085 (3)

 3.  An executive board may meet in executive session only to:

      (a) Consult with the attorney for the association on matters relating to proposed or pending litigation if the contents of the discussion would otherwise be governed by the privilege set forth in NRS 49.035 to 49.115, inclusive.

      (b) Discuss the character, alleged misconduct, professional competence, or physical or mental health of a community manager or an employee of the association.

      (c) Except as otherwise provided in subsection 4, discuss a violation of the governing documents, including, without limitation, the failure to pay an assessment.

      (d) Discuss the alleged failure of a unit’s owner to adhere to a schedule required pursuant to NRS 116.310305 if the alleged failure may subject the unit’s owner to a construction penalty.

NRS 116.31085 (3)
  1. Whereas NRS 116.31085(3)(c) only authorizes the Board to “discuss” alleged violations of the governing documents in executive session, NRS 116.31085(4) only permits Board action to sanction an owner for an alleged violation in closed session when it holds a hearing at which the owner can present a defense to dissuade the Board from imposing a sanction for an alleged violation.

NRS 116.31085(4)

      4.  An executive board shall meet in executive session to hold a hearing on an alleged violation of the governing documents unless the person who may be sanctioned for the alleged violation requests in writing that an open hearing be conducted by the executive board. If the person who may be sanctioned for the alleged violation requests in writing that an open hearing be conducted, the person:

      (a) Is entitled to attend all portions of the hearing related to the alleged violation, including, without limitation, the presentation of evidence and the testimony of witnesses;

      (b) Is entitled to due process, as set forth in the standards adopted by regulation by the Commission, which must include, without limitation, the right to counsel, the right to present witnesses and the right to present information relating to any conflict of interest of any member of the hearing panel; and

      (c) Is not entitled to attend the deliberations of the executive board.

NRS 116.31085(4)

NO MINUTES = IT NEVER HAPPENED

  1. NRS 116.31085(6) requires the Board to report its actions taken in closed session in the regular Board minutes.

6. Except as otherwise provided in this subsection, any matter discussed by the executive board when it meets in executive session must be generally noted in the minutes of the meeting of the executive board.

  1. There are no minutes of any SCA Board meeting that document a Board action to authorize the sale of 2763 White Sage Drive.
  2. NRS 116.31085 (6) also defines a sanctioned owner’s right to receive minutes of any closed meeting at which the Board took action to sanction an owner for an alleged violation pursuant to a hearing.

The executive board shall maintain minutes of any decision made pursuant to subsection 4 concerning an alleged violation and, upon request, provide a copy of the decision to the person who was subject to being sanctioned at the hearing or to the person’s designated representative.

  1. SCA refused to provide minutes as required by NRS 116.31085(6) to document a decision to foreclose was made pursuant to a hearing make the action voidable.
  2. See 2/26/19 SCA response to Tobin’s RFDs (request for documents) .
  3. See 2/26/19 SCA response to Tobin’s ROGs (interrogatories)
  4. The fact that SCA Board did not provide notice of its intent to authorize the foreclosure of 2763 White Sage, nor offer the owner an opportunity for an open hearing, nor hold a hearing that provided the owner with the mandated due process is evidenced by CAM Lori Martin’s June 1, 2016 email refusing Tobin’s request for minutes of any meeting at which the BOD took action to foreclose:

“Your request for the “minutes where actions leading to foreclosure for delinquent assessment(s) was approved for 2763 White Sage” cannot be fulfilled since those minutes are Executive Session minutes and not privy to the anyone except the Board. The only time Executive Session minutes are released to a homeowner is if a hearing was held and then, only that portion of the meeting minutes is provided.”

CAM Lori Martin’s June 1, 2016 email refusing Tobin’s request for minutes

No notice or hearing was provided

SCA Board did not provide mandated notice and hearing prior to imposing a sanction for the alleged violation of delinquent assessments

NRS 116.31031 requires any HOA Board to provide due process to an owner prior to the imposition of any penalty for an alleged violation of the governing documents.

4.  The executive board may not impose a fine pursuant to subsection 1 unless:

      (a) Not less than 30 days before the alleged violation, the unit’s owner and, if different, the person against whom the fine will be imposed had been provided with written notice of the applicable provisions of the governing documents that form the basis of the alleged violation; and

      (b) Within a reasonable time after the discovery of the alleged violation, the unit’s owner and, if different, the person against whom the fine will be imposed has been provided with:

             (1) Written notice:

                   (I) Specifying in detail the alleged violation, the proposed action to cure the alleged violation, the amount of the fine, and the date, time and location for a hearing on the alleged violation; and

                   (II) Providing a clear and detailed photograph of the alleged violation, if the alleged violation relates to the physical condition of the unit or the grounds of the unit or an act or a failure to act of which it is possible to obtain a photograph; and

             (2) A reasonable opportunity to cure the alleged violation or to contest the alleged violation at the hearing.

–For the purposes of this subsection, a unit’s owner shall not be deemed to have received written notice unless written notice is mailed to the address of the unit and, if different, to a mailing address specified by the unit’s owner.

      5.  The executive board must schedule the date, time and location for the hearing on the alleged violation so that the unit’s owner and, if different, the person against whom the fine will be imposed is provided with a reasonable opportunity to prepare for the hearing and to be present at the hearing.

      6.  The executive board must hold a hearing before it may impose the fine, unless the fine is paid before the hearing or unless the unit’s owner and, if different, the person against whom the fine will be imposed:

      (a) Executes a written waiver of the right to the hearing; or

      (b) Fails to appear at the hearing after being provided with proper notice of the hearing.

      7.  If a fine is imposed pursuant to subsection 1 and the violation is not cured within 14 days, or within any longer period that may be established by the executive board, the violation shall be deemed a continuing violation. Thereafter, the executive board may impose an additional fine for the violation for each 7-day period or portion thereof that the violation is not cured. Any additional fine may be imposed without providing the opportunity to cure the violation and without the notice and an opportunity to be heard required by paragraph (b) of subsection 4.

      8.  If the governing documents so provide, the executive board may appoint a committee, with not less than three members, to conduct hearings on alleged violations and to impose fines pursuant to this section. While acting on behalf of the executive board for those limited purposes, the committee and its members are entitled to all privileges and immunities and are subject to all duties and requirements of the executive board and its members.

5/12/17 SCA attorney opinion

Adam Clarkson stated unironically, and apparently, with a complete lack of self-awareness, that SCA Board compliance with specific meeting laws is required for its corporate actions to be valid.

In his first legal opinion as SCA’s Legal counsel and debt collector, Clarkson stated, inter alia,

SCA Board did not comply with NRS 116 meeting laws when it made decisions regarding collection fines, debt forgiveness or foreclosures.

Further references

SCA CC&Rs 7.4 Compliance and Enforcement

SCA bylaws 3.26 Enforcement Procedures

11/15/12          NRED Advisory 12-05-116 Executive Session Agendas

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