Developers have two ways to pay homeowners associations

     By Barbara Holland, CPM
      Q. I have a couple of questions.
      In one of your recent articles pertaining to the new state laws, what was meant when you referred to the amount of money the developer contributed to the homeowners association on a per-unit basis or per-lot basis? What about money deposited into the reserve account by the developer? Is this supposed to be referenced in the covenants or bylaws, and if so, where? Are there any other dues the developer should be paying?
      A. Depending on the governing documents that have been recorded by the developer, state law NRS 116 allows the developer to pay either the monthly assessment on all units owned within a phase, or to subsidize the association by contributing money to meet the operating expenses during the developer's control of the property.
      The new law requires the developer to transfer over to the association certain financial information within 30 days after the developer no longer has the majority on the board. The law requires the developer to deliver the information showing what money has been contributed to the reserve account and what money was contributed as a subsidy. A per-unit or per-lot basis would mean, for example, that the developer contributed "x" amount of money per unit per month, such as $45 per unit per month.
      State law requires all governing documents to conform with the new law. If the current governing documents are not amended by Oct. 1, 2000, the provisions of the law will supersede the governing documents of an association.
      If for some reason, during the developer's control of the property, a special assessment was passed, the developer would probably have to contribute the same special assessment per unit as a homeowner. Otherwise, the developer has a choice between monthly dues and subsidizing the association's expenses.
      Q. The development we are in has not sold all of its units. Is the association responsible to pay the cleaning and upkeep for the model homes? How about redoing the fountain in front or hooking up a spa that has never been hooked up?
      A. First question: No, that expense belongs solely to the developer.
      As for the second question, during the development stages, there are certain construction costs as opposed to operational costs of the association. Redoing the fountain or hooking up the spa fall under construction costs.
      Let's assume the pool has been completed. The cost to operate that pool is the association's responsibility. If there are warranty issues or construction problems with the operation of the pool, the developer may be responsible for correcting those problems.
      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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