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More new new state laws that affect HOAs

Updated July 6, 2021 - 11:22 am

Note: This is the second column in a two-part series on new state laws that will affect Las Vegas communities.

Senate Bill 186 has received much attention from the community management profession. This bill and its requirements are directly attributable to state Sen. Pat Spearman, D-North Las Vegas. SB186 has a series of requirements:

■ Associations will need to establish electronic access to documents effective Jan. 1, 2022.

■ Associations that consist of 150 units or more are to establish and maintain a secure internet website or electronic portal that may be accessed by any unit owner. Many associations already have such a program. The law requires that the site include, without limitation, the governing documents, most recent covenants, conditions and restrictions, the annual and any proposed budgets, notices and agendas for upcoming meetings and any other documents required by law or regulation to post. If the association has fewer than 150 units, the law encourages the association to establish and maintain the website or portal.

■ For some associations and community management companies, the next requirement will cost some money as the law requires associations to establish electronic payment options, effective Jan. 1, 2023.

Be prepared to increase your copying and mailing budgets for 2022. This part of the law requires associations to send notices both electronically and by mail, amending Nevada Revised Statute 116.31068.

The section had been revised to allow electronic mailings to reflect the changing in how our society communicates. Now, the new law states that unless a unit owner opts out of receiving electronic communication or has not designated an electronic mail address, the association shall deliver any notice required to be given by the association and any other communication to the homeowner by mail and by electronic mail. The law also allows for communication by hand delivery to the unit owner or any other method reasonably calculated to provide notice to the unit owner.

The next sections of this law are controversial. Some association attorneys are stating some of the requirements are contrary to federal laws and debt collections. At this time, this column will not address such concerns. Here are some of the changes that will spur associations to seek counsel with their attorneys and collection companies:

1. The law precludes persons involved with the foreclosure from buying a foreclosed unit, including the association, to be effective Oct. 1, amending NRS 116.31164. That includes any person who exercised the decisions pertaining to the foreclosure and their employees, the collection company used to collect any obligations relating to the unit, the community manager, member of the board and any attorney who provided representation to the parties. It also includes any person who is related by blood, adoption, marriage or domestic partnership within the third degree of consanguinity or affinity to a person who conducted the sale or any entity in which that person holds an interest.

2. The law requires additional reporting by collection agencies that serve associations, to be effective Oct. 1, amending NRS 649. The reports are to be filed to the commissioner no later than Jan. 31 of each year unless the commissioner grants an extension. The report is to include the following: the number of cases, the name of each association, the amount of money collected for each association, the total amount of money collected by the collection company, the zip code of each debtor and a statement signed by the manager of the collection company affirming that the collection company did not collect a debt during the immediately preceding year in violation of NRS 649.375.

3. The law precludes a community manager from collecting a debt from an association that they manage through a collection company operated by the manager or affiliate of the manager, effective Oct. 1.

■ SB72: The law allows the director of the Department of Business and Industry to establish a task force to study association concerns and issues. This law became effective upon passage and approval. It amends NRS 116.1201, concerning the foreclosure procedures. This is the section of the law that lists which types of associations are exempt from NRS 116 statues with the exceptions of NRS 116.31038, NRS 116.31152, NRS 116.31075 and the new addition to the law NRS 116.3116 to 116.31168 inclusive. The associations that are mostly exempt from NRS 116 include the limited-purpose association, the rural agricultural residential community and landscape maintaining of common elements community.

Some other issues SB72 addresses are:

1. This law instructs the Commission for Common-Interest Communities to regulate health, safety and welfare violations by amending NRS 116.31031. We expect the commission to further clarify this kind of violation by establishing the criteria used in determining whether the violation poses an imminent threat and determining the limitations on the amount of fines to be imposed by the association. The law now includes the unit owner, or tenant or invitee of the unit owner or tenant that could be fined up to $1,000 after a violation hearing.

2. It also amends NRS 116.31031 (the pizza man rule) by adding the tenant to the law. This law prevents an owner and not a tenant from being fined because of a violation committed by an invitee unless the owner or tenant participated or authorized the violation or had prior notice of the violation or had an opportunity to stop the violation but failed to stop it.

3. SB72 confirms that continuing violations are not capped. This is an important clarification of NRS 116.31031. Another important clarification for boards pertains to the executive session meetings to discuss any privileged matter with the association’s attorney, amending NRS 116.31085. The current law states that the board can meet with its attorney on matters relating to proposed or pending litigation if the contents of the discussion would fall under the privilege sections of NRS 49.035 to NRS 49.115 inclusive. The new law allows a board to meet in executive session to discuss any privileged matter with the association’s attorney.

4. Finally, SB72 makes some minor clarifications that if a homeowner requests in writing to have their hearing held at an open board meeting, the hearing must be held in a meeting of the board per NRS 116.31083 (the law pertaining to regular board meetings). Also, the law requires that the homeowner receives a written decision within a reasonable time after the decision is made and a period to cure the violation before the violation becomes a continuing violation. Please note, you cannot commence a continuing fine until the date in which the notice of the decision is provided to the homeowner.

5. SB72 amended NRS 116.31085. The new law does not require the board to provide the executive session minutes regarding a homeowner’s hearing. The board is required to maintain minutes as to the decisions.

Barbara Holland is a certified property manager and holds the supervisory community manager certificate with the state of Nevada. She is an author and educator on real estate management. Questions may be sent to holland744o@gmail.com.

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