77°F
weather icon Clear

SB 186 bad for Nevada HOAs; could cause lawsuits

Senate Bill 186 will expose Nevada community associations to lawsuits over foreclosures. It will also cause an increase in association assessments and create needless paper waste.

Foreclosure lawsuits

Almost all Nevada community associations lost their insurance coverage for foreclosures after the superpriority litigation issues that occurred over the past decade. Due to last-minute changes to SB 186, uninsured community associations will be exposed to foreclosure litigation claims and class actions, which means that associations’ litigation costs and judgments will be passed on to association homeowners through assessments.

How did this happen and why? SB 186 was changed to eliminate the ability of a community association to purchase a unit by credit bid at the association’s foreclosure sale. No association ever wants to purchase a unit, but the ability to do so as part of the non-judicial foreclosure process is necessary in order to lawfully process a non-judicial foreclosure.

The Federal Fair Debt Collection Practices Act, 15 U.S.C.A. § 1692f, provides, in relevant part, as follows:

A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if—

(A) there is no present right to possession of the property claimed as collateral through an enforceable security interest;

(B) there is no present intention to take possession of the property; or

(C) the property is exempt by law from such dispossession or disablement.

An association would not have a present right to possession through an enforceable security interest as required by subsection (A) where it lacks the right to take possession through a credit bid purchase. If an association cannot purchase a unit by credit bid then it would not be possible for an association to have the intent to take possession of the property through nonjudicial foreclosure as required by subsection (B). Similarly, pursuant to subsection (C) an association would not lawfully be able to default a property (i.e., threatening to take a nonjudicial action to effect dispossession of the property) because the property would be exempt from dispossession due to the association’s preclusion from purchasing by credit bid.

Increased assessments and paper waste

For the past decade, Nevada community associations have saved money and trees by providing notices through electronic mail as allowed by Nevada Revised Statute 116.31068 when an owner provides an e-mail address for notices. SB 186 takes away this discretion and instead forces associations to utilize physical mail and e-mail simultaneously regardless of a unit owner’s desired method for notice. In the aggregate, this change may cost Nevadans in HOAs in excess of $10 million dollars a year in paper and mailing costs, not to mention the waste of paper that will occur. These are costs associations have not had to include in the budget for more than a decade, so expect this change will result in an assessment increase in 2022 if this bill is not stopped.

Our last chance to stop this from happening is for the SB 186 to be vetoed.

Please contact Gov. Steve Sisolak and his chief of staff (michellewhite@gov.nv.gov) to urge that he save Nevadans from being subjected to avoidable liability and needless costs by vetoing SB 186.

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.

Don't miss the big stories. Like us on Facebook.
THE LATEST
Heated discussion could erupt over delay in pool reopening

Our pool hasn’t opened, and it should for the residents. The HOA board has the authority to open it. It’s record-setting heat in Las Vegas. What can we do ?

Dogs over 40 pounds not welcome in community

You would need to check with the association’s legal counsel as to whether you should grandfather or whether you should start enforcing the restriction to all existing violators. Expect push back as not only is this a public relations issue but, face it, if you are a dog owner, your dog is part of your family.

Spouses cannot serve on HOA board at the same time

You would not be able to serve on the board at the same time your wife is serving, per Nevada Revised Statute 116.31034 (10)(a)(1).

Real estate investing is not a one-trick pony game

Ignite Funding, a hard money lender, experienced zero defaults in 2020, a pitfall that many lenders and real estate developers were unable to avoid due to the global pandemic. Ignite Funding has not taken this achievement lightly, knowing that many in the lending industry were not left unscathed. Ignite Funding attributes this success to their lending philosophies and the various steps they take to mitigate the company’s overall exposure to risk. Risk mitigation is exceedingly important as Ignite Funding’s sole operation is to provide thousands of investors the opportunity to participate in real estate investments through trust deeds.

Things HOA boards should consider during COVID reopening

There is a lot of confusion out there concerning COVID-19 reopening protocols and how it affects our homeowners associations. Communities across the valley are struggling with how best to address this situation. I have invited Las Vegas attorneys Michael T. Schulman, Gregory P. Kerr and David Stern to weigh in on this very important subject.

Don’t get swept up by home repair scams this spring

April showers bring May flowers — along with a list of projects to tackle around the house. If your spring-cleaning agenda includes minor or major home renovation plans, it’s likely you’ll require the services of a contractor to help your vision come to life. Whether updating your flooring, renovating your kitchen or building a pool or spa, it’s always important to hire licensed contractors who are in good standing with the Nevada State Contractors Board

Homeowner thinks HOA board wants too much information

I was wondering if a homeowners association can make you tell them how many people live in the house, what kind of car you drive and the size and weight of your pets.

HOA raises funds for Make-A-Wish of Southern Nevada

During this COVID year, our Las Vegas communities have done good things for their residents. I have opened this column up to share those stories with my readers. We have this one for this week:

HOA changes color scheme and it’s a mess

For many associations, the original paint scheme is not available any more. The paint colors simply don’t exist and more “modern” colors have come to replace the older ones. Even if this is the case with your association, there should be some consistency of colors for the residents to prevent the “mixed-match mess-up.