It was only a matter of time. Recently, we received a renewal notice for one of our homeowners associations that is insured by Travelers. As anticipated, we were expecting an increase in the premium. The premium increased from $4,831 to $5,507, or about 14 percent. We had projected an increase in our 2014 operating budget due to recent lawsuits.
Travelers went one step further. There was an endorsement change that will exclude claims based upon or arising out of any lawsuit or demand letter referencing a “superpriority lien.” I am sure this is just the beginning for all of the other major insurance companies to start issuing policies with this exclusion.
This exclusion may become a moot point once the Nevada Supreme Court rules on the superpriority lien. We can only hope that the Nevada Supreme Court justices can see through the hypocrisy and rule that associations have the right to enforce their superpriority liens, which include the late, legal and collection costs.
Q: I live in a development that has a master association HOA and a subdivision HOA.
I have lived in my home for almost four years, and the previous owner, who purchased the property new, lived in the home for more than two years.
When I closed on my home, I was never given a copy of the subdivision HOA rules and did not know that it even existed until three months after I closed and received a bill from them stating that I owed fees. One of the rules is that my backyard (which nobody can see) be landscaped in accordance with their guidelines.
My problem stems from the fact that more than six years later, the sub HOA has decided to enforce this. Had I been aware prior to closing that this rule existed I could have either negotiated a lower purchase price or have required that the seller comply with this mandate.
As a result, I am facing legal action from the sub HOA and thus risk losing my home over this issue since my financial situation does not include any extra funds to cover the cost of installing backyard landscaping.
What recourse do I have against my sub HOA for not enforcing the rule for more than six years and for them not providing me with a copy of it before I closed on the house?
Can the ombudsman’s office help?
A: NRS 116.4109 pertains to the resale of association homes. According to the law, the seller or the seller’s agent is to furnish to the buyer a resale package that contains the community’s conditions, covenants and restrictions, bylaws and the disclosure statement, which consists of warnings when purchasing a home in an association. This last part is required by NRS 116.41095.
As to the enforcement of an architectural requirement, there has been a Nevada State Supreme Court case, Gladstone v. Gregory, which addressed whether there had been an abandonment of a restrictive covenant so general and substantial as to frustrate the original purpose.
In this case, the court specifically held that the right to enforce one restrictive covenant is not lost by acquiescence in the violation of another.
You need to contact the Nevada Real Estate Division’s Ombudsman’s Office as there are a number of programs (some informal versus formal) that are offered to the public to help settle disputes.
Perhaps, you can negotiate with your association a plan over a period of time where certain portions of your backyard would be completed until the entire project is finished.
Review your governing documents for the architectural sections. Your documents may not require any more than the laying down of rocks and chad.
Barbara Holland, certified property manager, broker and supervisory certified association manager, is president and owner of H&L Realty and Management Co. Questions may be sent to the Association Q&A, P.O. Box 7440, Las Vegas, NV 89125. Fax is 702-385-3759, email is firstname.lastname@example.org.