Changes to AB 350 include investing funds and policies

Editor's Note: This is the third column in a four-part series addressing recent state laws affecting the state's homeowners associations.

We'll continue our discussion from last week on the amendments made to Assembly Bill 350.

* One of the new sections within the standards will be of importance to associations as it is a major change. Item 12 under NRS 116A.400, says an association may maintain and invest funds in a financial institution whose accounts are insured by the Federal Deposit Insurance Corp., National Credit Union Share Insurance Fund, Securities Investor Protection Corp. or a private insurer approved per NRS 678.735.

This pertains to credit unions and has not been published in the law or on the Internet yet. Accounts also can be insured in government securities.

Prior to this new addition to the law, associations could only place funds in a bank that was licensed in the state. This will allow more flexibility for the associations and more opportunities of obtaining higher interest rates on their funds. It also means that associations will need the support of financial experts or consultants as the average community manager and management company really do not have this expertise.

* Section 16 requires the community manager ensure the association develops and approves written investment policies and procedures. Again a financial consultant should be engaged to help develop these policies.

* Section 21 states that the community manager ensures that the association has written collection policies approved by the board and in compliance with all local, state and federal collection of debt laws and that the board must approve all write-offs of debt.

The last section would amend NRS 116A.400 is a list of what a community manager shall not do.

* Section 6 states that, except as otherwise permitted by the provisions of the court rules governing the legal profession, the manager cannot establish an attorney-client relationship with an attorney or law firm that represents a client who employs a community manager or anyone he or she has made an agreement.

* The law that was amended in the conference committee pertains to swimming pools and this has already caused a controversy with Southern Nevada Health District laws.

NRS 444.065 (state laws pertaining to swimming pools) was amended. Section 2e now states that any location where the structure is a privately owned pool and is used by members of a private club, or invited guests of the members, would not be included in the definition of public swimming pool.

What this means is private club pools would not fall under the health department's jurisdiction.

Through the grapevine, this provision was pushed through, depending upon who you are talking to, by either a major casino operator, an exclusive HOA, etc. It was passed literally on the last day possible. It was not meant to include homeowner associations, but a big can of worms are out on this one.

Our health district has already received calls from communities telling the staff that they are no longer covered under NRS 444.

I would recommend to all association boards and community managers and management companies to maintain their pools and spas according to all SNHD regulations, if for nothing else to protect the association from lawsuits caused by injuries or death at facilities.

In addition, associations by definition are not clubs as membership is not exclusive. In a club, you can be denied membership. By definition, when you purchased into an HOA, you are a mandatory member, you cannot be denied membership

Many of the proposed changes will become effective July 1, 2009, some on Oct. 1, 2009, and some on Jan. 1, 2010, which also will be included in another article.

In my next column I will address questions from readers about these new laws.

If you would like more information and a my full opinion on these bills, e-mail me at support@hlrealty.com.

NOTE: The Nevada Real Estate Division will hold Ombudsman Legislative Summary to help communities understand the changes in HOA laws. Upcoming sessions are for Aug. 28, Bradley Building, 2501 E. Sahara Ave. and Sept. 16, Centennial YMCA, 6601 N Buffalo Dr. Seating is limited and attendees are encouraged to call 486-4480 to reserve a seat.

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 Association Q.&A., P.O. Box 7440, Las Vegas, NV 89125. Her fax number is 385-3759, or she can be reached by e-mail at support@hlrealty.com.