New law addresses disclosure policy and length of term allowed for boards

EDITOR’S NOTE: This is part of a special series of columns addressing major new laws affecting the state’s homeowners associations.

In previous weeks I have addressed Assembly Bill 350 and its massive effects on our HOAs. Last week we talked about Senate Bill 182. This week I’d like to take a look at Senate Bill 183. All of these bills were passed into law during our last legislative session.

*SB183 starts with a similar provision that was passed as part of Senate Bill 253. SB183 version starts that a member of an executive board who stands to gain any personal profit or compensation of any kind from a matter before the board shall disclose the matter and abstain from voting on it. Once again, an employee of the developer is exempt. SB253 describes in detail the various types of personal relationships from blood relative to the third degree of consanguinity or affinity (marriage). For those of you who are not charting the various laws, SB182 jumps into this topic by stating that anyone who receives directly or indirectly any compensation which influences his or her decision on association matters will be guilty of a D felony. Can we call these versions of the law, the full employment act for attorneys?

*For association homeowners who wish to sell their homes, SB183 allows the Common-Interest Communities & Condominium Hotels Commission to adopt more regulations to add to the disclosures for the sale of a unit. AB350 already added more requirements for both the developer and the homeowner who is selling a home NRS 116.4103.1k1 and NRS 116.4109). (Just a footnote, in 2007, the Legislature passed an energy disclosure law that will be in effect in 2010 that will add to your disclosures and will cost you more money to have it prepared by Nevada Energy and or Southwest Gas.)

*More restrictions have been placed upon board members. A director shall not participate in any hearing, or cast any vote relating to a fine if he or she has not paid all assessments. If the delinquent board member does participate in the hearing, any action taken at the hearing is void and the director’s vote is void.

*SB183 allows an association to have three-year terms for directors. The previous restriction of only a two-year term that became law a few years ago, will not be an easy one to change for many associations as the change would require amending either the bylaws or covenants.

*One section of the current law pertaining to the developer and an exit audit was clarified with the passage of SB183. The developer is to pay the cost of the ancillary audit, which is to be delivered to the association within 210 days after the date the developer’s control ends.

*The board meeting must be held at least once every quarter and not less than 100 days as opposed to once every 90 days, unless required to have more meetings per the association’s governing documents.

*If an official publication contains or will contain any mention of a candidate or ballot question, SB183 requires equal space to be provided, upon request and without charge, to a candidate or a representative of an organization that supports or opposes a ballot question. This law also includes equal space for any official publication that contains or will contain the views or opinions of the association. The board, officers, employees and agents are immune from criminal or civil liability for any act or omission which arises out of the publication.

These are other highlights of the major changes to SB183.

*SB 351 made some significant changes as it pertains to the investment of money of the reserve accounts. All funds need to be deposited in a financial institution that is located in this state, is qualified to conduct business in this state or has consented to be subject to the jurisdiction including the power to subpoena in this state and division. (Once again, there is some sloppiness in the law. This sentence actually begins with the words, “except as otherwise provided in subsection 2” …. There is no subsection 2 as it was deleted).

In addition, funds must be maintained and invested in a financial institution with accounts insured by the Federal Deposit Insurance Corp., the National Credit Union Share Insurance Fund or the Securities Investor Protection Corp, a private insurer approved pursuant to NRS 6788.755, a government security backed by the U.S. government.

The CICCHC is instructed to develop a declaration that a financial institution, which is located out of state, would need to sign to consent to submit to the jurisdiction of the state of Nevada. The changes allow a little more flexibility for associations to find other sources to help increase their interest rates.

*Many of the “worded” changes in this bill were superfluous as they did not really add any additional requirements to the existing law, such as the section pertaining to the maintenance responsibility of the association.

*There are a number of association records that are considered to be private such as the personnel records of employees. The new law has added to this list, architectural plans or specifications submitted by a owner to the association during the approval process required by the association’s governing documents.

*One final change pertains to the information form that a seller must give to a buyer as part of the purchase agreement that can be found in section NRS116.41095. The new addition states, “Certain provisions in the covenants and other governing documents may be superseded by contrary provisions of NRS 116. The Nevada revised statutes are available on the Internet at www.leg.state.nv/nrs/”. The obvious reason for this addition is it would be extremely costly to revise an association’s governing documents to incorporate all of the changes in the law.

With the conclusion of this article, this column has reviewed so far 16 new laws which impact associations, with a few more to be addressed.

We will continue to provide summaries of these new laws to our readers, as well as continuing our questions and answers format.

Barbara Holland, certified property manager, is president and owner of H&L Realty and Management Co. To ask her a question, e-mail

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