Some new HOA laws went into effect Friday

Editor's note: Barbara Holland takes a break from her question- and answer-format to talk about the recent legislative session.

The legislative session has come to an end, finally. There were the "winners" and the "losers." This article presents a summary of some of the bills that were passed and signed by the governor. These laws became effective Friday.

The superfluous bills -- waste of taxpayer's money -- took up time that should have been spent on more important issues such as our economy, the budget, education, redistricting of the state, etc.

• AB 246 authorizes a candidate to request the association mail out campaign materials or provide the candidate with a list of the addresses so that he or she may send materials to the unit owners.

This bill further provides the list must not include the names of the unit owners or the names of any tenants of the unit owners and that the candidate must provide a written statement that the candidate is requesting this list for the sole purpose of distributing campaign materials and that the candidate will not make any other use of the information.

The new law allows the association to charge 25 cents per page for the first 10 pages and 10 cents per page thereafter or in the form of a compact disk at a cost of no more than $5 or by electronically at no cost.

Under the previous law, associations were already required to distribute the candidate informational statement to the homeowners. The additional verbiage is just a waste of space and probably will never be implemented by any association.

• SB30 made two changes to NRS 116. The first pertained to the expansion of electronic payments and the second pertained to a homeowner's written request for records that include the financial statements, budgets and reserve study.

Within 14 days of a written request, the association is to provide a copy of the records in an electronic format at no cost, or in paper format at a cost not to exceed 25 cents for the first 10 pages and 10 cents per page thereafter.

The Legislature repealed section 116.31177, which states the same provisions as the new section NRS 116.31175, with the exception of the electronic submission and the 10 cents per page thereafter. Why repeal the section? Just add the new information.

• SB 89 is another example of the law that has been changed every legislative session. It revises the NRS 116 provisions pertaining to associations' audits and reviews of financial statements. The 2009 law stated that if an association's annual budget was less than $75,000, the association was to have a review of its financial statements in the year immediately preceding the year in which a study of the association's reserves was conducted unless an audit was requested by 15 percent of the voting members of the associations. The 2011 law "waters down" the regulations even more by exempting association's with annual budgets less than $75,000.

I personally did not agree with the 2009 changes and absolutely do not agree with the 2011 changes. It is in the best interests of the board members, homeowners and managers that financial statements be prepared by an independent certified public accountant on an annual basis.

What does not make sense for me is that so many bills were introduced to protect the homeowners. This is not one of them. By providing annual certified financial statements, the homeowners can have a certain amount of comfort knowing that a third party reviewed its finances. Both lenders of mortgages and insurance companies want to see these reports as to the financial viability of the association.

Finally, this is a perfect example where the Legislature's right hand and left hand are out of sync and where the legislature demonstrates its ignorance of association management.

One of the new laws that will become effective on Jan. 1 will require associations to have fidelity coverage of at least three months of aggregate association's assessments, plus the amount in the reserve account, not to exceed more than $5,000,000. Insurance companies providing fidelity coverage will absolutely want to review the associations' financial statements.

This law was solely passed because of complaints that it cost too much money to have a financial statement. A fact that really is not true. In the long run it could cost homeowners more money in the absence of a third party reviewing the finances of the association.

Homeowners lose rights

• AB122 revised the existing laws that restricted associations from unreasonably restricting systems related to wind energy. The original law, which was passed in 2009, defined "unreasonable restrictions" to mean any requirement on a system that significantly decreased its efficiency or performance and did not allow the use of an alternative system at a substantially comparable cost, efficiency and performance."

What the new law did was to delete this definition as part of the law. This does not make sense to me as it in essence diminished the rights of a unit owner, not enhanced their rights. The previous law did not prohibit an association to have reasonable restrictions or requirements that related to " height, noise or safety." The new law adds to this list to include "finish, location and setback."

Modern age of technology

• SB30 revised NRS 116.31153 pertains to electronic payments. The law has been expanded from the single item of automatic payments for utilities to any invoice that needs to be paid. Association may now use electronic signatures to withdraw money from operating account if the electronic transfer of money is made pursuant to a written agreement. The board must authorize the electronic transfer of money and have established internal accounting controls to safeguard the assets of the association.

In other news

Henderson's Community Development Department has sent letters to HOAs warning them that removing street-side landscaping may be in violation of city code. The letter urges HOA boards to contact the department before making changes.

Barbara Holland, certified property manager, is president and owner of H&L Realty and Management Co. To ask her a question, email support@hlrealty.com.