Effect on the State or on Industrial Insurance: No.
EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.
AN ACT relating to common-interest ownership; revising the provisions governing unit-owners' associations; requiring the attorney general to monitor the practices of such associations and perform other functions relating to common-interest ownership; requiring such associations to pay an annual fee to the attorney general; requiring such associations to set aside money as a reserve for repairs and replacement; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
Section 1 Chapter 116 of NRS is hereby amended by adding thereto a new section to read as follows:
1. Every association shall, on or before July 1 of each year, pay to the office of the attorney general a fee for each unit governed by the association.
2. The fee must be established by the attorney general and be in an amount sufficient to cover the estimated operating costs and expenses of the office of the attorney general in carrying out the provisions of section 9 of this act during the fiscal year beginning on July 1 of that year.
Sec. 2 NRS 116.1203 is hereby amended to read as follows:
116.12031. Except as otherwise provided in subsection 2, if a planned community:
(a) Contains no more than 12 units and is not subject to any developmental rights; or
(b) Provides, in its declaration, that the annual average liability for common expenses of all units restricted to residential purposes, exclusive of optional users' fees and any insurance premiums paid by the association, may not exceed $500 per unit,
it is subject only to NRS 116.1105, 116.1106 and 116.1107 unless the declaration provides that this entire chapter is applicable.
2. Except for NRS 116.3104, 116.31043, 116.31046 and 116.31138, the provisions of NRS 116.3101 to 116.3119, inclusive, and section 1 of this act, and 116.11031 to 116.110393, inclusive, to the extent necessary in construing any of those sections, apply to a residential planned community containing more than six units.
Sec. 3. NRS 116.2107 is hereby amended to read as follows:
116.2107 1. The declaration must allocate to each unit:
(a) In a condominium, a fraction or percentage of undivided interests in the common elements and in the common expenses of the association (NRS 116.3115) and a portion of the votes in the association;
(b) In a cooperative, a proportionate ownership in the association, a fraction or percentage of the common expenses of the association (NRS 116.3115) and a portion of the votes in the association; and
(c) In a planned community, a fraction or percentage of the common expenses of the association (NRS 116.3115) and a portion of the votes in the association.
2. The declaration must state the formulas used to establish allocations of interests. Those allocations may not discriminate in favor of units owned by the declarant or an affiliate of the declarant.
3. If units may be added to or withdrawn from the common-interest community, the declaration must state the formulas to be used to reallocate the allocated interests among all units included in the common-interest community after the addition or withdrawal.
4. The declaration may provide:
(a) That different allocations of votes are made to the units on particular matters specified in the declaration;
(b) For cumulative voting only for the purpose of electing members of the executive board; and
(c) For class voting on specified issues affecting the class if necessary to protect valid interests of the class.
Except as otherwise provided in NRS 116.31032, a declarant may not utilize cumulative or class voting for the purpose of evading any limitation imposed on declarants by this chapter nor may units constitute a class because they are owned by a declarant.
5. Except for minor variations because of rounding, the sum of the liabilities for common expenses and, in a condominium, the sum of the undivided interests in the common elements allocated at any time to all the units must each equal one if stated as a fraction or 100 percent if stated as a percentage. In the event of discrepancy between an allocated interest and the result derived from application of the pertinent formula, the allocated interest prevails.
6. In a condominium, the common elements are not subject to partition, and any purported conveyance, encumbrance, judicial sale or other voluntary or involuntary transfer of an undivided interest in the common elements made without the unit to which that interest is allocated is void.
7. In a cooperative, any purported conveyance, encumbrance, judicial sale or other voluntary or involuntary transfer of an ownership interest in the association made without the possessory interest in the unit to which that interest is related is void.
8. For a unit-owners' association organized after October 1, 1997, the declaration must provide that a unit's owner who:
(a) Has an allocation of interest that is 50 percent or more of the total allocation of interests; and
(b) Is not domiciled at the common-interest community,
may control or cause to be controlled no more than 49 percent of the total allocation of interests.
Sec. 4. NRS 116.31034 is hereby amended to read as follows:
116.31034 1. Except as otherwise provided in subsection 5 of NRS 116.212, not later than the termination of any period of declarant's control, the units' owners shall elect an executive board of at least three members, at least a majority of whom must be units' owners. The executive board shall elect the officers. The members and officers of the executive board shall take office upon election.
2. An officer, employee, agent or director of a corporate owner of a unit, a trustee or designated beneficiary of a trust that owns a unit, a partner of a partnership that owns a unit, and a fiduciary of an estate that owns a unit may be an officer or member of the executive board. In all events where the person serving or offering to serve as an officer or member of the executive board is not the record owner, he shall file proof of authority in the records of the association.
3. Each member of the executive board shall, within 6 months after his election or reelection, complete a course of instruction or continuing education that has been approved by the attorney general concerning laws relating to common-interest ownership and submit a certificate of completion of the course to the attorney general.
Sec. 5. NRS 116.3106 is hereby amended to read as follows:
116.31061. The bylaws of the association must provide:
(a) The number of members of the executive board and the titles of the officers of the association;
(b) For election by the executive board of a president, treasurer, secretary and any other officers of the association the bylaws specify;
(c) The qualifications, powers and duties, terms of office and manner of electing and removing officers of the association and members of the executive board and filling vacancies;
(d) Which, if any, of its powers the executive board or officers may delegate to other persons or to a managing agent;
(e) Which of its officers may prepare, execute, certify and record amendments to the declaration on behalf of the association; [and]
(f) Procedural rules for conducting meetings of the association; and
(g) A method for amending the bylaws.
2. Except as otherwise provided in the declaration, the bylaws may provide for any other matters the association deems necessary and appropriate.
3. No amendment to the bylaws may be made applicable to a unit's owner who is domiciled at the common-interest community as of the date of the amendment until at least 6 months have elapsed from the date of the amendment.
4. The bylaws must:
(a) Be plainly written in English that is easy to understand; and
(b) Contain such restrictions as are specified by the attorney general pursuant to section 9 of this act.
Sec. 6. NRS 116.3108 is hereby amended to read as follows:
116.3108 1. A meeting of the association must be held at least [twice each year.] once each month. Special meetings of the association may be called by the president, a majority of the executive board or by units' owners having 20 percent, or any lower percentage specified in the bylaws, of the votes in the association.
2. Not less than 10 nor more than 60 days in advance of any meeting, the secretary or other officer specified in the bylaws shall cause notice to be hand-delivered or sent prepaid by United States mail to the mailing address of each unit or to any other mailing address designated in writing by the unit's owner. The notice of any meeting must state the time and place of the meeting and [the items on the agenda, including, but not limited to, the general nature of any proposed amendment to the declaration or bylaws, any fees or assessments to be imposed or increased by the association, any budgetary changes and any proposal to remove an officer or member of the executive board.] include a copy of the agenda for the meeting. The notice must include notification of the right of a unit's owner to have a copy of the minutes or a summary of the minutes of the meeting distributed to him upon request if he pays the association the cost of making the distribution.
3. The agenda for the meeting must consist of:
(a) A clear and complete statement of the topics scheduled to be considered during the meeting, including, without limitation, any proposed amendment to the declaration or bylaws, any fees or assessments to be imposed or increased by the association, any budgetary changes and any proposal to remove an officer or member of the executive board.
(b) A list describing the items on which action may be taken and clearly denoting that action may be taken on those items.
(c) A period devoted to comments by units' owners and discussion of those comments. No action may be taken upon a matter raised under this item of the agenda until the matter itself has been specifically included on an agenda as an item upon which action may be taken pursuant to paragraph (b).
4. If the association adopts a policy imposing a fine on a unit's owner for the violation of the bylaws or other rules established by the association, the secretary or other officer specified in the bylaws shall prepare and cause to be hand-delivered or sent prepaid by United States mail to the mailing address of each unit or to any other mailing address designated in writing by the unit's owner, a schedule of the fines that may be imposed for those violations.
[4.] 5. Not more than 30 days after any meeting, the secretary or other officer specified in the bylaws shall cause the minutes or a summary of the minutes of the meeting to be made available to the units' owners. A copy of the minutes or a summary of the minutes must be provided to any unit's owner who pays the association the cost of providing the copy to him.
Sec. 7. NRS 116.3115 is hereby amended to read as follows:
116.3115 1. Until the association makes an assessment for common expenses, the declarant shall pay all common expenses. After an assessment has been made by the association, assessments must be made at least annually, based on a budget adopted at least annually by the association.
2. Except for assessments under subsections [3, 4 and 5, all] 4, 5 and 6:
(a) All common expenses, including a reserve, must be assessed against all the units in accordance with the allocations set forth in the declaration pursuant to subsections 1 and 2 of NRS 116.2107.
(b) The association shall set aside as a reserve for repairs and replacement an amount equal to not less than 5 percent of all assessments received each month. The reserve may be used only for common expenses that involve major repairs or replacement, including, without limitation, the repairing or replacing of roofs, roads and sidewalks, and must not be used for daily maintenance.
3. Any past due assessment for common expenses or installment thereof bears interest at the rate established by the association not exceeding 18 percent per year.
[3.] 4. To the extent required by the declaration:
(a) Any common expense associated with the maintenance, repair or replacement of a limited common element must be assessed against the units to which that limited common element is assigned, equally, or in any other proportion the declaration provides;
(b) Any common expense or portion thereof benefiting fewer than all of the units must be assessed exclusively against the units benefited; and
(c) The costs of insurance must be assessed in proportion to risk and the costs of utilities must be assessed in proportion to usage.
[4.] 5. Assessments to pay a judgment against the association may be made only against the units in the common-interest community at the time the judgment was entered, in proportion to their liabilities for common expenses.
[5.] 6. If any common expense is caused by the misconduct of any unit's owner, the association may assess that expense exclusively against his unit.
[6.] 7. If liabilities for common expenses are reallocated, assessments for common expenses and any installment thereof not yet due must be recalculated in accordance with the reallocated liabilities.
[7.] 8. The association shall provide written notice to the owner of each unit of a meeting at which an assessment for a capital improvement is to be considered or action is to be taken on such an assessment at least 21 calendar days before the meeting.
Sec. 8. NRS 116.4103 is hereby amended to read as follows:
116.41031. Except as otherwise provided in NRS 116.41035, a public offering statement must contain or fully and accurately disclose each of the following:
(a) The name and principal address of the declarant and of the common-interest community, and a statement that the common-interest community is either a condominium, cooperative or planned community.
(b) A general description of the common-interest community, including to the extent possible, the types, number and declarant's schedule of commencement and completion of construction of buildings, and amenities that the declarant anticipates including in the common-interest community.
(c) The estimated number of units in the common-interest community.
(d) Copies of the declaration, bylaws, and any rules or regulations of the association, but a plat or plan is not required.
(e) Any current balance sheet and a projected budget for the association, either within or as an exhibit to the public offering statement, for 1 year after the date of the first conveyance to a purchaser, and thereafter the current budget of the association. The budget must include, without limitation:
(1) A statement of the amount [, or a statement that there is no amount,] included in the budget as a reserve for repairs and replacement; and
(2) The projected monthly assessment for common expenses for each type of unit.
(f) A description of any services or subsidies being provided by the declarant or an affiliate of the declarant, not reflected in the budget.
(g) Any initial or special fee due from the purchaser at closing, together with a description of the purpose and method of calculating the fee.
(h) The terms and significant limitations of any warranties provided by the declarant, including statutory warranties and limitations on the enforcement thereof or on damages.
(i) A statement that unless the purchaser or his agent has personally inspected the unit, the purchaser may cancel, by written notice, his contract for purchase until midnight of the fifth calendar day following the date of execution of the contract, and the contract must contain a provision to that effect.
(j) A statement of any unsatisfied judgments or pending suits against the association, and the status of any pending suits material to the common-interest community of which a declarant has actual knowledge.
(k) Any current or expected fees or charges to be paid by units' owners for the use of the common elements and other facilities related to the common-interest community.
2. A declarant is not required to revise a public offering statement more than once each calendar quarter, if the following warning is given prominence in the statement: "THIS PUBLIC OFFERING STATEMENT IS CURRENT AS OF (insert a specified date). RECENT DEVELOPMENTS REGARDING (here refer to particular provisions of NRS 116.4103 and 116.4105) MAY NOT BE REFLECTED IN THIS STATEMENT."
Sec. 9. Chapter 228 of NRS is hereby amended by adding thereto a new section to read as follows:
The attorney general shall employ at least one attorney, one auditor and one investigator to:
1. Monitor the practices of unit-owners' associations pursuant to chapter 116 of NRS;
2. Review complaints received from unit owners concerning the management of a common-interest community, including, without limitation, an election of the executive board of a unit-owners' association;
3. Conduct such related investigations as the attorney general determines are necessary;
4. Provide information to the general public concerning the responsibilities of a unit-owners' association and the rights of unit owners;
5. Approve courses of instruction and continuing education for members of the executive board of a unit-owners' association pursuant to NRS 116.31034; and
6. Specify restrictions that apply to and must be included in the bylaws of each unit-owners' association.