SB136_EN

Senate Bill No. 136–Senators Hardy, O’Connell, Cegavske, Townsend, Amodei, Care, Coffin, McGinness, Nolan, Schneider, Shaffer, Tiffany and Titus

CHAPTER..........

AN ACT relating to property; making various changes relating to common-interest communities; authorizing a unit-owners’ association to impose construction penalties under certain circumstances and to place and foreclose a lien on a unit for failure to pay such penalties; revising provisions governing the imposition of certain fines by a unit-owners’ association; establishing certain procedural requirements for the imposition of certain fines; providing exceptions; 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. A unit’s owner shall adhere to a schedule required by the

association for:

(a) The completion of the design of a unit or the design of an

improvement to a unit;

(b) The commencement of the construction of a unit or the

construction of an improvement to a unit;

construction of an improvement to the unit; or

(d) The issuance of a permit which is necessary for the

occupancy of a unit or for the use of an improvement to a unit.

2. The association may impose and enforce a construction

penalty against a unit’s owner who fails to adhere to a schedule as

required pursuant to subsection 1 if:

(a) The maximum amount of the construction penalty and the

schedule are set forth in:

(1) The declaration;

(2) Another document related to the common-interest

community that is recorded before the date on which the unit’s

owner acquired title to the unit; or

(3) A contract between the unit’s owner and the

association; and

(b) The unit’s owner receives notice of the alleged violation

which informs him that he has a right to a hearing on the alleged

violation.

3. For the purposes of this chapter, a construction penalty is

not a fine.

Sec. 2. NRS 116.1203 is hereby amended to read as follows:

116.1203 1. Except as otherwise provided in subsection 2, if

a planned community contains no more than 12 units and is not

subject to any developmental rights, 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 the definitions set forth in NRS

116.110305 to 116.110393, inclusive, to the extent that such

definitions are necessary in construing any of those [sections,]

provisions, apply to a residential planned community containing

more than six units.

Sec. 3. NRS 116.3102 is hereby amended to read as follows:

116.3102 1. Except as otherwise provided in subsection 2,

and subject to the provisions of the declaration, the association may:

(a) Adopt and amend bylaws, rules and regulations;

(b) Adopt and amend budgets for revenues, expenditures and

reserves and collect assessments for common expenses from units’

owners;

agents and independent contractors;

(d) Institute, defend or intervene in litigation or administrative

proceedings in its own name on behalf of itself or two or more units’

owners on matters affecting the common-interest community;

(e) Make contracts and incur liabilities;

(f) Regulate the use, maintenance, repair, replacement and

modification of common elements;

(g) Cause additional improvements to be made as a part of the

common elements;

(h) Acquire, hold, encumber and convey in its own name any

right, title or interest to real estate or personal property, but:

(1) Common elements in a condominium or planned

community may be conveyed or subjected to a security interest only

pursuant to NRS 116.3112; and

(2) Part of a cooperative may be conveyed, or all or part of a

cooperative may be subjected to a security interest, only pursuant to

NRS 116.3112;

(i) Grant easements, leases, licenses and concessions through or

over the common elements;

(j) Impose and receive any payments, fees or charges for the use,

rental or operation of the common elements, other than limited

common elements described in subsections 2 and 4 of NRS

116.2102, and for services provided to units’ owners;

(k) Impose charges for late payment of assessments [and, except

as otherwise provided in NRS 116.31031, after notice and an

opportunity to be heard, levy] ;

(l) Impose construction penalties when authorized pursuant to

section 1 of this act;

(m) Impose reasonable fines for violations of the [declaration,

bylaws, rules and regulations] governing documents of the

association[;

(l)] only if the association complies with the requirements set

forth in NRS 116.31031;

(n) Impose reasonable charges for the preparation and

recordation of amendments to the declaration, the information

required by NRS 116.4109 or statements of unpaid assessments;

[(m)] (o) Provide for the indemnification of its officers and

executive board and maintain directors’ and officers’ liability

insurance;

[(n)] (p) Assign its right to future income, including the right to

receive assessments for common expenses, but only to the extent the

declaration expressly so provides;

[(o)] (q) Exercise any other powers conferred by the declaration

or bylaws;

[(p)] (r) Exercise all other powers that may be exercised in this

state by legal entities of the same type as the association;

[(q)] (s) Direct the removal of vehicles improperly parked on

property owned or leased by the association, pursuant to NRS

487.038; and

[(r)] (t) Exercise any other powers necessary and proper for the

governance and operation of the association.

2. The declaration may not impose limitations on the power of

the association to deal with the declarant which are more restrictive

than the limitations imposed on the power of the association to deal

with other persons.

Sec. 4. NRS 116.31031 is hereby amended to read as follows:

116.31031 1. [If] Except as otherwise provided in this

section, if a unit’s owner [,] or a tenant or guest of a unit’s owner [,

does not comply with a] violates any provision of the governing

documents of an association, the executive board of the association

may, if the governing documents so provide:

(a) Prohibit, for a reasonable time, the unit’s owner [,] or the

tenant or guest of the unit’s owner [,] from:

(1) Voting on matters related to the common-interest

community.

(2) Using the common elements. The provisions of this

subparagraph do not prohibit the unit’s owner [,] or the tenant or

guest of the unit’s owner [,] from using any vehicular or pedestrian

ingress or egress to go to or from the unit, including any area used

for parking.

(b) [Require] Impose a fine against the unit’s owner [,] or the

tenant or guest of the unit’s owner [, to pay a fine] for each [failure

to comply that does not threaten the health and welfare of the

common-interest community.] violation, except that a fine may not

be imposed for a violation that is the subject of a construction

penalty pursuant to section 1 of this act. The fine must be

commensurate with the severity of the violation, but must not

exceed $100 for each violation or a total amount of $500, whichever

is less.

2. The executive board may not impose a fine pursuant to

subsection 1 unless:

(a) Not less than 30 days before the violation, the person

against whom the fine will be imposed had been provided with

written notice of the applicable provisions of the governing

documents that form the basis of the violation; and

(b) Within a reasonable time after the discovery of the

violation, the person against whom the fine will be imposed has

been provided with:

(1) Written notice specifying the details of the violation, the

amount of the fine, and the date, time and location for a hearing

on the violation; and

(2) A reasonable opportunity to contest the violation at the

hearing.

3. The executive board must schedule the date, time and

location for the hearing on the violation so that the person against

whom the fine will be imposed is provided with a reasonable

opportunity to prepare for the hearing and to be present at the

hearing.

4. The executive board must hold a hearing before it may

impose the fine, unless the person against whom the fine will be

imposed:

(a) Pays the fine;

(b) Executes a written waiver of the right to the hearing; or

proper notice of the hearing.

5. If a fine is imposed pursuant to subsection 1 and the

violation is not cured within 14 days , or [a] within any longer

period [as] that may be established by the executive board, the

violation shall be deemed a continuing violation. Thereafter, the

executive board may impose an additional fine for the violation for

each 7-day period or portion thereof that the violation is not cured.

Any additional fine may be imposed without notice and an

opportunity to be heard.

[3. Except as otherwise provided in subsection 2, the

imposition of a fine pursuant to this section must comply with the

requirements of subsection 6 of NRS 116.31065.]

6. If the governing documents so provide, the executive board

may appoint a committee, with not less than three members, to

conduct hearings on violations and to impose fines pursuant to

this section. While acting on behalf of the executive board for

those limited purposes, the committee and its members are entitled

to all privileges and immunities and are subject to all duties and

requirements of the executive board and its members.

7. The provisions of this section establish the minimum

procedural requirements that the executive board must follow

before it may impose a fine. The provisions of this section do not

preempt any provisions of the governing documents that provide

greater procedural protections.

Sec. 5. NRS 116.31065 is hereby amended to read as follows:

116.31065 The rules adopted by an association:

1. Must be reasonably related to the purpose for which they are

adopted.

2. Must be sufficiently explicit in their prohibition, direction or

limitation to inform a [unit’s owner, or a tenant or guest of a unit’s

owner,] person of any action or omission required for compliance.

3. Must not be adopted to evade any obligation of the

association.

4. Must be consistent with the governing documents of the

association and must not arbitrarily restrict conduct or require the

construction of any capital improvement by a unit’s owner that is

not required by the governing documents of the association.

5. Must be uniformly enforced under the same or similar

circumstances against all units’ owners. Any rule that is not so

uniformly enforced may not be enforced against any unit’s owner.

6. May be enforced by the [assessment] association through

the imposition of a fine only if[:

(a) The person alleged to have violated the rule has received

notice of the alleged violation that informs him of his opportunity to

request a hearing on the alleged violation.

(b) At least 30 days before the alleged violation, the person

alleged to have violated the rule was given written notice of the rule

or any amendment to the rule.] the association complies with the

requirements set forth in NRS 116.31031.

Sec. 6. NRS 116.3108 is hereby amended to read as follows:

116.3108 1. A meeting of the units’ owners of an association

must be held at least once each year. If the governing documents of

a common‑interest community do not designate an annual meeting

date of the units’ owners, a meeting of the units’ owners must be

held 1 year after the date of the last meeting of the units’ owners. If

the units’ owners have not held a meeting for 1 year, a meeting of

the units’ owners must be held on the following March 1. Special

meetings of the units’ owners of an association may be called by the

president, a majority of the executive board or by units’ owners

having 10 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 of the units’ owners of an association, the secretary or other

officer specified in the bylaws shall cause notice of the meeting to

be hand‑delivered, 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 or, if the association offers to send

notice by electronic mail, sent by electronic mail at the request of

the unit’s owner to an electronic mail address designated in writing

by the unit’s owner. The notice of the meeting must state the time

and place of the meeting and include a copy of the agenda for the

meeting. The notice must include notification of the right of a unit’s

owner to:

(a) Have a copy of the minutes or a summary of the minutes of

the meeting [distributed to him] provided to the unit’s owner upon

request and, if required by the executive board, upon payment to the

association of the cost of [making the distribution.] providing the

copy to the unit’s owner.

(b) Speak to the association or executive board, unless the

executive board is meeting in executive session.

3. The agenda for a meeting of the units’ owners 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 of the

association 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. In an

emergency, the units’ owners may take action on an item which is

not listed on the agenda as an item on which action may be taken.

discussion of those comments. Except in emergencies, 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 declaration, bylaws or other rules

established by] fines for any violations of the governing documents

of 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.

5. Not more than 30 days after any meeting of the units’

owners, 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.

6. As used in this section, “emergency” means any occurrence

or combination of occurrences that:

(a) Could not have been reasonably foreseen;

(b) Affects the health, welfare and safety of the units’ owners of

the association;

the executive board; and

(d) Makes it impracticable to comply with the provisions of

subsection 2 or 3.

Sec. 7. NRS 116.31085 is hereby amended to read as follows:

116.31085 1. Except as otherwise provided in this section, a

unit’s owner may attend any meeting of the units’ owners of the

association or of the executive board and speak at any such meeting.

The executive board may establish reasonable limitations on the

time a unit’s owner may speak at such a meeting.

2. An executive board may meet in executive session to:

(a) Consult with the attorney for the association on matters

relating to proposed or pending litigation if the contents of the

discussion would otherwise be governed by the privilege set forth in

NRS 49.035 to 49.115, inclusive;

(b) Discuss matters relating to personnel; [or

violation of the governing documents , [alleged to have been

committed by a unit’s owner,] including, without limitation, the

failure to pay an assessment [, except as otherwise provided in

subsection 3.] ; or

(d) Discuss the alleged failure of a unit’s owner to adhere to a

schedule required pursuant to section 1 of this act if the alleged

failure may subject the unit’s owner to a construction penalty.

3. An executive board shall meet in executive session to hold a

hearing on an alleged violation of the governing documents unless

the [unit’s owner who allegedly committed] person who may be

sanctioned for the alleged violation requests in writing that the

hearing be conducted by the executive board at an open meeting.

The [unit’s owner who is alleged to have committed] person who

may be sanctioned for the alleged violation [may] is entitled to

attend the hearing and testify concerning the alleged violation, but

the person may be excluded by the executive board from any other

portion of the hearing, including, without limitation, the

deliberations of the executive board.

4. Except as otherwise provided in this subsection, any matter

discussed by the executive board when it meets in executive session

must be generally noted in the minutes of the meeting of the

executive board. The executive board shall maintain minutes of any

decision made pursuant to subsection 3 concerning an alleged

violation and, upon request, provide a copy of the decision to the

[unit’s owner who was the subject of the hearing] person who was

subject to being sanctioned at the hearing or to his designated

representative.

5. Except as otherwise provided in subsection 3, a unit’s owner

is not entitled to attend or speak at a meeting of the executive board

held in executive session.

Sec. 8. NRS 116.3116 is hereby amended to read as follows:

116.3116 1. The association has a lien on a unit for any

construction penalty that is imposed against the unit’s owner

pursuant to section 1 of this act, any assessment levied against that

unit or any fines imposed against the unit’s owner from the time the

construction penalty, assessment or fine becomes due. Unless the

declaration otherwise provides, any penalties, fees, charges, late

charges, fines and interest charged pursuant to paragraphs (j) [, (k)

and (l)] to (n), inclusive, of subsection 1 of NRS 116.3102 are

enforceable as assessments under this section. If an assessment is

payable in installments, the full amount of the assessment is a lien

from the time the first installment thereof becomes due.

2. A lien under this section is prior to all other liens and

encumbrances on a unit except:

(a) Liens and encumbrances recorded before the recordation of

the declaration and, in a cooperative, liens and encumbrances which

the association creates, assumes or takes subject to;

(b) A first security interest on the unit recorded before the date

on which the assessment sought to be enforced became delinquent

[,] or, in a cooperative, the first security interest encumbering only

the unit’s owner’s interest and perfected before the date on which

the assessment sought to be enforced became delinquent; and

assessments or charges against the unit or cooperative.

The lien is also prior to all security interests described in paragraph

(b) to the extent of the assessments for common expenses based on

the periodic budget adopted by the association pursuant to NRS

116.3115 which would have become due in the absence of

acceleration during the 6 months immediately preceding institution

of an action to enforce the lien. This subsection does not affect the

priority of mechanics’ or materialmen’s liens, or the priority of liens

for other assessments made by the association.

3. Unless the declaration otherwise provides, if two or more

associations have liens for assessments created at any time on the

same property, those liens have equal priority.

4. Recording of the declaration constitutes record notice and

perfection of the lien. No further recordation of any claim of lien for

assessment under this section is required.

5. A lien for unpaid assessments is extinguished unless

proceedings to enforce the lien are instituted within 3 years after the

full amount of the assessments becomes due.

6. This section does not prohibit actions to recover sums for

which subsection 1 creates a lien or prohibit an association from

taking a deed in lieu of foreclosure.

7. A judgment or decree in any action brought under this

section must include costs and reasonable attorney’s fees for the

prevailing party.

8. The association , upon written request , shall furnish to a

unit’s owner a statement setting forth the amount of unpaid

assessments against the unit. If the interest of the unit’s owner is real

estate, the statement must be in recordable form. The statement must

be furnished within 10 business days after receipt of the request and

is binding on the association, the executive board and every unit’s

owner.

9. In a cooperative, upon nonpayment of an assessment on a

unit, the unit’s owner may be evicted in the same manner as

provided by law in the case of an unlawful holdover by a

commercial tenant, and the lien may be foreclosed as provided by

this section or by NRS 116.31162 to 116.31168, inclusive.

10. In a cooperative where the owner’s interest in a unit is

personal property [(] under NRS 116.1105 , [),] the association’s

lien may be foreclosed [in like manner] as a security interest under

NRS 104.9101 to 104.9709, inclusive.

Sec. 9. NRS 116.31162 is hereby amended to read as follows:

116.31162 1. Except as otherwise provided in subsection 4,

in a condominium, in a cooperative where the owner’s interest in a

unit is real estate [as determined pursuant to] under NRS 116.1105,

or in a planned community, the association may foreclose its lien by

sale after:

(a) The association has mailed by certified or registered mail,

return receipt requested, to the unit’s owner or his successor in

interest, at his address if known[,] and at the address of the unit, a

notice of delinquent assessment which states the amount of the

assessments and other sums which are due in accordance with

subsection 1 of NRS 116.3116, a description of the unit against

which the lien is imposed[,] and the name of the record owner of

the unit;

(b) The association or other person conducting the sale has

executed and caused to be recorded, with the county recorder of the

county in which the common-interest community or any part of it is

situated, a notice of default and election to sell the unit to satisfy the

lien, which contains the same information as the notice of

delinquent assessment, but must also describe the deficiency in

payment and the name and address of the person authorized by the

association to enforce the lien by sale; and

the amount of the lien, including costs, fees and expenses incident to

its enforcement, for 60 days following the recording of the notice of

default and election to sell.

2. The notice of default and election to sell must be signed by

the person designated in the declaration or by the association for that

purpose[,] or , if no one is designated, by the president of the

association.

3. The period of 60 days begins on the first day following the

later of:

(a) The day on which the notice of default is recorded; or

(b) The day on which a copy of the notice of default is mailed

by certified or registered mail, return receipt requested, to the unit’s

owner or his successor in interest at his address , if known, and at

the address of the unit.

4. The association may not foreclose a lien by sale [for the

assessment of] based on a fine or penalty for a violation of the

[declaration, bylaws, rules or regulations] governing documents of

the association [, unless the violation is of a type that threatens]

unless:

(a) The violation threatens the health, safety or welfare of the

residents of the common-interest community [.] ; or

(b) The penalty is imposed for failure to adhere to a schedule

required pursuant to section 1 of this act.

Sec. 10. NRS 38.300 is hereby amended to read as follows:

38.300 As used in NRS 38.300 to 38.360, inclusive, unless the

context otherwise requires:

1. “Assessments” means:

(a) Any charge which an association may impose against an

owner of residential property pursuant to a declaration of covenants,

conditions and restrictions, including any late charges, interest and

costs of collecting the charges; and

(b) Any penalties, fines, fees and other charges which may be

imposed by an association pursuant to paragraphs (j) [, (k) and (l)]

to (n), inclusive, of subsection 1 of NRS 116.3102.

2. “Association” has the meaning ascribed to it in

NRS 116.110315.

3. “Civil action” includes an action for money damages or

equitable relief. The term does not include an action in equity for

injunctive relief in which there is an immediate threat of irreparable

harm, or an action relating to the title to residential property.

4. “Division” means the Real Estate Division of the

Department of Business and Industry.

5. “Residential property” includes, but is not limited to, real

estate within a planned community subject to the provisions of

chapter 116 of NRS. The term does not include commercial property

if no portion thereof contains property which is used for residential

purposes.

Sec. 11. 1. The amendatory provisions of this act apply to

any violation of the governing documents of an association or

master association that occurs on or after October 1, 2003.

2. Notwithstanding any other law to the contrary, if the

provisions of the governing documents of an association or master

association do not conform to the amendatory provisions of this act:

(a) The nonconforming provisions of the governing documents

shall be deemed to have been conformed to the amendatory

provisions of this act by operation of law on October 1, 2003; and

(b) If the association or master association is associated with a

common-interest community that was created on or after January 1,

1992, the executive board of the association or master association

may change the nonconforming provisions of the governing

documents to conform to the amendatory provisions of this act. The

executive board of the association or master association may make

such changes without complying with any procedural requirements

that would otherwise apply if the executive board were to amend the

governing documents of the association or master association in

accordance with law.

3. As used in this section:

(a) “Association” has the meaning ascribed to it in

NRS 116.110315.

(b) “Common-interest community” has the meaning ascribed to

it in NRS 116.110323.

NRS 116.110345.

(d) “Governing documents” has the meaning ascribed to it in

NRS 116.110347.

(e) “Master association” has the meaning ascribed to it in

NRS 116.110358.

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