Senate Bill No. 192–Senator Rawson

February 15, 1999

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Referred to Committee on Judiciary

 

SUMMARY—Makes various changes concerning common-interest communities. (BDR 10-70)

FISCAL NOTE: Effect on Local Government: No.

Effect on the State or on Industrial Insurance: No.

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).

 

AN ACT relating to common-interest communities; enacting various provisions governing certain rights of an association with respect to certain property located within common-interest communities; enacting provisions governing the election, terms of office and qualifications of members of the executive board and officers of an association; providing for rules of procedure at a meeting of an association; making various other changes concerning common-interest communities; and providing other matters properly relating thereto.

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN
SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

1-1 Section 1. Chapter 116 of NRS is hereby amended by adding thereto

1-2 the provisions set forth as sections 2, 3 and 4 of this act.

1-3 Sec. 2. Notwithstanding any provision of the governing documents

1-4 to the contrary, in a planned community, an association may not:

1-5 1. With respect to property located within the planned community

1-6 that is not a unit:

1-7 (a) Prohibit or otherwise object to any residential use of the property

1-8 unless such use violates any applicable zoning regulations or restrictions.

1-9 (b) Adopt any restrictions on the residential use of the property that

1-10 are inconsistent with any applicable zoning regulations or restrictions.

1-11 (c) Prohibit pedestrian or vehicular ingress or egress to the property.

1-12 This paragraph does not prohibit an association from charging the

1-13 owner of the property a reasonable and nondiscriminatory fee for the

1-14 purpose of operating and maintaining a gate or other similar device

1-15 designed to control access to the community that would otherwise impede

1-16 ingress or egress to the property.

2-1 2. Construct a maintenance facility at a location that is not

2-2 consistent with the master plan for the community unless the association

2-3 obtains the written consent of all units’ owners whose property is located

2-4 within 500 feet of the proposed facility. Notwithstanding any provision of

2-5 law, a governmental entity shall not issue any permit for the construction

2-6 of a maintenance facility described in this subsection unless the

2-7 governmental entity first receives written evidence of compliance with

2-8 this subsection.

2-9 Sec. 3. Notwithstanding any provision of the governing documents

2-10 to the contrary:

2-11 1. An officer of the association or a member of the executive board

2-12 shall serve for a term not to exceed 2 years.

2-13 2. An officer of the association or a member of the executive board

2-14 may be elected to succeed himself.

2-15 Sec. 4. Notwithstanding any provision of the governing documents

2-16 to the contrary:

2-17 1. Each meeting of an association must be conducted in accordance

2-18 with the provisions of chapter 241 of NRS.

2-19 2. The proceedings at any meeting of an association must be

2-20 governed by Roberts Rules of Order.

2-21 Sec. 5. NRS 116.11038 is hereby amended to read as follows:

2-22 116.11038 "Residential use" means use as a dwelling or for personal,

2-23 family or household purposes by ordinary customers, whether rented to

2-24 particular persons or not. Such uses include marina boat slips, piers, stable

2-25 or agricultural stalls or pens, campground spaces or plots, parking spaces or

2-26 garage spaces, storage spaces or lockers and garden plots for individual

2-27 use, but do not include spaces or units primarily used to derive commercial

2-28 income from, or provide service to, the public.

2-29 Sec. 6. NRS 116.2116 is hereby amended to read as follows:

2-30 116.2116 1. Subject to the provisions of the declaration, a declarant

2-31 has an easement through the common elements as may be reasonably

2-32 necessary to discharge the declarant’s obligations or exercise special

2-33 declarant’s rights, whether arising under this chapter or reserved in the

2-34 declaration.

2-35 2. In a planned community, subject to the provisions of paragraph (f)

2-36 of subsection 1 of NRS 116.3102 and NRS 116.3112, the units’ owners

2-37 have an easement:

2-38 (a) In the common elements for purposes of access to their units; and

2-39 (b) To use the common elements and all real estate that must become

2-40 common elements (paragraph (f) of subsection 1 of NRS 116.2105) for all

2-41 other purposes.

2-42 3. Within the Lake Tahoe Watershed, unless the terms of an

2-43 easement in favor of an association specifically prohibit the construction

3-1 of a pier, dock or other similar recreational facility, if the owner of the

3-2 servient estate has obtained a permit pursuant to NRS 445A.170 for the

3-3 construction of a pier, dock or other similar recreational facility, the

3-4 owner may construct a pier, dock or other similar recreational facility

3-5 without obtaining any other approval. As used in this subsection, "Lake

3-6 Tahoe Watershed" means all of that area draining in the Lake Tahoe

3-7 Basin and Lake Tahoe in Nevada.

3-8 Sec. 7. NRS 116.21185 is hereby amended to read as follows:

3-9 116.21185 The respective interests of units’ owners referred to in

3-10 subsections 5, 6 and 7 of NRS 116.2118 and in NRS 116.21183 are as

3-11 follows:

3-12 1. Except as otherwise provided in subsection 2, the respective

3-13 interests of units’ owners are the fair market values of their units, allocated

3-14 interests, and any limited common elements immediately before the

3-15 termination, as determined by one or more independent appraisers selected

3-16 by the association. The decision of the independent appraisers must be

3-17 distributed to the units’ owners and becomes final [unless disapproved] if

3-18 approved within 30 days after distribution by units’ owners to whom [25]

3-19 75 percent of the votes in the association are allocated. The proportion of

3-20 interest of any unit’s owner to that of all units’ owners is determined by

3-21 dividing the fair market value of that unit and its allocated interests by the

3-22 total fair market values of all the units and their allocated interests.

3-23 2. If any unit or any limited common element is destroyed to the extent

3-24 that an appraisal of the fair market value [thereto] of the unit or limited

3-25 common element before destruction cannot be made, the interests of all

3-26 units’ owners are:

3-27 (a) In a condominium, their respective interests in the common elements

3-28 immediately before the termination;

3-29 (b) In a cooperative, their respective ownerships immediately before the

3-30 termination; and

3-31 (c) In a planned community, their respective liabilities for common

3-32 expenses immediately before the termination.

3-33 Sec. 8. NRS 116.3103 is hereby amended to read as follows:

3-34 116.3103 1. Except as otherwise provided in the declaration, the

3-35 bylaws, this section or other provisions of this chapter, the executive board

3-36 may act in all instances on behalf of the association. In the performance of

3-37 their duties, the officers and members of the executive board are fiduciaries

3-38 and are subject to the insulation from liability provided for directors of

3-39 corporations by the laws of this state. The members of the executive board

3-40 are required to exercise the ordinary and reasonable care of directors of a

3-41 corporation, subject to the business-judgment rule.

3-42 2. The executive board may not act on behalf of the association to

3-43 amend the declaration (NRS 116.2117), to terminate the common-interest

4-1 community (NRS 116.2118), [or] to elect members of the executive board

4-2 or determine their qualifications, powers and duties or terms of office

4-3 (subsection 1 of NRS 116.31034) [,] or to make assessments for common

4-4 expenses, but the executive board may fill vacancies in its membership for

4-5 the unexpired portion of any term.

4-6 3. Within 30 days after adoption of any proposed budget for the

4-7 common-interest community, the executive board shall provide a summary

4-8 of the budget to all the units’ owners, and shall set a date for a meeting of

4-9 the units’ owners to consider ratification of the budget not less than 14 nor

4-10 more than 30 days after mailing of the summary. [Unless at that meeting a

4-11 majority of all units’ owners or any larger vote specified in the declaration

4-12 reject the budget, the budget is ratified, whether or not] The units’ owners

4-13 must ratify the budget by at least a two-thirds vote of all persons present

4-14 and entitled to vote at any meeting of the units’ owners at which a

4-15 quorum is present. If the proposed budget is [rejected,] not ratified, the

4-16 periodic budget last ratified by the units’ owners must be continued until

4-17 such time as the units’ owners ratify a subsequent budget proposed by the

4-18 executive board.

4-19 Sec. 9. NRS 116.31034 is hereby amended to read as follows:

4-20 116.31034 1. Except as otherwise provided in subsection 5 of NRS

4-21 116.212, not later than the termination of any period of declarant’s control,

4-22 the units’ owners shall elect an executive board of at least three members,

4-23 at least a majority of whom must be units’ owners. The executive board

4-24 shall elect the officers. The members and officers of the executive board

4-25 shall take office upon election. Notwithstanding any provision of the

4-26 governing documents to the contrary, for the election of members and

4-27 officers of the executive board:

4-28 (a) Votes may not be cast by proxy; and

4-29 (b) Units’ owners must be allowed to cast votes by absent ballot.

4-30 2. An officer, employee, agent or director of a corporate owner of a

4-31 unit, a trustee or designated beneficiary of a trust that owns a unit, a partner

4-32 of a partnership that owns a unit, and a fiduciary of an estate that owns a

4-33 unit may be an officer or member of the executive board. In all events

4-34 where the person serving or offering to serve as an officer or member of the

4-35 executive board is not the record owner, he shall file proof of authority in

4-36 the records of the association.

4-37 3. Each member of the executive board shall, at the time of his

4-38 appointment or election, certify in writing that he has [read] :

4-39 (a) Resided within the common-interest community or this state for a

4-40 period of not less than 270 days during the previous year.

4-41 (b) Read and understands the governing documents of the association

4-42 and the provisions of this chapter.

5-1 4. On the anniversary date of the certification made pursuant to

5-2 paragraph (a) of subsection 3, a member of the executive board shall

5-3 certify in writing that he has resided within the common-interest

5-4 community or this state for a period of not less than 270 days during the

5-5 previous year.

5-6 Sec. 10. NRS 116.311 is hereby amended to read as follows:

5-7 116.311 1. If only one of several owners of a unit is present at a

5-8 meeting of the association, that owner is entitled to cast all the votes

5-9 allocated to that unit. If more than one of the owners are present, the votes

5-10 allocated to that unit may be cast only in accordance with the agreement of

5-11 a majority in interest of the owners, unless the declaration expressly

5-12 provides otherwise. There is majority agreement if any one of the owners

5-13 cast the votes allocated to that unit without protest made promptly to the

5-14 person presiding over the meeting by any of the other owners of the unit.

5-15 2. [Votes] Except as otherwise provided in paragraph (a) of

5-16 subsection 1 of NRS 116.31034, votes allocated to a unit may be cast

5-17 pursuant to a proxy executed by a unit’s owner. If a unit is owned by more

5-18 than one person, each owner of the unit may vote or register protest to the

5-19 casting of votes by the other owners of the unit through an executed proxy.

5-20 A unit’s owner may revoke a proxy given pursuant to this section only by

5-21 actual notice of revocation to the person presiding over a meeting of the

5-22 association. A proxy is void if it is not dated or purports to be revocable

5-23 without notice. A proxy terminates one year after its date, unless it specifies

5-24 a shorter term.

5-25 3. If the declaration requires that votes on specified matters affecting

5-26 the common-interest community be cast by lessees rather than units’

5-27 owners of leased units:

5-28 (a) The provisions of subsections 1 and 2 apply to lessees as if they were

5-29 units’ owners;

5-30 (b) Units’ owners who have leased their units to other persons may not

5-31 cast votes on those specified matters; and

5-32 (c) Lessees are entitled to notice of meetings, access to records, and

5-33 other rights respecting those matters as if they were units’ owners.

5-34 Units’ owners must also be given notice, in the manner provided in NRS

5-35 116.3108, of all meetings at which lessees are entitled to vote.

5-36 4. No votes allocated to a unit owned by the association may be cast.

5-37 Sec. 11. NRS 116.3115 is hereby amended to read as follows:

5-38 116.3115 1. Until the association makes an assessment for common

5-39 expenses, the declarant shall pay all common expenses. After an assessment

5-40 has been made by the association, assessments must be made at least

5-41 annually, based on a budget adopted at least annually by the association.

5-42 Except for an association for a time-share project governed by the

5-43 provisions of chapter 119A of NRS, and unless the declaration imposes

6-1 more stringent standards, the budget must include a budget for the daily

6-2 operation of the association and the money for the reserve required by

6-3 paragraph (b) of subsection 2.

6-4 2. Except for assessments under subsections 4, 5 and 6:

6-5 (a) All common expenses, including a reserve, must be assessed against

6-6 all the units in accordance with the allocations set forth in the declaration

6-7 pursuant to subsections 1 and 2 of NRS 116.2107.

6-8 (b) The association shall establish a reserve for the repair and

6-9 replacement of the major components of the common elements. The reserve

6-10 may be used only for common expenses that involve major repairs or

6-11 replacement, including, without limitation, repairing and replacing roofs,

6-12 roads and sidewalks, and must not be used for daily maintenance.

6-13 3. Any past due assessment for common expenses or installment

6-14 thereof bears interest at the rate established by the association not

6-15 exceeding 18 percent per year.

6-16 4. To the extent required by the declaration:

6-17 (a) Any common expense associated with the maintenance, repair or

6-18 replacement of a limited common element must be assessed against the

6-19 units to which that limited common element is assigned, equally, or in any

6-20 other proportion the declaration provides;

6-21 (b) Any common expense or portion thereof benefiting fewer than all of

6-22 the units must be assessed exclusively against the units benefited; and

6-23 (c) The costs of insurance must be assessed in proportion to risk and the

6-24 costs of utilities must be assessed in proportion to usage.

6-25 5. Assessments to pay a judgment against the association may be made

6-26 only against the units in the common-interest community at the time the

6-27 judgment was entered, in proportion to their liabilities for common

6-28 expenses.

6-29 6. If any common expense is caused by the misconduct of any unit’s

6-30 owner, the association may assess that expense exclusively against his unit.

6-31 7. If liabilities for common expenses are reallocated, assessments for

6-32 common expenses and any installment thereof not yet due must be

6-33 recalculated in accordance with the reallocated liabilities.

6-34 8. The association shall provide written notice to the owner of each

6-35 unit of a meeting at which an assessment for a capital improvement [or the

6-36 commencement of a civil action] is to be considered or action is to be taken

6-37 on such an assessment at least 21 calendar days before the meeting. The

6-38 association may take action on such an assessment only if:

6-39 (a) A quorum is present; and

6-40 (b) The units’ owners who are present and entitled to vote agree to the

6-41 assessment by a two-thirds vote.

7-1 9. The association shall provide written notice to each unit’s owner

7-2 of a meeting at which the commencement of a civil action is to be

7-3 considered or action is to be taken on such a civil action at least 21

7-4 calendar days before the meeting. Except as otherwise provided in this

7-5 subsection, the association may commence a civil action only [upon a vote

7-6 or agreement of the owners of units to which at least a majority of the votes

7-7 of the members of the association are allocated.] if a quorum is present

7-8 and the units’ owners who are present and entitled to vote agree to

7-9 commence the civil action by a majority of the votes. The provisions of

7-10 this subsection do not apply to a civil action that is commenced:

7-11 (a) By an association for a time-share project governed by the

7-12 provisions of chapter 119A of NRS;

7-13 (b) To enforce the payment of an assessment;

7-14 (c) To enforce the declaration, bylaws or rules of the association;

7-15 (d) To proceed with a counterclaim; or

7-16 (e) To protect the health, safety and welfare of the members of the

7-17 association.

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