MINUTES OF THE meeting
of the
ASSEMBLY Committee on Judiciary
Seventy-First Session
May 22, 2001
The Committee on Judiciarywas called to order at 9:05 a.m. on Tuesday, May 22, 2001. Chairman Bernie Anderson presided in Room 3138 of the Legislative Building, Carson City, Nevada. The meeting was simultaneously videoconferenced in Room 4401 of the Grant Sawyer Office Building, Las Vegas. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mr. Bernie Anderson, Chairman
Mr. Mark Manendo, Vice Chairman
Mrs. Sharron Angle
Mr. Greg Brower
Ms. Barbara Buckley
Mr. John Carpenter
Mr. Jerry Claborn
Mr. Tom Collins
Mr. Don Gustavson
Mrs. Ellen Koivisto
Ms. Kathy McClain
Mr. Dennis Nolan
Mr. John Oceguera
Ms. Genie Ohrenschall
GUEST LEGISLATORS PRESENT:
Senator Michael Schneider, Clark Senate District 8
STAFF MEMBERS PRESENT:
Nicolas Anthony, Committee Policy Analyst
Risa B. Lang, Committee Counsel
Deborah Rengler, Committee Secretary
OTHERS PRESENT:
Scott Craigie, American Resort Development Association (ARDA)
Karen Dennison, American Resort Development Association (ARDA)
Shirley Penzel, Projects Chief, Real Estate Division
Stephen Cloobeck, representing self
Foster Mullen, American Resort Development Association (ARDA) and QM Corp.
John Holmes, Ridge Sierra Property Owners Association
Chairman Anderson made opening remarks and noted a quorum was present.
Chairman Anderson opened the hearing on S.B. 261 and acknowledged Senator Michael Schneider, District 8, as he approached the witness table.
Senate Bill 261: Makes various changes to provisions governing time shares. (BDR 10-819)
Senator Schneider said S.B. 261 removed all the time-share regulations from Nevada Revised Statutes (NRS) 116 that dealt primarily with homeowner associations and created a separate chapter, NRS 119, for time-shares. There were many similarities to homeowner associations; but time-share developments had 10, 20, or 30,000 homeowners. Senator Schneider said it was comparing “apples to oranges.” S.B. 261 would also upgrade the industry, putting more regulations and control on the people who worked in the industry. S.B. 261 was supported by the American Resort Development Association (ARDA) and the Real Estate Division; all parties had worked on the legislation for two years. Las Vegas was the “hot market” for time-shares; every large time-share developer was trying to come to Las Vegas.
Scott Craigie, American Resort Development Association (ARDA), said two years’ work was represented in S.B. 261.
Chairman Anderson noted several revisions had taken place in the Senate. Scott Craigie said the revisions primarily dealt with budget issues. The bill was delayed, which created the exemption, due to the fiscal note. The original bill suggested some areas of regulation performed by the Real Estate Division should be moved into local government; that change resulted in an $86,000 a year budget issue, lost money. The industry decided to pay the money without having the jurisdiction or the responsibilities carried forward.
Karen Dennison, American Resort Development Association (ARDA), said prior to the enactment of NRS 116, Uniform Common Interest Ownership Act, all time-shares were regulated by NRS 119A. Then in 1991, NRS 116 was added and a bifurcated system of regulation was created. It was unclear as to what sections of NRS 116 applied to time-shares because of the overall statement in NRS 119A stating if a matter was regulated by NRS 119, it was not regulated by NRS 116. In 1997 and 1999, attempts were made to create an extensive list of those provisions of NRS 116 that did not apply to time-shares. The purpose of S.B. 261 was to move all time-share regulations into NRS 119A. Ms. Dennison called attention to a summary she prepared (Exhibit C) that would highlight many of the “moved” provisions and the technical clean-up language in S.B. 261. She reviewed six new categories:
Exhibit C also detailed those sections of NRS 116 that were moved into NRS 119 through S.B. 261.
Ms. Dennison continued reviewing S.B. 261 section by section:
q Sections 8 through 17 included definitions.
q Section 18 included provisions from NRS 116 and dealt with consumer protection issues.
q Section 19 discussed the relocation of boundaries.
q Section 20 dealt with owner referral program.
q Section 21 dealt with the withdrawal of units from a time-share plan.
q Section 22 explained the legal definition of a time-share.
q Section 23 dealt with the election of the board of directors.
q Section 24 dealt with the removal of board members.
q Section 25 dealt with the 10 percent quorum requirement and was consistent with NRS 82.291.
Chairman Anderson asked Ms. Dennison if she had been involved in the work several years ago that moved this issue out of the jurisdiction of the Judiciary Committee into Commerce and Labor. Ms. Dennison said she was not involved then. Chairman Anderson asked if the issue had been raised in the Senate. Ms. Dennison said it had not. Chairman Anderson cautioned Ms. Dennison, if S.B. 261 was enacted, she would be meeting with Commerce and Labor and that they met late afternoon or early evening.
Ms. Dennison continued her review of S.B. 261 section by section:
q Section 26 dealt with the reserve studies.
q Section 27 was a statement to lenders on unpaid assessments.
q Section 28 was taken from NRS 116.11034 and NRS 116.110385 and dealt with special declarants’ rights and developmental rights.
q Section 29 was the first of the management company regulation provisions.
q Section 30 was the disclosure section of the management company regulations.
q Section 31 was a disclosure statute regarding what amenities the developer must build.
q Section 32 incorporated some definitions.
q Sections 33 through 39 were technical corrections.
q Section 40 clarified what was perceived to be a loophole regarding the registration of a time-share.
q Section 41 stated the interest in a time-share was not a security.
q Sections 42 and 42.5 included technical corrections.
q Section 43 contained a provision from the ARDA code of ethics regarding targeted solicitations to prospective purchasers of other projects.
q Sections 44 through 50 were also technical corrections.
q Section 51 dealt with advertisements.
q Section 52 dealt with the contents of a time-share instrument, mandatory and permissive provisions.
Chairman Anderson asked what would be the advantage for state law to not have NRS 116 apply to NRS 119. Why should the judiciary issues now be transferred to Commerce and Labor? Ms. Dennison said it was not the intent to remove the judiciary jurisdiction; the intent was to separate the issues of time-shares and common-interest communities. It was very confusing comparing or combining NRS 116 and NRS 119A; S.B. 261 attempted to clarify that problem. Chairman Anderson recalled attempts in the last three sessions to make changes; why was it not done initially? There had also been concerns for time-shares regarding short-term rental agreement rights, notifications, expulsions, etcetera. Ms. Dennison said NRS 116 would still govern condominium associations. Chairman Anderson said it appeared everything was “OK” until 1991 when NRS 116 was created; S.B. 261 would move everything into NRS 119A.
Shirley Penzel, Projects Chief, Real Estate Division, supported S.B. 261, which would be a “tremendous improvement” in time-share law.
Stephen Cloobeck said this was the first time that the industry and the Real Estate Division had attempted to consolidate the time-share provisions into one statute in NRS 119A. Mr. Cloobeck said S.B. 261 would protect the consumers in ways the existing laws did not.
Chairman Anderson asked how Mr. Cloobeck believed existing state law did not protect consumers. Mr. Cloobeck said management companies charged the consumer hidden fees such as transfer of interest or late association fees. Chairman Anderson asked if Mr. Cloobeck had documents to prove his statements. Mr. Cloobeck said the association could produce those documents. Chairman Anderson asked if those documents had been presented in the Senate at the first hearing of the bill. Mr. Cloobeck said the Senate did not ask for those documents.
Foster Mullen, American Resort Development Association, supported S.B. 261. Mr. Mullen believed time-shares and common-interest communities needed to develop separately, with different needs and different laws.
John Holmes, Ridge Sierra Property Owners Association, had been an owner for 17 years and had been on the board of directors for 13 years; he fully supported S.B. 261. He hoped S.B. 261 would be enacted to separate time-share regulations from the common-interest community regulations and eliminate any confusion in the future.
Chairman Anderson and Assemblywoman Buckley discussed privately the jurisdictional question if S.B. 261 was enacted.
Chairman Anderson asked for further testimony on S.B. 261. There being none, he closed the hearing on S.B. 261.
ASSEMBLYWOMAN BUCKLEY MOVED TO DO PASS S.B. 261.
ASSEMBLYWOMAN OHRENSCHALL SECONDED THE MOTION
Assemblyman Collins was confused about exemptions mentioned in the bill; he would reserve his vote at this time.
Assemblywoman Buckley recalled this issue arose in the 70th Session when she chaired the Assembly Committee on Commerce and Labor. In an effort to provide more accountability for the homeowners’ association, it was realized the time-share developments were being overly burdened; but there was not time to work on the issues during the 70th Session. The interested parties were asked to work on the issues during the interim, resulting in a good job of straightening out the chapters in regard to time-shares. Ms. Buckley believed S.B. 261 was a good bill.
MOTION PASSED UNANIMOUSLY WITH MR. COLLINS RESERVING HIS RIGHT TO CHANGE HIS VOTE ON THE FLOOR.
Chairman Anderson asked Assemblywoman Buckley to present the bill on the Assembly floor.
Chairman Anderson recessed the meeting at 10:10 a.m. pending a possible floor meeting. There being no further business, Chairman Anderson adjourned the meeting at 4:30 p.m.
RESPECTFULLY SUBMITTED:
Deborah Rengler
Committee Secretary
APPROVED BY:
Assemblyman Bernie Anderson, Chairman
DATE: