MINUTES OF THE meeting
of the
ASSEMBLY Committee on Judiciary
Seventy-First Session
May 25, 2001
The Committee on Judiciarywas called to order at 9:14 a.m. on Friday, May 25, 2001. Chairman Bernie Anderson presided in Room 3138 of the Legislative Building, Carson City, Nevada. The meeting was simultaneously videoconferenced in Room 4412 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:
Bob Maddox, Nevada Trial Lawyers Association
Karen Dennison, Lake at Las Vegas Joint Venture
Tami DeVries, Legal Administrative Officer, Department of Business and Industry, Real Estate Division, Las Vegas
Michael Buckley, Community Association Institute Legislative Action Committee (CAI/LAC)
Pamela Scott, Senior Property Manager, Community Association Management, Summerlin Development, The Howard Hughes Corporation, Las Vegas
Karen Brigg, Eugene Burger Management Company
David Walker, Deputy Administrator, Department of Business and Industry, Real Estate Division, Las Vegas
Chairman Anderson made opening remarks and noted a quorum was present.
Chairman Anderson opened the work session on S.B. 421, an exempt bill that needed to be acted upon that day.
Senate Bill 421: Makes various changes to provisions governing common-interest communities. (BDR 10-446)
Chairman Anderson called attention to two documents:
(1) Work session document (Exhibit C) provided by Nick Anthony, Committee Policy Analyst.
(2) Summary of the Proposed Amendments to Senate Bill No. 421 (Exhibit D) prepared by the Legal Division.
Nicolas Anthony read the summary on S.B. 421 from the work session document (Exhibit C). Mr. Anthony indicated there were nine proposed amendments included in the work session document (Exhibit C). Also presented to the committee was a letter from the Nevada Trial Lawyers Association (NTLA) (Exhibit E) with justification for the amendment to delete Section 36 and 37, as well as a further amendment to Section 42.
Chairman Anderson said an updated copy of the Section 39 Working Group Revisions (Exhibit F) was also distributed to the committee.
Bob Maddox, Nevada Trial Lawyers Association (NTLA), felt that Section 42 should be deleted; but, if it was not to be deleted, the amendment was suggested to make Section 42 “more reasonable.”
Chairman Anderson verified that S.B. 421, Sections 36 and 37, were included in A.B. 133, which would make various changes concerning construction, constructional defects, and common-interest communities. Chairman Anderson asked if an agreement had been reached to delete Sections 36 and 37. Karen Dennison, Lake at Las Vegas Joint Venture, said the Working Group supported the deletion of Sections 36 and 37.
Chairman Anderson reviewed Section 42 and the proposed amendment from the NTLA. Mr. Maddox preferred to delete Section 42, and Ms. Dennison agreed.
Senator Michael Schneider, Clark County Senatorial District 8, stated that he just became aware that Sections 36 and 37 were in A.B. 133. It was important that those provisions remain in Nevada Revised Statutes (NRS) 116, which was the bible for homeowner associations.
Chairman Anderson asked if there were problems with Section 64 and if that section also was included in A.B. 133. Risa Lang, Committee Counsel, said an agreement had been reached to deal with Section 64 in A.B. 133. Michael Buckley and the Working Group asked to have Section 64 deleted from S.B. 421. Ms. Dennison said the Working Group supported moving Section 64 to A.B. 133.
Assemblywoman Buckley clarified that those sections regarding construction defect litigation would not be “moved” to A.B. 133. A.B. 133 included certain policy choices and decisions made by the committee, and those decisions would not be reversed in S.B. 421.
Chairman Anderson restated that Sections 36, 37, 42, and 64 of S.B. 421 would be deleted.
Mr. Anthony continued with the second proposed amendment to Section 39 and drew attention to the typed, cleaner version (Exhibit F). Ms. Dennison said the typed version of the amendment did reflect the consensus of the Working Group.
Senator Schneider felt deleting Section 64 would not be in the best interest of Nevada homeowners, and he suggested a conference committee would be needed. Senator Schneider wanted to compare Section 64 to A.B. 133.
Chairman Anderson clarified that Section 64 had been recommended by the Working Group to be deleted. Ms. Dennison replied in the affirmative and stated there were other provisions in S.B. 421 that were more important.
Assemblyman Carpenter said he had read Section 64 and noted it dealt with associations, assessments for expenses, and budget details; however, there was but nothing related to construction defects. Were those provisions taken care of in any other legislation? Ms. Dennison said NRS 116 would still remain the same as it related to common expenses, reserves, and so on. It was not the intention to move Section 64 to any other NRS chapter. Chairman Anderson said that Section 64 was already in A.B. 133.
Assemblywoman Buckley said the language on page 29 contained the rules on how to file a lawsuit. By deleting the rules, the law would stay the way it was. The assessment would stay in the law, and the proposed changes would not.
Senator Schneider said Ms. Dennison had assured him that the existing law would remain even with the deletion of Section 64. He had been concerned about the use of reserve funds.
Assemblyman Carpenter asked what would become of the provisions of Section 64. Chairman Anderson said the elimination of Section 64 from S.B. 421 did not remove NRS 116.3115 from the existing law. NRS 116.3115 would remain the same. Had Section 64 remained in S.B. 421 and the bill became law, and that section of the law would have changed to remove that language.
Mr. Anthony called attention to the revised Section 39 amendment. Chairman Anderson said that amendment was discussed on page 5, number 22, of Exhibit D. Chairman Anderson asked if the Section 39 amendment was acceptable to the committee. There being no objections, the changes as suggested in the Section 39 proposed amendment would be included in S.B. 421.
Chairman Anderson and Assemblyman Carpenter shared comments regarding Mr. Carpenter’s proposed amendment relating to rural communities being subject to the open meeting law. It would be discussed in detail closer to the end of the meeting.
Michael Buckley, Community Association Institute Legislative Action Committee (CAI/LAC), testified via videoconferencing from Las Vegas. David Persiano, Nevada Trial Lawyers Association, and Donna Erwin, Las Vegas Country Club Estates, joined Mr. Buckley at the witness table to listen and observe. Mr. Buckley reviewed the proposed amendment section-by-section (Exhibit C, pages 4 through 27)
Assemblywoman Buckley had general questions about the commission that would be established with the passage of S.B. 421. She asked if the commission was full-time or part-time, what was the current status of the cost, and from where would the funding come. Ms. Dennison said the commission would meet four times a year; therefore it would be part-time. The common-interest communities fund was created from what was formerly the ombudsman fund. Tami DeVries, Legal Administrative Officer, Department of Business and Industry, Real Estate Division, said the cost would be taken out of a reserve account that already existed. Chairman Anderson asked if the ombudsman’s office was being eliminated. Ms. DeVries said the ombudsman’s office would still be in existence to assist and educate homeowners. The commission would have regulatory functions over anyone violating NRS 116.
Assemblywoman Buckley was aware that there existed “extra money” in the budget to pay for the function of the commission, and she asked how much extra money was available. Ms. DeVries reported the reserve account had approximately $675,000. Assemblywoman Buckley asked why the money was collected and not used. She suggested that money could be utilized to fund the staffing pattern suggested in the document previously distributed.
Chairman Anderson asked what the concern had been related to interim finance and additional funding. Ms. DeVries replied the Real Estate Division did not need to go to the Interim Finance Committee for additional funds, but to get authority to use the funds. Chairman Anderson verified that the authority was not in the bill. Ms. DeVries said the authority was included in the bill, but the fiscal note would need to be approved. Chairman Anderson clarified that S.B. 421 would need to be referred to the Assembly Committee on Ways and Means. That was what Ms. DeVries was requesting.
Senator Schneider reminded the committee “The Real Estate Division received $3 a door from the fee.” It had been anticipated that the ombudsman’s office would provide education, which did not happen in the last couple of years. That resulted in the extra money in the reserve fund. The Senate believed it was favorable to “front-end load” the program with the extra money since there was plenty of money being received. Eventually the fee might even be reduced.
Chairman Anderson asked if the creation of the commission would diminish the program of the ombudsman. Senator Schneider said he anticipated there would be plenty of money to run both programs. The commission provided the “teeth” that the ombudsman needed and the public had demanded.
Mr. Buckley continued explaining the various provisions of his amendment (Exhibit C, pages 4 through 27). When Section 40 was under discussion, Chairman Anderson said he had an amendment from Renny Ashleman (Exhibit C, page 28). Mr. Buckley supported the amendment that made an exception for units owned or leased by the declarant. Ms. Dennison said the Working Group agreed with that amendment.
Assemblyman Collins asked if the “rentals” referenced were short-term rentals and not long-term leases. Chairman Anderson clarified that the management company handled the rentals, not owners who chose to use their units as transient lodging. Ms. Dennison said it had to be under the governing documents and referred to the developer’s use for sales or other purposes. Chairman Anderson verified that transient lodging would not be allowed within closed communities.
Mr. Buckley continued the review of the provisions of the proposed amendment. Section 58 deleted the requirement that every monetary fine notice be sent by certified mail. Chairman Anderson asked if there should be concern that the notice was not tacked on the door, put on the bulletin board, or placed by the mailboxes; how could it be guaranteed that the homeowner actually received the notice. Mr. Buckley said it could be amended to include “by first-class mail” as the cost of certified mail was approximately $4. Chairman Anderson agreed there was an expense, but certified mail did provide protection for the association.
Pamela Scott, Senior Property Manager, Community Association Management, Summerlin Development, The Howard Hughes Corporation, said there were a number of written notices that were required by law. The first level was a courtesy notice that would cause a great financial burden, especially when dealing with 60,000 residents. The second level was a first warning notice if correction was not accomplished with the courtesy notice. The third notice was a hearing notice, providing the homeowner the opportunity to be heard and another opportunity to correct whatever the problem might have been. The hearing notice could be sent by certified mail, but there was a better chance to be opened if sent by first-class mail. Ms. Scott said it was her experience that whenever a notice was sent by certified mail, it was also sent first class. Chairman Anderson asked who would be receiving the notices, the unit owner or the resident. Ms. Scott said the unit owner was the only party with which the association had a legal relationship and was the responsible party. The unit owner may have a tenant or a relative living in the home. If the name of the tenant was known, a copy of the notice could be sent to the tenant as well.
Assemblyman Manendo asked what kind of notices was sent out every week. Ms. Scott said she sent out approximately 200 “violation” notices a week. Chairman Anderson asked what the quickest resolution to the problems would be. Karen Brigg, Eugene Burger Management Company, said the notices to the unit owner gave the owners the opportunity to ensure the problems were corrected. The owner would be billed for the violation if it went to a fine-levying situation.
Ms. Dennison believed too much had been deleted in Mr. Buckley’s amendment. She asked that the wording “alleged to have violated” be restored, because otherwise it did not make sense.
Mr. Buckley said, in light of the previous conversation, he would suggest that the language include “and the occupant or tenant, if known.” Chairman Anderson asked if Mr. Buckley agreed with Ms. Dennison’s observation. He remarked the question of certified mail still bothered him. Mr. Buckley said in many circumstances the only way to correct a violation was through the unit owner. Chairman Anderson said that might be an issue, but proof was needed that the unit owner had been notified. Assemblyman Collins said “alleged violation” was mentioned in three instances after the language questioned by Ms. Dennison.
Ms. Scott said there were additional noticing requirements included in S.B. 421. Because of the financial burden, the associations might have to start ignoring violations. Mr. Buckley said the law as it presently existed did not require certified mail. Chairman Anderson clarified the proposed amendment for Section 58.
Chairman Anderson continued reviewing the provisions of Mr. Buckley’s proposed amendment. Section 68 discussed the time period requirements for foreclosure. Mr. Buckley said S.B. 421 was supposed to provide for 30 more days than was now provided. As the bill was drafted it provided 60 more days. Assemblyman Carpenter believed people needed more time if they were going to save their home. Chairman Anderson said the bill proposed to add 30 days in front of the noticing process, in addition to the 60 days currently in law. Did Mr. Carpenter want to increase the time in current law? Assemblyman Carpenter was concerned with decreasing any time allowed and added there must have been a reason it was increased to 90 days when the bill was drafted. Ms. Dennison said the justification for the 60 days and the 30-day pre-notice was an effort to mirror the 120-day foreclosure period for a first deed of trust.
Chairman Anderson reviewed each provision of Mr. Buckley’s proposed amendment indicating the committee’s intended action for each.
Chairman Anderson called attention to the proposed amendment (Exhibit C, pages 29 through 32) submitted by Senator John Briggs, Retired, requesting the deletion of Section 50. Chairman Anderson asked Mr. Buckley if he had reviewed the proposed amendment. Mr. Buckley said he had spoken with Senator Briggs, and it was intended that the board be given “carte blanche” to make changes. Mr. Buckley suggested the language “without the approval of unit owners” be amended into Section 50. David Walker, Deputy Administrator, Department of Business and Industry, Real Estate Division, said he had a lengthy conversation with Senator Briggs and explained that provision was to bring the regulations into conformity without making other changes. He was appeased by that explanation. Chairman Anderson said Senator Brigg’s proposed amendment could then be withdrawn. Mr. Walker agreed.
Chairman Anderson asked Ms. DeVries to clarify her proposed amendment (Exhibit C, pages 33 and 34). Ms. DeVries reviewed the six provisions of the proposed amendments. A discussion ensued regarding “gifts, grants, or donations” that might be construed as bribes. It raised questions regarding ethics as specified in NRS 281 and the definition of a public officer. Risa Lang suggested including language specifying the use of the gifts, grants, or donations. Mr. Walker suggested including language “pursuant to commission functions or duties” that would eliminate personal use. Assemblyman Carpenter asked why it was not limited to state or federal grants. Mr. Walker said there might be occasion that an institution might want to help improve the program. Chairman Anderson asked that it be limited to “federal grants” and “may enter into agreements with other entities that were required or authorized to carry out similar duties” that could allow other agencies to participate.
Ms. DeVries continued to review the other provisions of her proposed amendment. She reported she had spoken with Senator Schneider, and he was comfortable with the proposed amendment.
Assemblyman Carpenter submitted an amendment (Exhibit C, page 35) that proposed that rural agricultural residential common-interest communities be subject to the open meeting law. Chairman Anderson asked if a qualifier was needed indicating the size of the rural area development. Assemblyman Carpenter said a provision could be added that it applied to just the boards of the associations. Ms. DeVries said there were regulations that defined whether an association would qualify as a rural, agricultural, residential common-interest community. Chairman Anderson asked if that definition indicated a size. Ms. DeVries said there were three criteria in the Nevada Administrative Code (NAC) 116, and size was not considered a significant factor.
Chairman Anderson reported that Assemblywoman Vonne Chowning, District 28, had a bill, A.B. 484that was passed out of the Assembly that would revise provisions governing disclosure statements required upon sale of the unit in a common-interest community. A.B. 484 did not have a hearing in the Senate. S.B. 421 was a suitable vehicle to send those provisions to the Senate. Chairman Anderson suggested that A.B. 484 be amended into S.B. 421, giving A.B. 484 one more chance at life.
Chairman Anderson entertained a motion to amend, do pass and re-refer to the Assembly Committee on Ways and Means. Chairman Anderson clarified all the amendments as previously discussed would be part of the motion. There was also a conflict notice on two bills that had already passed – A.B. 621 that would revise provisions relating to real estate and A.B. 336 that would require provision of information and assistance to certain adoptive parents, prospective adoptive parents, and other persons involved in adoption of child. Those bills were already enrolled.
ASSEMBLYMAN COLLINS MOVED TO AMEND AND DO PASS, AND RE-REFER TO WAYS AND MEANS S.B. 421 WITH ALL THE DISCUSSED AMENDMENTS.
ASSEMBLYWOMAN OHRENSCHALL SECONDED THE MOTION.
Assemblyman Nolan asked if there would be any conflicts with A.B. 484. Chairman Anderson said he did not believe there would not be any conflicts. Assemblyman Manendo asked if the fee provided in Section 28 could fall back onto the homeowner. Ms. DeVries said she did not anticipate that the certification fee of $35 to $50 was insufficient for the association to pass onto the homeowner.
Chairman Anderson asked for further testimony. There being none, he called for the vote on S.B. 421.
MOTION PASSED WITH MR. BROWER AND MS. BUCKLEY ABSENT FROM THE VOTE.
Chairman Anderson stated that S.B. 421 would go the Assembly Committee on Ways and Means, and the Committee on Judiciary would monitor its progress.
Assemblyman Manendo said he would be presenting an Assembly floor amendment on S.B. 482, a bill that would establish prohibited and required conduct of person who used a skateboard park. Chairman Anderson said S.B. 482 had been sitting on the Chief Clerk’s desk awaiting the amendment.
Chairman Anderson recessed the meeting at 11:10 a.m. pending a possible meeting behind the Bar of the Assembly. There being no further business, Chairman Anderson adjourned the meeting at 4:40 p.m.
RESPECTFULLY SUBMITTED:
Deborah Rengler
Committee Secretary
APPROVED BY:
Assemblyman Bernie Anderson, Chairman
DATE: