Assembly Bill No. 484–Assemblymen Chowning, Gibbons, Price, Ohrenschall, Anderson, Beers, Berman, Brown, Cegavske, Claborn, de Braga, Dini, Freeman, Giunchigliani, Goldwater, Gustavson, Hettrick, Humke, Leslie, Manendo, McClain, Mortenson, Nolan, Parks, Perkins, Smith and Tiffany

 

March 19, 2001

____________

 

Referred to Committee on Judiciary

 

SUMMARY—Revises provisions governing disclosure statement required upon sale of unit in common-interest community. (BDR 10‑584)

 

FISCAL NOTE:            Effect on Local Government: No.

                                    Effect on the State: No.

 

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to common-interest communities; revising the information that must be furnished by a unit’s owner to a prospective purchaser before the sale of the unit; 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. NRS 116.4109 is hereby amended to read as follows:

   116.4109  1.  Except in the case of a sale in which delivery of a public offering statement is required, or unless exempt under subsection 2 of NRS 116.4101, a unit’s owner shall furnish to a purchaser before the execution of any contract for the sale of a unit, or otherwise before conveyance:

   (a) A copy of the declaration, other than any plats and plans, the bylaws, the rules or regulations of the association and, except for a time share governed by the provisions of chapter 119A of NRS, the information statement required by NRS 116.41095;

   (b) A statement setting forth the amount of the monthly assessment for common expenses and any unpaid assessment of any kind currently due from the selling unit’s owner[;] that the purchaser will be obligated to pay;

   (c) A statement setting forth any unpaid fines due from the selling unit’s owner that the purchaser will be obligated to pay;

   (d) A statement of any violations of the governing documents of the association associated with the unit that the purchaser will be obligated to correct or repair;

   (e) The current operating budget of the association and a financial statement for the association; [and

   (d)] (f) A statement of any unsatisfied judgments or pending legal actions against the association and the status of any pending legal actions relating to the common-interest community [of which the unit’s owner has actual knowledge.] ;

   (g) A statement of any pending claims submitted to arbitration or mediation to which the association is a party; and

   (h) A statement of any legal actions or claims for arbitration or mediation that may reasonably be anticipated to be filed against the association.

   2.  The association, within 10 days after a request by a unit’s owner, shall furnish a certificate containing the information necessary to enable the unit’s owner to comply with this section. The certificate must be signed by a member of the executive board of the association. A unit’s owner providing a certificate pursuant to subsection 1 is not liable to the purchaser for any erroneous information provided by the association and included in the certificate.

   3.  Neither a purchaser nor the purchaser’s interest in a unit is liable for [any] :

   (a) Any unpaid assessment , [or] fee or fine greater than the amount [set forth in the certificate prepared by the association.] disclosed pursuant to this section; or

   (b) The correction or repair of any violation of the governing documents of the association that is not disclosed pursuant to this section.

   4.  If the association fails to furnish the certificate within the 10 days allowed by subsection 2, the seller is not liable for [the] :

   (a) Any delinquent assessment[.] , fee or fine owed to the association; or

   (b) The correction or repair of any violation of the governing documents of the association associated with the unit.

1-1    Sec. 2.  NRS 116.41095 is hereby amended to read as follows:

1-2    116.41095  The information statement required by NRS 116.4103 and

1-3  116.4109 must be in substantially the following form:

 

1-4  BEFORE YOU PURCHASE PROPERTY IN A

1-5  COMMON-INTEREST COMMUNITY

1-6  DID YOU KNOW . . .

1-7    1.  YOU ARE AGREEING TO RESTRICTIONS ON HOW YOU

1-8  CAN USE YOUR PROPERTY?

1-9  These restrictions are contained in a document known as the Declaration of

1-10  Covenants, Conditions and Restrictions (C, C & R’s) that should be

1-11  provided for your review before making your purchase. The C, C & R’s

1-12  become a part of the title to your property. They bind you and every future

1-13  owner of the property whether or not you have read them or had them

2-1  explained to you. The C, C & R’s, together with other “governing

2-2  documents” (such as association bylaws and rules and regulations), are

2-3  intended to preserve the character and value of properties in the

2-4  community, but may also restrict what you can do to improve or change

2-5  your property and limit how you use and enjoy your property. By

2-6  purchasing a property encumbered by C, C & R’s, you are agreeing to

2-7  limitations that could affect your lifestyle and freedom of choice. You

2-8  should review the C, C & R’s and other governing documents before

2-9  purchasing to make sure that these limitations and controls are acceptable

2-10  to you.

2-11    2.  YOU WILL HAVE TO PAY OWNERS’ ASSESSMENTS FOR AS

2-12  LONG AS YOU OWN YOUR PROPERTY?

2-13  As an owner in a common-interest community, you are responsible for

2-14  paying your share of expenses relating to the common elements, such as

2-15  landscaping, shared amenities and the operation of any homeowner’s

2-16  association. The obligation to pay these assessments binds you and every

2-17  future owner of the property. Owners’ fees are usually assessed by the

2-18  homeowner’s association and due monthly. You have to pay dues whether

2-19  or not you agree with the way the association is managing the property or

2-20  spending the assessments. The executive board of the association may have

2-21  the power to change and increase the amount of the assessment and to levy

2-22  special assessments against your property to meet extraordinary expenses.

2-23  In some communities, major components of the community such as roofs

2-24  and private roads must be maintained and replaced by the association. If

2-25  the association is not well managed or fails to maintain adequate reserves

2-26  to repair, replace and restore common elements, you may be required to

2-27  pay large, special assessments to accomplish these tasks.

2-28    3.  IF YOU FAIL TO PAY OWNERS’ ASSESSMENTS, YOU

2-29  COULD LOSE YOUR HOME?

2-30  If you do not pay these assessments when due, the association usually has

2-31  the power to collect them by selling your property in a nonjudicial

2-32  foreclosure sale. If fees become delinquent, you may also be required to

2-33  pay penalties and the association’s costs and attorney’s fees to become

2-34  current. If you dispute the obligation or its amount, your only remedy to

2-35  avoid the loss of your home may be to file a lawsuit and ask a court to

2-36  intervene in the dispute.

2-37    4.  YOU MAY BECOME A MEMBER OF A HOMEOWNER’S

2-38  ASSOCIATION THAT HAS THE POWER TO AFFECT HOW YOU

2-39  USE AND ENJOY YOUR PROPERTY?

2-40  Many common-interest communities have a homeowner’s association. In a

2-41  new development, the association will usually be controlled by the

2-42  developer until a certain number of units have been sold. After the period

2-43  of developer control, the association may be controlled by property owners

2-44  like yourself who are elected by homeowners to sit on an executive board

2-45  and other boards and committees formed by the association. The

2-46  association, and its executive board, are responsible for assessing

2-47  homeowners for the cost of operating the association and the common or

2-48  shared elements of the community and for the [day to day] day-to-day

2-49  operation and management of the community. Because homeowners sitting

3-1  on the executive board and other boards and committees of the association

3-2  may not have the experience or professional background required to

3-3  understand and carry out the responsibilities of the association properly,

3-4  the association may hire professional managers to carry out these

3-5  responsibilities.

3-6  Homeowner’s associations operate on democratic principles. Some

3-7  decisions require all homeowners to vote, some decisions are made by the

3-8  executive board or other boards or committees established by the

3-9  association or governing documents. Although the actions of the

3-10  association and its executive board are governed by state laws, the C, C &

3-11  R’s and other documents that govern the common-interest community,

3-12  decisions made by these persons will affect your use and enjoyment of

3-13  your property, your lifestyle and freedom of choice, and your cost of living

3-14  in the community. You may not agree with decisions made by the

3-15  association or its governing bodies even though the decisions are ones

3-16  which the association is authorized to make. Decisions may be made by a

3-17  few persons on the executive board or governing bodies that do not

3-18  necessarily reflect the view of the majority of homeowners in the

3-19  community. If you do not agree with decisions made by the association, its

3-20  executive board or other governing bodies, your remedy is typically to

3-21  attempt to use the democratic processes of the association to seek the

3-22  election of members of the executive board or other governing bodies that

3-23  are more responsive to your needs. If persons controlling the association or

3-24  its management are not complying with state laws or the governing

3-25  documents, your remedy is typically to seek to mediate or arbitrate the

3-26  dispute and, if mediation or arbitration is unsuccessful, file a lawsuit and

3-27  ask a court to resolve the dispute. In addition to your personal cost in

3-28  mediation or arbitration, or to prosecute a lawsuit, you may be responsible

3-29  for paying your share of the association’s cost in defending against your

3-30  claim. There is no government agency in this state that investigates or

3-31  intervenes to resolve disputes in homeowner’s associations.

3-32    5.  YOU ARE REQUIRED TO PROVIDE PROSPECTIVE BUYERS

3-33  OF YOUR PROPERTY WITH INFORMATION ABOUT LIVING IN

3-34  YOUR COMMON-INTEREST COMMUNITY?

3-35  The law requires you to provide to a prospective purchaser of your

3-36  property, before you enter into a purchase agreement[, a] :

3-37    (a) A copy of the community’s governing documents, including the C,

3-38  C & R’s, association bylaws, and rules and regulations, as well as a copy of

3-39  this document. [You are also required to provide a]

3-40    (b) A copy of the association’s current financial statement, operating

3-41  budget and information regarding the amount of the monthly assessment

3-42  for common expenses, including the amount set aside as reserves for the

3-43  repair, replacement and restoration of common elements. [You are also

3-44  required to inform prospective purchasers]

3-45    (c) A statement setting forth any unpaid assessment or fine that the

3-46  purchaser will be obligated to pay.

3-47    (d) A statement of any violations of the governing documents of the

3-48  association that the purchaser will be obligated to correct or repair.

4-1    (e) A statement of any outstanding judgments or lawsuits pending

4-2  against the association . [of which you are aware. You are also required to

4-3  provide a]

4-4    (f) A statement of any pending claims submitted to arbitration or

4-5  mediation to which the association is a party.

4-6    (g) A statement of any legal actions or claims for arbitration or

4-7  mediation that may reasonably be anticipated to be filed against the

4-8  association.

4-9    (h) A copy of the minutes from the most recent meeting of the

4-10  homeowner’s association or its executive board.

4-11  For more information regarding these requirements, see Nevada Revised

4-12  Statutes 116.4103[.] and 116.4109.

4-13    6.  YOU HAVE CERTAIN RIGHTS REGARDING OWNERSHIP IN

4-14  A COMMON-INTEREST COMMUNITY THAT ARE GUARANTEED

4-15  YOU BY THE STATE?

4-16  Pursuant to provisions of chapter 116 of Nevada Revised Statutes, you

4-17  have the right:

4-18    (a) To be notified of all meetings of the association and its executive

4-19  board, except in cases of emergency.

4-20    (b) To attend and speak at all meetings of the association and its

4-21  executive board, except in some cases where the executive board is

4-22  authorized to meet in closed, executive session.

4-23    (c) To request a special meeting of the association upon petition of at

4-24  least 10 percent of the homeowners.

4-25    (d) To inspect, examine, photocopy and audit financial and other

4-26  records of the association.

4-27    (e) To be notified of all changes in the community’s rules and

4-28  regulations and other actions by the association or board that affect you.

4-29    7.  QUESTIONS?

4-30  Although they may be voluminous, you should take the time to read and

4-31  understand the documents that will control your ownership of a property in

4-32  a common-interest community. You may wish to ask your real estate

4-33  professional, lawyer or other person with experience to explain anything

4-34  you do not understand. You may also request assistance from the

4-35  ombudsman for owners in common-interest communities, Nevada Real

4-36  Estate Division, at (telephone number).

4-37  Buyer or prospective buyer’s initials:          

4-38  Date:          

 

4-39  H