New state laws affect HOA fees and water use

This week, I have invited local attorneys Gregory P. Kerr and Michael T. Schulman of Wolf, Rifkin, Shapiro, Schulman &Rabkin to explain new laws that will affect Las Vegas communities and the state’s homeowners associations. This the last column in a three-part series that takes an in-depth look at the new laws.

Assembly Bill 237 deals with automatic increases for account set-up fees, resale certificate fees and other similar fees.

This bill makes a number of changes to the amounts that associations can charge unit owners for services such as account setup fees, resale certificate fees and statement of demand fees. AB 237 also provides for annual inflationary increases to the account setup fee. AB 237 also prohibits any other fees to be charged for services similar to setting up new accounts and providing resale certificates and related information. AB 237 expressly authorizes the Nevada Real Estate Division to investigate and impose certain administrative penalties for violations of the fee provisions relating to these services.

■ Provides for the statutory cap of $350 for an account setup fee to be increased annually for inflation but not more than 3 percent each year.

Existing law under Nevada Revised Statutes 116.3102(1)(o) states that an association can impose a reasonable fee for opening or closing of any file (a.k.a. account setup fee) for each unit. That fee can only be charged to either the purchaser or seller of a unit and the fee must not be more than the actual cost the association incurs and cannot exceed $350. The account setup fee is often a charge that an association is obligated to pay to its managing agent pursuant to a management contract. Whatever the contract amount is, that is the amount that can be charged as an account setup fee to either the purchaser or the seller of a unit, but not to exceed $350. Subparagraph 4 of NRS 116.3102(1)(o) provides an inflationary increase but is arguably still subject to the $350 cap under subparagraph 2.

Under AB 237, subparagraph 2, which sets the cap of $350, is amended to include an annual inflation increase, which is calculated by multiplying the actual amount of the fee by the CPI percentage increase as published by the United States Department of Labor for the preceding year, but not to exceed a 3 percent increase from year to year. The inflation increase language allows the actual amount charged to be greater than $350 but, in no event can the association charge more than what the association incurs under its management (which may be less than $350), plus the inflationary increases as provided for under AB 237.

■ Sets a statutory cap on the resale certificate fee as provided for in NRS 116.4109.

Under existing law at NRS 116.4109(4)(b), the commission was delegated the authority to set the amount that an association could charge a unit owner for the resale certificate described in NRS 116.4109(3) and set the amount that could be charged to expedite a request for the resale certificate, but that the amount could not exceed $185 for the resale certificate and not exceed $100 for any expediting fee. Currently, under NAC 116.465, the commission set the resale certificate fee at $160 and the expediting fee at $125. AB 237 amends NRS 116.4109(4)(b) to eliminate the commission’s authority to set those fees and instead sets the resale certificate fee at $185 and the expediting fee at $100.

■ Increases certain superpriority lien amounts for the demand or intent to lien.

Existing law under NRS 116.3116(5) provides that certain costs of collection incurred in the collection of delinquent assessments are included in an association’s superpriority lien portion of its statutory assessment lien. One of those costs of collection included in the superpriority lien portion is the cost of the demand or intent to lien. The amount of that cost that is included in the superpriority lien is $150. Also NAC 116.470(2)(a) provides the maximum that can be charged a delinquent owner for the demand or intent to lien is $150.

Under AB 237, NRS 116.3116(5) is amended to increase the amount that can be secured as a part of the superpriority lien from $150 to $165. This does raise an issue about what can be charged as a cost of collection for the preparation of the demand or intent to lien notice. While AB 237 amends NRS 116.3116(5) to increase the amount secured by the superpriority lien to $165, the regulation under NAC 116.470(2)(a) still needs to be adjusted to reflect that change. As it stands now, that regulation still limits the fee for that notice to $150. It may be argued that the regulation still applies unless and until the regulation is amended to reflect the change made in AB 237.

■ Prohibits the imposition of any other fees not expressly provided for relating to services similar to the resale certificate preparation and the account setup activity.

AB 237 adds a new subsection to NRS 116.3102 and a new subsection to NRS 116.4109, both of which state that an association may not charge a purchaser or seller or agents thereof any other fee not otherwise provided for in those statutes and may not charge amounts in excess of the amounts as set forth in those statutes. In other words, for any services related to the account setup, the only fee that can be charged is the account setup fee as provided for in NRS 116.3102(1)(o) and only in the amounts as authorized thereunder. Also, for any services related to the preparation of the resale certificate under NRS 116.4109(3), the only fee that can be charged is the resale certificate fee as provided for in NRS 116.4109(4)(b) and only in the amounts as authorized thereunder. The purpose of this portion of AB 237 was to limit the amounts that can be charged for those services and to preclude the creation of other bases upon which to charge additional fees in connection with the sale of a unit.

■ Complaint process through the Nevada Real Estate Division for violations of account setup limitations and resale certificate limitations.

AB 237 establishes a complaint process that allows a person who believes he or she is aggrieved by a violation of NRS 116.3102(1)(o) or NRS 116.4109(4)(b) to file a complaint with the Division. Under AB 237, a person may file a complaint with the division if the person believes that he or she has been improperly charged fees that exceed or otherwise violate the limitations for account setup fees or resale certificate fees. Upon receipt of that complaint, and if circumstances warrant, the division will request of the person alleged to have committed the violation to respond in writing with any corrective action taken, including any reimbursement of any excessive fees. If the person alleged to have committed the violation does not respond within 30 days of receipt of the written notice, the failure to respond will be deemed an admission of wrongdoing and an administrative fine of up to $250 will be imposed. While the division already had the jurisdiction to investigate and prosecute violations of NRS 116, AB 237 provides for a specific process to remedy alleged violations of excessive charges for account setup fees or resale certificate fees.

Assembly Bill 356

As of Jan. 1, 2027, the Southern Nevada Water Authority and its member agencies will be prohibited from distributing Colorado River water to irrigate non-functional turf on property that is not zoned exclusively for residential purposes. AB 356 will almost certainly impact substantially common-interest communities that have natural turf on any common areas. AB 356 compels SNWA board of directors to establish a plan for the removal of non-functional turf within its jurisdiction. The plan will need to identify and facilitate the removal of existing non-functional turf within SNWA’s service area on property that is not zoned exclusively for a single-family residence. The plan is required to at least establish phases for the removal of non-functional turf based on categories of water users, and establish deadlines within the service area of the SNWA service area for existing customers to remove nonfunctional turf on property that is not zoned exclusively for a single-family residence before Dec. 31, 2026.

Also, AB 356 does not define the term “non-functional.” As such, under AB 356, the SNWA board of directors is charged with the duty of defining the term “non-functional” by regulation.

AB 356 also establishes the Nonfunctional Turf Removal Advisory Committee (“Advisory Committee”). The Advisory Committee:

1. Shall discuss issues related to the use and removal of nonfunctional turf by each water-use sector, including, without limitation, issues relating to the plan developed pursuant to section 39 of this act to identify and remove nonfunctional turf.

2. May provide written recommendations to the board of directors regarding the plan developed pursuant to AB 356, including, without limitation, any recommendations for waivers or exemptions to the provisions of AB 356. Any recommendation made by the Advisory Committee must be approved by a majority vote of all of its voting members. Any dissenting opinion of a member of the Advisory Committee must be fully documented and included with the recommendation to the board of directors.

The positions on the Advisory Committee are set forth in AB 356. It will consist of nine voting members and will be constituted as follows:

■ One member who represents an office park with existing nonfunctional turf at the time the member is appointed.

■ One member who represents an organization representing businesses.

■ One member who represents an industrial or commercial business with existing nonfunctional turf at the time the member is appointed.

■ Two members who represent a common-interest community with existing nonfunctional turf at the time the member is appointed.

■ One member who represents multifamily housing with existing nonfunctional turf at the time the member is appointed.

■ One member who represents an environmental organization.

■ One member who represents a local government with existing nonfunctional turf at the time the member is appointed.

■ One member who represents a golf course with existing nonfunctional turf at the time the member is appointed.

Two of the nine seats on the Advisory Committee are reserved for members representing common-interest communities that have existing non-functional turf. The qualifications of the two common-interest community representatives as provided for on the Advisory Committee as set forth in AB 356 assumes that the SNWA board of directors has established by regulation a definition of the term “non-functional turf.” That means that a regulation defining the term “non-functional turf” will precede the appointment of the members of Advisory Committee.

Barbara Holland is a certified property manager and holds the supervisory community manager certificate with the state of Nevada. She is an author and educator on real estate management. Questions may be sent to holland744o@gmail.com.