A look at recent laws that affect HOAs

EDITOR'S NOTE: This is the first column in a three-part series looking at how laws passed in this summer's state legislative session will affect local homeowner's associations.

It's the time of year to talk about the laws that were passed by the 78th Legislature. Of the 25 proposed laws that pertained to homeowner associations (believe me if felt that there were so many more!), only about a dozen passed.

• AB 157 — Effective Oct. 1. Do you own a miniature horse? Well, the legislature decided to grant the status of "service animal" to miniature horses (or service animal in training). This law also applies to service dogs. In addition to housing considerations, the law allows an employer to determine whether it is reasonable to allow an employee to keep a service animal at work. An employer may deny an employee from bringing his or her miniature horse to work based on a set of factors that can be found in 28 C.F.R. Section of 36.302. Don't expect to see the miniature horse at McDonalds, anytime soon but you may find one sitting in the lobby of your building complex or community management company.

• AB 301 — Effective July 1. A number of years ago during the time of 9/11, the Legislature passed a bill that would allow a homeowner to fly the American Flag as long as it was flying per federal requirements. For example, the American Flag can only be flown at night if lights are shining upon it. This law added the Nevada state flag under similar conditions. I have been told that it was originally amended to include the Denver Broncos' flag, which obviously did not pass, but you can't blame a legislator football fan for trying! P.S. the law requires associations to amend their governing documents to be in compliance with this new law.

• SB-160 — Effective May 30. You may recall a news story of a child who was killed when caught between two community gates that were closing. I don't know for a fact if this law was passed in response to this unfortunate accident, but it pertains the HOA liability regarding such issues. Associations can be sued for failing to exercise reasonable care by not eliminating potential dangerous conditions, especially those that could attract children. Associations will need to assess potential liabilities within their communities as the law imposes higher standards for community gates. There was a liability case some time ago, (not in Nevada) where potential burglars were on a roof of a school fell through a skylight and were injured. They successfully sued the school. That's an extreme example and hard to believe, but when it comes to pools and gates and other community features, children may not appreciate the dangerous condition. (I have to admit that when I was in elementary school, my friends and I would hop on the back of a truck and go for a ride).

• SB 174 — Effective Oct. 1. Many of my readers have been waiting to hear about this law about who can serve on an HOA board? The legislators looked at two different scenarios that are common to many associations, family members serving on the board and investors who own multiple units within the association. The law states that a homeowner may not be a candidate or an officer serving on the board if he or she resides in a unit with one of the following persons: spouse, domestic partners, related by blood, adoption or marriage within the third degree of consanguinity or affinity to another homeowner who is a director or an officer of the association. I will save you the trouble of looking up who falls under the third degree of consanguinity. If I were serving on the board, my children, my parents (first), my grandchildren, my brothers and sisters, grandparents (second), my great-grandchildren, nephews and nieces, uncles and aunts, great grandparents (third) would not be able to serve on the board at the same time. You may not serve on the board as a director or officer if you stand to gain any personal profit or compensation of any kind from a matter that comes before the board. So what happens later on down the road if a matter does present itself where a board member may stand to gain any personal profit? You can consult with your legal counsel, but to the best of my knowledge, the Legislature did not change Nevada Revised Statutes 116.31084, which states that if a member who stands to gain any personal profit or compensation from a matter before the board shall disclose it and abstain from voting. Please note, the profit/compensation exclusion does not apply to a person who owns 75 percent or more of the units in an association under certain circumstances. A homeowner may not serve on the board if your spouse, partner, child by blood, marriage or adoption performs the duties of a community manager for the association. This law presents a real problem for many small associations or for those associations where homeowners do not volunteer to serve as a director. Prior to this law being sent to the governor to sign, there was a section added that addresses the issue of husband and wife serving simultaneously on the board. First, one of them will have to resign. Second, if a call to action is sent to the homeowners to become candidates to serve on the board and if no one steps up to the plate, the resigning board member can return to serve on the board and complete their term of office.

• AB 474 — Effective July 1. This law pertains to the annual fee paid by associations to support the state's Ombudsman Office. It is currently at $3 per unit per year. This law increases that amount to $ 5 per unit per year. The Nevada real estate administrator has stated that it will be a little lower than the $5 per unit fee, possibly only $4.25 per unit. For budgetary purposes, many associations are using the $5 per unit fee.

• AB 238 — Effective July 1. The solicitation of bids is one of those NRS 116 sections the Legislature seems to change each session where they just can't reach an acceptable law between homeowner lobbyists, small associations and large associations. The law starts out with the word, "if" an association solicits bids for an association project then it whenever reasonably possible is to solicit at least three bids if the association projected is expected to cost more than 3 percent of the annual budget for associations of 1,000 units or less or more than 1 percent of the annual budget for associations of 1,000 units or greater. Often homeowners will ask why did the association not obtain three bids for a project, for an example when their contracted landscape maintenance company wants to charge X amount of dollars for trimming the palm trees. Answer: The association did not have to obtain three bids if the board did not pass a motion to obtain three bids. To avoid problems, associations should make sure the contracted maintenance contracts include not only the regular recurring maintenance fees but also any additional work that is not part of the normal service.

The second part of this bill requires the bids be opened and read aloud during a board meeting. Does this really mean that a landscape proposal or security contract consisting of multiple pages be actually read aloud at a meeting? We have been told that the administrator of the Nevada Real Estate Division has said no. The association must first read the fees listed on the bids so that the homeowners are aware of what is included, what is not included and what would be based on time and material, in essence, the substance of the bids.

The previous law defined an association project to include projects involving maintenance, repairs, replacements or restoration of any of the common elements. The new law includes the professional services of accounting, engineering and legal services. I, personally, had some issues with the expansion of the law. Do you select an attorney or your certified public accountant based on the lowest bid or based upon their expertise and experience regardless of their scheduled fees?

• SB 154 — Effective June 1 for preparing administrative tasks to carry out the provisions of the law and Jan. 1 for all other purposes. This law allows managers to satisfy up to five hours of continuing education credits in one-hour increments for attending disciplinary hearings at the Common-Interest Communities & Condominium Hotels Commission meetings or for an alternative dispute resolution proceeding with the permission of the parties involved. These one-hour credits must be completed within the two-year licensed period.

— Barbara Holland is a certified property manager, broker and supervisory certified association manager. Questions may be sent holland744o@gmail.com.